Transport services subcontracted in one's own name will be taxed at 21% VAT
The management of passenger transport service intermediation presents complex scenarios regarding the determination of the applicable VAT rate. Recently, the Dirección General de Tributos (DGT) has specified the tax treatment when an entity acts in its own name to contract transport services using third-party means.
What the DGT has resolved
The administration has determined that if an entity acts in its own name, mediating in the provision of transport services with third-party means, it must apply the special regime for travel agencies provided for in Law 37/1992. Under this regime, the operation is considered a single provision of services, which entails the application of the general tax rate of 21%.
Regarding invoicing obligations, the criteria indicate that under this special regime, there is no obligation to break down the VAT amount in the issued invoice. However, it is mandatory to include the mention "special regime for travel agencies" in the document to correctly identify the nature of the operation.
What it means for you
If your activity consists of passenger transport intermediation acting in your own name, the special regime for travel agencies will be your default framework. This implies that VAT will be applied to the margin or the total amount depending on the structure of the operation, but always at the 21% rate.
Nevertheless, there is a relevant operational alternative: if your client is a business owner with the right to deduction, the entity has the option to choose to apply the general VAT regime. In this case, each service would be taxed independently, allowing for a different treatment of the tax amounts.
What is advisable to do
It is necessary to evaluate the structure of your intermediation contracts to confirm whether you act in your own name or on behalf of another, as this determines the applicable tax regime. Likewise, it is advisable to analyze your client profile; if you operate mostly with business owners with the right to deduction, the choice between the special regime and the general regime should be analyzed to optimize invoicing management and the tax burden.
Frequently asked questions
- Is it mandatory to break down VAT in invoices under the special regime?
- It is not mandatory to break down the VAT amount in the invoice when the special regime for travel agencies is applied.
- Can I apply the general VAT regime instead of the special one?
- Yes, if the client is a business owner with the right to deduction, the entity can opt for the general regime, taxing each service independently.