The Law of the General State Budgets of 2017 has included as the only novelty, together with the reduction of VAT for live shows, the reduction of 21% to 10% of the VAT rate on prescription glasses, frames and contact lenses. Both rebates were claimed from various sectors in recent years.

The forecast of tax benefits obtained thanks to the reduced rate of VAT, compared to the general rate of 21%, amounts this year to 8,140.05 million euros, 2.8% more than what the Government would have foreseen for 2016.

The reduction of the VAT tax rate,both for live shows and for prescription glasses frames, was a claim that both sectors had been making in recent times.

New VAT tax rates for medical-health products

On June 29, 2017, the Spanish Parliament approved the General State Budgets for 2017, which introduced as a novelty that the frames of prescription glasses returned to tax with a reduced VAT of 10% (Law37/1992);

as was the case until January 2015, when the Government agreed to increase the frames, not the prescription lenses, to 21%, coming into conflict with the sector.

However, since June 29, 2017, and thanks to the approval of the General State Budget, prescription glasses, contact lenses and frames are once again incorporated into the sixth section of the reduced VAT tax rates.

This heading includes, among others, pharmaceutical products for direct use by consumers such as:

  • Medical equipment, apparatus and other instruments designed for the personal and exclusive use of persons with physical, mental, intellectual or sensory impairments;
  • The rest of medical equipment, appliances, medical devices;
  • Medical equipment, apparatus and other apparatus used to make up for physical deficiencies of animals or for the purpose of preventing, diagnosing or treating animal diseases.

On the other hand, cosmetics and personal hygiene products (except pads, tampons and condoms) and accessories, spare parts and spare parts of medical equipment, appliances and instrumentsare excluded. And from January 2015 until the approval of the budget, glasses frames were also excluded.

VAT on Glasses Frames in 2017

The modification of the VAT regulation in Law 28/2014 that taxed frames (but not lenses) with 21%, produced an open crisis between the optical sector and the Treasury.

The Spanish Federation of Associations of the Optical Sector (FEDAO) refers to a judgment of the Court of Justice of the European Union of 2013 (Case C-360/11 of 17 January 2013), in which the appliances, equipment and instruments to which the VAT tax rate was applied to glasses in the supply of those goods, including glasses, were limited, prescription contact lenses, and the products necessary for their use, care and maintenance.

Thus, despite the tax reform, the optical sector continued to pay 10% for the import of the frames,understanding that the change had not been developed through the correct regulation.

But the Customs service detected the bad payment of taxes and anonymously transferred a query to the General Directorate of Taxes. This would confirm, on several occasions, that the frames do not have the condition of prescription glasses until the prescription lenses are incorporated,which forces the companies to now face the retroactive payment of the 11 percentage points that separate 21% of the 10% of the tax.

How does the change in VAT on glasses in 2017 affect opticians and customers?

As of June 29 of this year, invoices will be taxed at 10%, which does not imply a price reduction,since many opticians have been applying this VAT as they are finished products.

This VAT tax rate will be applied from the date on which the sale became effective,
that is, from the moment the glasses and frames were delivered, and VAT cannot be reduced to 10% for any reason.

For example, if you make a change of glasses purchased in June in July, you will not be able to request a reduction in the tax rate. Likewise, if it is returned, the optician must include in the 21% paid when buying the glasses.

It should be remembered that repairs and modifications of parts of the frames are not subject to the 10% reduced VAT.

Finally, the opticians have the obligation to regularize the payment

of VAT for the years 2015 and 2016,issuing corrective invoices with a tax rate of 21%.

The sector believes that the collection that the Treasury will achieve for this regularization could be between 100 and 200 million euros. The Tax Agency, for its part, confirms the investigation but not the figures.