The Ministry of Finance predicts that 1.3 million self-employed workers and 700,000 small businesses will start benefitting from the VAT de caja, a new tax procedure that will allow these businesses to delay paying the VAT until the receive payment for goods of services instead of paying it when those goods and services are delivered to customers. It is still not clear if the new procedure, which was much in demand, will be well received.
The cutoff for using the new tax procedure is a lot smaller: invoices need to be less than two million euros. Still, this is not the main reason that companies are not excited about the IVA de caja. The procedure raises significantly the level of transparency between small businesses and their providers.
In addition to not having to pay taxes on goods and services before they are paid for, the VAT de caja (alongside the módulos tax reform) is an effective tool in the head Tax Agency's fight against fraud.