When the Community first registered with a CIF number at the Hacienda, it must have stated in its “Objects” at the time on the appropriate “modelo” form. This would clearly have identified to the Hacienda that the CIF number belongs to a Community in Spain and NOT a trading entity, ie. A company that is trading with a view to a profit. Therefore they would not be eligible to reclaim IVA on expenditure.
I would advise against retrospective changes by the Community President. Their existing status also has some tax advantages, eg. Any surplus community income at present each year is not subject to Corporate Taxation (Impuesto de sociedades). Any change in status would no doubt bring the Community under the corporation tax radar of the Agencia Tributaria. As suggested, IVA registration would give rise to IVA on Community Fee income in either event that “an active” trading status was granted.
They may consider registering a separate business within the Community (eg. A “concession” such as a shop or bar, subject to local planning laws). They would then be able to reclaim some of the community expenditure no doubt (but not all) by charging certain costs via the concession. This expenditure would of course would be subject to enquiry by the Hacienda. The Community could make a “donation” to the concession to get around the IVA on some of its income derived from residents.
There are special exceptions/concessions for IVA reclaims for charity based entities in Spain, but this does not cover communities per say.
David Mayer- FCCA, ACA, MAAT
Jacksons Administradores SL
This message was last edited by Jacksonsadmin on 11/09/2012.