With effect since January 1st, 2014, article 23 of Law 14/2013 of September 27, introduces a new Special Regime for VAT to be declared on a Cash Basis.
The new regime changes the way businesses can declare their VAT as it offers the possibility to change from the Accrual Basis used up to now to a Cash Basis.
The new system allows those businesses that have registered under the new special regime with the Tax Office to delay the payment of VAT on invoices until the invoice has been settled, instead of the current system in which VAT is due in the tax period when the invoice is issued. Likewise, if you purchase from a company registered under this regime, businesses cannot deduct the VAT from the invoices until the bill has been settled in full.
Equally, your clients will not be able to deduct the VAT until they settle their invoices fully.
Nevertheless, the law establishes the deadline of December 31st, of the year following the year in which the transaction took place, to declare and pay over the VAT, even if the payment for the invoices had not been recovered or settled.
If you would like to register for this new Special Regime you will need to fulfill certain requirements established by law. For example you can not exceed 2M€ in volume of transactions the previous year, 2013 in this case, or have received a payment in cash of over 100.000€ from a single client during that fiscal year.
The deadline to apply for this regime is March 31st, 2014.