The reform condemns the DDAs, an instrument that allows importers not to have to pay VAT. It penalizes especially SMEs.

A recent modification of the VAT regulation, approved last November and which will come into force on January 2016, penalizes the importing SME in relation to the large company and liquidates almost the so-called DDAs (DDA for professionals), a particular instrument of tax optimization that brings competitive advantages to the companies here compared to those in other countries.

Experts call the modification self-inflicted damage because it was not even urged by Brussels∙les.
The new tax scenario facilitates the operations of large importers

Despite the transcendence of the change, which had already been warned in the draft that the state government made public in June 2014, the sector’s response has been almost null∙la, a fact that experts in international trade consulted attribute to the lack of unity in this economic sector and to a historical aversion to transparency, which hinders the flow of information and communication between the different agents. The truth is that weeks after the approval of the reform there are still many companies and also large institutions affected that are just starting to get used to the new scenario. And these are changes that substantially alter the rules of the game.

To appreciate the importance of the modification it is necessary to have a basic understanding of how this part of international trade works. When a company established in the European Union imports products from outside the countries that make up the European Union, it must pay the customs duties that Brussels determines for each type of item. In addition, the taxes of each country are applied, especially the VAT on imports. It is worth thinking that in a standard purchase operation abroad, a company that picks up a container at the port has to pay the manufacturer of the goods, the stevedore, the owner of the warehouse, the dockers, the transporters and a long etcetera. In order to avoid having to pay VAT on top of this reguitzell of payment commitments, we have created some storage areas linked to the Tax Agency’s customs service so that this payment could be deferred upon leaving the premises. Initially, these deposits were intended for companies that had to carry out some kind of manipulation prior to the sale, to make changes of ownership or to pay in installments as the merchandise was delivered. Of duane deposits there are private ones, associated with large importers, and public ones, mainly declared for transit and at the service of any interested company. In Catalonia there are more than two hundred dams, most of them in the Barcelona and Tarragona areas and close to the ports. Its control corresponds to the only two employees of the service of duanes that there is in Catalonia for this task. Of course, of course, there are duplicitous dypsits all over Europe.

However, in 1992, the so-called different customs duties (DDA) were created, based on a modification of the old duties for tobacco and alcohol, which are subject to special taxes. The DDAs have the advantage of not having to pay VAT even when the merchandise leaves the premises. In this way, the importer can place the product in its stores, sell it and pay the VAT at a later date. Surely this was not the legislator’s intention, but almost everyone has used the DDAs as a fiscal tool to avoid having to pay VAT and avoid a burden on retailers. And if at the beginning it was only large companies, now it is all of them. “The crisis and financial difficulties have generalized its use, especially among SMEs,” explains Manel Anguren, from Guiex, an international trade consultancy.

Els canvis

One of the modifications introduced to the law radically restricts its use to a very specific group of products, including sugar, cocoa and olives. They are basically unprocessed and non-industrial products, although it is certainly not an arbitrary choice, no one can explain why these and not others. “It’s a huge restriction, whoever has a job and lives off this activity can look for another job,” says Anguren.

The second modification entails a new restriction that affects the profile of the companies that can suspend the payment of VAT, which as of January 1 will only be those registered in the Redeme (VAT Monthly Refund Register). It is important to remember that only companies with a turnover of more than six million euros are obliged to be part of this regime. It is true that companies can apply to register with the Redeme, but the accounting requirements involved and the greater tax burden on this group do not encourage them to take this step. As if that were not enough, registration is only possible in some periods and on January 31 the current period ends and the door will not open again until November.

According to Daniel Agosto, also a partner at Guiex, “the current scenario improves the conditions of SMEs and improves those of large companies, without there being any reasoned motivation”. In fact, the law avoids giving explanations. There is no evidence that the associations of large importers have exerted any pressure in this sense, and they have surely found the change as a Christmas present. Nor has there been a requirement from Brussel∙les regarding this.

If we are to speculate, surely the increase in the number of companies that serve the DDA poses a problem of control that is not easy when there are only two officials in Catalonia. But there is no evidence that this is the cause.

The certain fact is that the Spanish government’s displeasure with the DDA will not be innocuous and will have consequences on Catalonia’s competitiveness in its quest to become the logistics gateway to southern Europe, as denounced by Anguren and Agosto, who recall that the DDA is a tool for attracting international companies.

Rotterdam, Europe’s largest port, has a tax policy that favors imports, makes it easier for companies to avoid VAT and does not distinguish by size.

Francesc Muñoz, Barcelona