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Consequences of submitting quarterly VAT tax returns in Spain instead of monthly ones
It is no secret that VAT procedures are outstandingly formal. It not only requires the examination of companies’ operations in relation to this tax, but the frequency with which VAT assessment forms are to be submitted is also taken into account.
A highlight is a judgement dated 21-10-2008 of the Catalan High Court (TSJ Cataluña), which overruled the penalty imposed by tax authorities on a large company that had erred in the forms submitted, notwithstanding the fact that the company had paid the right sums in accordance with the assessment form submitted. As a large company, VAT assessments had to be submitted on a monthly basis and, therefore, the payment of the resulting amount also had to be monthly. But this company made a mistake and made a quarterly payment, as the forms it submitted for some months in 2001 were quarterly. Shortly after, the authorities required the payment of a 20% penalty plus late-payment interest.
Finally, the court ruled that the only applicable sanction is 5% - with no late-payment interest - as the delay in payments, in this case quarterly payments, never exceeded a three-month term. In these cases, the penalty is always 5%, and this sum can be slightly reduced when no appeals are submitted. The Court concluded that “excessively formal aspects masking reality cannot prevail.” In any case, the company still had to pay the 5% penalty for late payment outside the monthly term, but the penalty was significantly lower than the amount initially claimed by the tax authorities.