Commitment to purchase products as a service subject to 21% VAT

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the tax nature of commercial agreements in which a company commits to purchasing products from a manufacturer in exchange for economic consideration or credits.

What the DGT has ruled

The inquiry addressed whether the purchase commitment operation was subject to Value Added Tax (IVA). The DGT has ruled that the commitment to acquire products from a manufacturer, through which the latter provides money that is amortized through credits, is considered a provision of services in accordance with Article 11.two.5 of Law 37/1992.

The ruling is based on the fact that these amounts should not be understood as commercial discounts or bonuses, but rather as direct consideration for the service of the purchase commitment. As it is a provision of services, the operation is subject to the general rate of 21%.

What this means for you

This ruling has a direct impact on the accounting and tax operations of companies operating under this business model. If your organization assumes purchase commitments in exchange for receiving money or credits from a supplier, that receipt of funds is not a mere cost reduction, but rather income from services.

This implies that the company must:

• Consider the operation as a provision of services subject to VAT.
• Apply the 21% tax rate.
• Issue the corresponding invoice to charge said tax.
• Settle the tax in periodic VAT returns.

What should be done

It is necessary to analyze the nature of current commercial agreements with suppliers. If there are money flows or credits derived from acquisition commitments, it must be verified whether the current operation complies with the obligation to issue an invoice with the general rate of 21%. The correct classification of these amounts avoids inspection risks arising from an incorrect application of the regulations of Law 37/1992.