VAT on donations of medical equipment following Royal Decree-Law 15/2020 and subsequent information notice NI GA 13/2020 dated April 23 from the Customs Department
Spain Tax Commentary
Commission Decision (EU) 2020/491 of April 3 granted import duty relief and a VAT exemption in respect of imports of necessary goods to combat the effects of the COVID-19 outbreak.
This Decision responded to the requests sent by the member states since the outbreak was declared a public health emergency on January 30, 2020. Before the decision was adopted, a few affected member states put the relief and exemption in place provisionally, with an obligation for the beneficiary to refund these incentives if they were not ultimately authorized by the Commission.
As a result, the Customs and Excise and Special Taxes Department has published various information notices in relation to that import duty relief and VAT exemption, describing the requirements for claiming them, as we analyzed in our commentary dated April 6.
Later, Royal Decree-Law 15/2020, of April 21, 2020, on additional urgent measures to support the economy and employment (view our alert dated April 22), allowed (in article 8) zero-rated VAT on domestic supplies and intra-Community acquisitions or imports of the medical equipment listed in its annex (view here), if the customer is a public entity, a private charitable entity, or a (public or private) clinic or hospital, and the taxable event is between April 23 and July 31 2020, which leaves transactions performed before April 23, 2020 in a less favorable position.
It is determined that to be eligible, these transactions must be recorded in an invoice as if they were exempt transactions, despite which the zero rate charge does not in any way restrict the right for the taxable person performing the transaction to deduct any input VAT they incur.
That zero rate is chargeable also on donations of equipment with no further requirements than having to be performed for the benefit of any of the customers identified in article 8 mentioned above and becoming chargeable during its period of validity. Similarly to cases of transfers for consideration, donors of equipment may deduct any VAT they incur, and have to issue an invoice to the recipient of the donation which must be recorded as an exempt invoice.
Following the publication of Royal Decree-Law 15/2020, the Customs Department has published a new information notice NI GA 13/2020 dated April 23, substituting all earlier ones (view here), which recasts the VAT and import duty treatment and determines, among others, the formalities needed for the new zero rate to apply. The notice expressly mentions the following European Commission documents that may be applicable in relation to this subject:
In short, following the notices and approved legislation, including the above-mentioned European Commission Decision:
Imports of any necessary medical equipment to combat the effects of COVID-19 may be performed without VAT or import duties if the requirements laid down in the European Commission Decision are met, where they are performed by any of the entities entitled to the exemption or any private entities acting on their behalf.
Domestic acquisitions, intra-Community acquisitions and imports of medical equipment (as listed in Royal Decree-Law 15/2020) performed by public entities, private charitable entities, or (public or private) clinics or hospitals are subject to zero-rated VAT, which does not restrict the right for the transferor to deduct any input VAT on acquisition of the equipment.
 The only fact that the notice highlights as a new feature from previous notices is that in the case of “central government organizations, including central government entities, public bodies and other bodies governed by public law”, no prior authorization from a Spanish tax agency official is needed.