Commission decides to refer Spain to the Court of Justice of the European Union for failing to transpose VAT measures into national law

Today, the European Commission decided to refer Spain to the Court of Justice of the European Union for failing to transpose two separate Directives related to VAT measures into national law.

Council Directive (EU) 2020/285 introduced substantial changes to the VAT rules applicable to small businesses (SMEs) and aims to create a modern, simplified SME scheme (INFR(2025)0047). In particular, the Directive seeks to:

• reduce VAT compliance costs for SMEs both domestically and at EU level;

• reduce distortions of competition both domestically and at EU level;

• reduce the negative impact of the threshold effect; and

• facilitate compliance by SMEs and monitoring by tax administrations.

Spain has indicated that it does not intend to apply the VAT exemption for SMEs as set in the Directive, since applying the exemption is optional for Member States. Although this is possible, Spain is still expected to transpose the provisions that allow SMEs established in Spain to apply the exemption scheme in other Member States. This is necessary for an SME established in Spain to obtain the exemption elsewhere in the EU, it first needs to register with the Spanish authorities.

Council Directive (EU) 2022/542 of 5 April 2022 amending Directives 2006/112/EC and (EU) 2020/285 as regards rates of value added tax (INFR(2025)0048), lays down several mandatory provisions that must be transposed by Member States, regarding:

• the place of supply for VAT purposes of certain services when they are streamed or otherwise made virtually available, and

• the VAT special scheme for second hand goods, works of art, collectors' items and antiques.

The lack of transposition by Spain of the place of supply provisions entails the risk of double taxation or non-taxation, as the other 26 Member States have transposed the Directive and will apply different rules. The lack of transposition of the measures on the VAT special scheme for second hand goods, works of art, collectors' items and antiques is also susceptible to cause distortions of competition.

Background

All EU Member States were required to bring into force the laws necessary to transpose these two Directives by 31 December 2024 and to communicate those measures to the Commission by the deadline.

In the absence of such communication by Spain, two letters of formal notice were sent to Spain on 31 January 2025, followed by reasoned opinions on 17 July 2025. However, Spain has not yet notified the transposition of the two Directives into national law. It is the only Member State that has failed to do so.

The Commission is therefore referring Spain to the Court of Justice of the European Union, requesting the imposition of financial sanctions. 

More Information

EU infringement procedure 

Infringement decisions database and infringements map and graphs

March 2026 Infringement cycle

Infringement procedure Spain (INFR(2025)0047), (INFR(2025)0048)