Régimen fiscal

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Two weeks ago, Royal Decree Law 28/2020, of September 22, on remote working was published in the Official Gazette of the Spanish State (BOE) and, in its additional provision six, included the tax regime for the “2020 UEFA Women’s Champions League” final, whose quarter-finals, semi-finals and final were held in San Sebastián and Bilbao in August.

The approved tax measures were already addressed in additional provision three of Royal Decree Law 27/2020, of August 4, on extraordinary and urgent financial measures applicable to local entities. However, that regulatory text, regulating the use of councils’ budgetary surpluses and leftover cash, was not passed in the Spanish Congress of Deputies, and the Decree Law including the tax regime for the sporting event was consequently repealed.

The range of measures set out in Royal Decree Law 28/2020 are the same as those adopted in 2019 for the final of the men’s UEFA Champions League, held in Madrid’s Wanda Metropolitana stadium, and the 2020 European Championship, which was to be headquartered in Bilbao but has been postponed until next year as a result of the COVID-19 pandemic.

Therefore, a Corporate Income Tax and Non-Resident Income Tax exemption is established for the organizer and the participating teams on income received. This applies whether or not they are permanently established in Spain, throughout the event and insofar as that revenue is directly related to their participation in it.

For individuals not resident in Spain, the income received as a result of providing services to the organizer or the participating teams will not be considered obtained in Spain. However, if those individuals acquire tax residence in Spain due to traveling to Spain for the Champions League final, they may opt to pay Non-Resident Income Tax, in accordance with the special impatriates regime set out in section 93 of the Spanish Personal Income Tax Act (Ley del IRPF). They will therefore be taxed as if they were not resident in Spain, and only earnings from a Spanish source (limited tax liability) are subject to a general rate of 24% (for work earnings), increasing to 45% for earnings above 600,000 euros paid by a single payer.

The following measures are adopted on Value-Added Tax.

  • Regarding refunding tax paid as a result of operations related to the sporting event:

    (i) for business owners not established in the European Union, there will be no reciprocity requirement as set out in section 119 bis of the Spanish VAT Act (Ley del IVA), i.e. it is not necessary for there to be reciprocal treatment with regard to refunding the input VAT in the third-party country in favor of business owners established in the VAT territory.

    (ii) for business owners not established in the tax territory, when they are considered liable for VAT they will be entitled to have the tax paid as a result of the event refunded on a monthly basis. Furthermore, they will not be required to keep tax records through the Spanish Tax Administration Agency’s Electronic Headquarters (SII).

For non-established business owners or professionals who meet the requirements set out in the corresponding input VAT refund procedures for non-established persons (sections 119 and 119 bis of the VAT Act), the tax paid can be refunded under those special procedures. 

  • Business owners or professionals not established in the European Union, the Canary Islands, Ceuta or Melilla, or a state with which there are mutual assistance tools, will not have to appoint a representative for compliance with VAT obligations.
  • Importing goods temporarily used for the event will be exempt from VAT. The maximum use period of 24 months will end on December 31 of the year after the Women’s Champions League at the latest.
  • Finally, regarding the rule on effective use contained in section 70.Two of the VAT Act — under which some localized services outside the European Union are taxed in the Spanish VAT territory if they are effectively used in this territory — it is foreseen that it will not apply when the services are provided by legal entities resident in Spain incorporated for the sporting event by the organizer or the participating teams and are related to organizing, promoting or supporting that event.

This special regime applicable to the 2020 UEFA Women’s Champions League confirms our legislator’s desire to promote and attract international sporting events in Spain through an attractive tax regulation for organizers and participants.

Authors: Bartolomé Sánchez and Lidia Margareto

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bartolome.sanchez@cuatrecasas.com

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lidia.margareto@cuatrecasas.com