Bill would update the Basque Economic Agreement for new state taxes

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1. The bill proposes amending the Economic Agreement with the Basque Country to adapt it to recent changes in the state tax system, using the single-reading and urgency procedures.
2. It updates VAT rules to reflect the European reform of electronic commerce, including the one-stop-shop mechanism and distance sales, and adjusts the 10 million euro turnover threshold.
3. It incorporates two new taxes into the Agreement: the Tax on Financial Transactions and the Tax on Certain Digital Services, with rules for sharing revenue and audits between the State and the Foral Provincial Councils.
4. It amends Article 46 so that tax registration declarations also include the Tax on Certain Digital Services, and adjusts Article 68 to make the special procedures of the Arbitration Board more workable.
5. It adapts Article 56 on the compensations deducted from the Basque quota, in line with the methodology approved for the 2017-2021 five-year period.
6. The tenth transitional provision regulates how rights and obligations for the new taxes, effective January 16, 2021, are allocated, including amounts assessed before the law takes effect.

Who it affects

• Businesses and professionals operating in both common and Basque territory: The rules for sharing, filing and auditing VAT and the new taxes change.
• Foral Provincial Councils and the State Administration: How revenue, audits and quota compensations are shared is redefined.
• Taxpayers under the new financial and digital taxes: They must pay one or both Administrations in proportion to their operations in each territory.
• Parties in disputes before the Arbitration Board: They will have faster special procedures, such as the extension of effects.

Words worth knowing

Concierto Económico (Economic Agreement)

The agreement governing how people and businesses in the Basque Country pay taxes to the State and how the region is funded.

Cupo (quota)

The amount the Basque Country contributes to the State to fund services it provides across Spain.

Diputaciones Forales (Foral Provincial Councils)

Institutions of each Basque historical territory that manage and collect their taxes.

Ventanilla única (one-stop shop)

A system allowing businesses to file VAT declarations for the whole European Union at a single point.

Declaración censal (tax registration declaration)

A form used to register, deregister or update a taxpayer's details with the tax authorities.

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