The Court of Justice of the European Union, in Case C‑515/24, confirmed that Spain’s limitation on input VAT deduction for entertainment expenses is compatible with EU law. The ruling clarifies that the exclusion was maintained under Article 176 of the VAT Directive because it existed at the time of Spain’s accession to the EU, thereby strengthening the Spanish legislature’s position while leaving room for future disputes over expense classification.
The CJEU upheld Spain’s denial, confirming that the limitation under Article 96 of the Spanish VAT Law is compatible with EU law and that the exclusion is maintained under Article 176 of the VAT Directive.
The judgment was issued on March 12 2026.
The court interpreted the standstill clause as allowing member states to maintain historical exclusions that existed on the reference date (Spain’s accession), treating the simultaneous entry of the deduction right and its limitations as the original configuration rather than a subsequent restriction.
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Meridian Global Services · about 1 hour ago
The Court of Justice of the European Union ruled on 12 March 2026 that Spain may continue to deny input VAT recovery on entertainment and representation expenses, even when linked to taxable activity, under Article 176’s standstill clause. The decision confirms that EU law permits Member States to retain historic exclusions, affecting Spanish businesses incurring client hospitality costs. The ruling highlights the lack of harmonisation across the EU and the need for firms to review their VAT recovery policies.
Law360 · 1 day ago
The European Court of Justice ruled that Spain’s restriction on VAT deductions for entertainment expenses does not breach EU law. The decision confirms that the country’s entertainment VAT break limit remains compliant with EU regulations. The ruling was issued on March 12, 2026.
Forbes España · 8 days ago
Spanish business and professional associations have called for fiscal deductions to help companies and self-employed professionals implement the new electronic invoicing and Verifactu systems, which are set to become mandatory on 1 January 2027. They argue that without such incentives, 3.3 million SMEs and 3.4 million self-employed could face a collapse in the rollout. The request is an amendment to the Royal Decree Law that maintains the 2027 deadline while seeking tax relief.
LinkedIn · 15 days ago
The LinkedIn post explains Spain’s Modelo 349, an informative declaration for intra‑community transactions with EU VAT‑registered entities. It outlines filing frequencies, deadlines, key compliance risks, and the types of transactions that must be reported. The post emphasizes that Modelo 349 does not generate a tax payment and stresses accurate reporting to avoid audits.
International Tax Review · about 1 month ago
The Court of Justice of the European Union (CJEU) ruled that Spain cannot impose a stricter “directly and exclusively” requirement on VAT exemptions for services supplied by independent groups of persons. The decision clarifies that services must be directly necessary for the exempt activity, but exclusivity is not required, allowing general services such as cleaning to qualify. The ruling also states that competition distortion must be assessed on a concrete basis, not presumed.
Bloomberg Tax · about 2 months ago
The European Court of Justice issued a preliminary ruling on Jan. 22, 2026, stating that the Spanish VAT exemption for services rendered by cost‑sharing groups to members at cost is not valid. The ruling interprets Council Directive 2006/112/EC as precluding such an exemption, as the services were deemed outsourced and not linked to tax‑exempt activities. The decision applies to services such as cleaning for healthcare and educational buildings.
