EU – Commission: Refer Spain to the EU Court of Justice 

EU Member States were mandated to transpose two Council Directives (2020/285 and 2022/542) into national law by December 31, 2024, and to communicate the positive outcome to the Commission by the deadline. 

The EU provisions derived from these Council Directives should have entered into force in EU Member States by January 1, 2025. 

On March 11, 2026, the EU Commission decided to refer Spain to the CJEU for shortcomings in transposing the mandated VAT requirements deriving from Council Directive (EU) 2020/285 and Council Directive (EU) 2022/542 into national law. 

Spain: Lack of Coherence with EU VAT  

Council Directive (EU) 2020/285 introduced relevant modifications to the VAT rules applicable to EU-established small businesses (SMEs). The main push behind the idea of modifying the previously established framework for SMEs was to develop a more cross-border-friendly VAT framework for SMEs across the whole Union. 

The development of the new cross-border EU SME scheme is a foundational concept behind these amendments. This scheme will reduce VAT compliance costs for SMEs not only on the domestic level, but also for their intra-EU operations. 

Spanish representatives officially stated that the Government doesn’t intend to transpose these novelties into national law, following EU law, which permits MSs, in this case, to not apply the SME exemption deriving from this Directive. 

Even though that may be the case, under EU law, the Member State is still responsible for transposing these rules into national law, so the rules will permit domestic businesses to benefit from the new scheme for intra-EU operations. 

Council Directive (EU) 2022/542 introduced a few provisions that should be transposed by Member States, concerning the following: 

• New place of supply rules for virtual events 
• VAT special scheme for second-hand goods, works of art, collectors’ items, and antiques.

Spain failed to transpose the new rules and requirements deriving from this Directive into national law, and the lack of transposition increases the risk of double taxation or non-taxation, as the other Member States have transposed this Directive and will follow the new rules. 

Commission vs Spain 

Considering that Spain hasn’t transposed these Directives in accordance with the Commission’s formal notice of January 31, 2025, and the follow-up of July 17, 2025, the Commission referred the infringement to the EU Court of Justice. 

The Commission is requesting that the CJEU impose financial sanctions on Spain for failing to harmonize national law with EU VAT standards.