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The government is looking for an exit to the VAT war between the Treasury and the regional television stations

Introduces a provision in the Public Sector Contracts Act, passed last week, to clarify the contentious

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The government is looking for an exit to the VAT war between the Treasury and the regional television stations

Corporació Catalana de Mitjans audiovisuals (TV3), Public Society of Broadcasting and television Extremadura (Canal Extremadura), Televisión Regional de Castilla-La Mancha (CMT), Corporacion Radio y television de Galicia (Galician TV) and autonomous Region of Aragon (TVAA), among ors, maintain a pulse against tax agency on account of treatment of VAT. A couple of months ago, Forta, Federation of Autonomic Televisions, warned that Hacienda was subjecting m to an "economic suffocation" that could "lead to liquidation". To try to save situation, Government has introduced a change through Public Sector Contracts Act, passed last week.

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But war of se public bodies with Treasury has been fought for a long time. Up to 2014 autonomous television stations only had — y loaded — VAT on advertising revenues and sponsorship of ir programs but not public subsidies that were received from regional public entities. However, all VAT was deducted from all of its expenses. The result is that y substantially lightened ir tax bill and improved ir liquidity, because it was often that liquidation would return m.

But Hacienda changed its interpretation in 2014. He n began to consider that se public societies had a dual object. On one hand y had a commercial activity because of revenues of sponsorship and publicity; And on or, y developed a public service. So he began to open inspections to televisions on pretext that se could only deduct part of VAT, which corresponded to his commercial activity. And to calculate it, it applied rule of rata. As about 90% of revenues of se channels come from subsidies of regional entities and only 10% of ir ads, new method allowed Treasury to open dozens of multi-million dollar inspections.

The sentence of Extremadura

The Central administrative economic Tribunal (TEAC), which disputes tax matters, dictated last May a sentence that gave reason to television Extremadura in contentious that it maintained with tax agency on return of VAT. That is to say, this decision allowed channel to deduct all vat of its expenses, but it forced it to bear tax of subsidies that it receives. However, legal modification of last week changes situation again.

The tension grew with entry into force of fiscal reform in 2015, which affected VAT law. The new standard forced public entities to integrate subsidies into tax base. That is, to affect VAT on public funding. This ensured its tax bill, 21% more, and unleashed a wave of television resources to courts and, consequently, anor waterfall of Treasury records. Pulse is grew.

Back to past

The pressures of Forta, Autonomous communities mselves and delicate financial situation of se audiovisual entities have pushed government to modify VAT law through a provision of Public Sector Contracts Act, approved last week. "The public financing received by se public services will not be included in tax base of VAT," says undersecretary of state of finance, Felipe Martínez Rico.

Tomás Comarca, a member of LEAN Abogados and a tax expert, explains that legal change invalidates reform of 2015 that affects se cases. "It is as if it were to return to initial interpretation that VAT on subsidies and public funding received by se televisions is not supported." The Mark recalls that matter is very judicializado and even resources have come to Brussels. For his part, Enrique Laucirica, secretary general of Forta, claims that he will "definitely clarify issue." It's very controversial. "They've been developing rules for years and it's still not clear."

Jesús Rodríguez Márquez, of firm F J Martín Abogados, warns that new standard has retroactive effects. Still, change did not try to autonomic televisions.

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