The entering into effect of the VAT and IEPS Law reforms implies an increase in the rates and the implementation of new taxes. A 10 calendar day deadline is set to carry out the transition for operations carried out before the end of the year and paid as of January 1st, 2014. Background A few days ago the various reforms to the tax laws which will apply in 2014 were published in the Official Gazette including, amongst others, the VAT and IEPS Laws. One of the most relevant items is the VAT increase in border regions from 11% to 16%, to match the applicable rate in the rest of the country. Based on the above, operations carried out in border regions before December 31st which were not invoiced and paid in 2013 and will be invoiced in 2014, will be taxed at 16%. The Special Tax on Production and Services (IEPS) has also been modified regarding rates and taxable percentages. Therefore, as is the case for VAT, the amounts that are not charged or paid by January 10th, 2014 will be taxed at a higher rate according to the new dispositions. New taxable products are also added such as flavoured drinks, fossil fuels, pesticides and some non-basic high calorie contents food. New Dispositions The Authorities grant the taxpayers, through transitory dispositions, the possibility of applying the previous rates for services rendered, leases, or sales carried out in 2013 and paid in 2014, as long as they meet the following requirements: • The goods and services delivered or provided must have been done so before January 1st, 2014. • Payment for the operations carried out must be made within the first 10 calendar days following the coming into effect of the law, that is to say at the latest on January 10th, 2014. It is important to mention that in order to be able to apply this option both requirements need to be met and this does not apply to operations carried out between related parties. It is therefore important that clients pay before the deadline and that services and goods were provided before the end of 2013, this also applies to goods and services provided by your suppliers and payments that need to be made to them. If this is not the case then the taxpayer will have to reissue the invoice with the new rates established for 2014. Please feel free to contact us if you have any doubts or questions.