Commission decides to refer Spain to the CJEU for failing to transpose EU rules into national law

On 11 March, the European Commission decided to refer Spain to the Court of Justice of the European Union for failing to transpose two Directives on VAT measures into national law.

Council Directive (EU) 2020/285 introduced substantial changes to the VAT rules applicable to small businesses (SMEs). Its aim is to create a modern and simplified regime for SMEs [INFR(2025)0047]. In particular, the Directive aims to:

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

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

• reduce the negative impact of the threshold effect; and

• facilitate compliance by SMEs and monitoring by tax authorities.

Spain has indicated that it does not intend to apply the VAT exemption for SMEs established in the Directive, as the application of the exemption is optional for Member States. Although this is possible, Spain should transpose the provisions allowing SMEs established in Spain to apply the exemption scheme in other Member States. This is necessary because, in order for an SME established in Spain to obtain the exemption elsewhere in the EU, it must first 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 the rates of value added tax [INFR(2025)0048] lays down several mandatory provisions that Member States must transpose in relation to:

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

• the special VAT scheme applicable to second-hand goods, works of art, antiques and collectors’ items.

Spain’s failure to transpose the provisions relating to the place of supply entails the risk of double taxation or non-taxation, since the other 26 Member States have transposed the Directive and will apply different rules. Failure to transpose the measures relating to the special VAT scheme applicable to second-hand goods, works of art, antiques and collectors’ items.

Context

All EU Member States were required to bring into force the legislation necessary to transpose these two Directives by 31 December 2024 at the latest and to communicate those measures to the Commission within the prescribed period.

In the absence of such notification from 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 still not notified the transposition of both Directives into national law. It is the only Member State that has not done so.

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

For more information: European Commission