Montero yields and will pay the communities 3,000 million for the unpaid VAT of 2017




The blow that the Supreme court to the Ministry of Finance of María Jesús Montero last April he already had a response from the Government. The Executive yields and will pay 3,000 million euros to the autonomous communities to compensate for the unpaid amount of VAT in 2019 -corresponding to two years years- which has its reason for being in the reform that was carried out in 2017, as confirmed by sources close to the fiscal policy council.

Montero had been refusing to offset this amount for years after only paying the regions 11 of the 12 months of the aforementioned tax for 2017, which was to be paid two years later. This decision has been communicated to the communities in the fiscal policy council which was held online today.

This turn in the decisions of the Treasury comes after a few months ago the High Court condemned the State to pay VAT to Castilla y León -and later to Galicia as well-, which opened the door to a barrage of claims from all territories. The government has relented in its refusal to solve the problem with the commitment to approve a budget line in 2022 to solve the economic damage caused by the 2017 regulatory change, according to sources familiar with the meeting. Montero already tried to solve this matter in the General State Budgets of 2019, but finally, when the accounts did not go ahead, it was considered impossible, the intention declined and went to rejection … until now, all forced largely by the Supreme.

In order to regularize situations, the Minister of Finance has announced that the regions will also receive an additional transfer in 2022 to cover the negative settlements in 2020 that they erroneously received. With the Covid, the Executive did not take into account the drop in public income to make payments on account to the communities; Now, the regions must return the money overcharged and that, in theory, did not correspond to them, but what the Treasury will do is give the territories about 3,900 million euros so that this return does not cause damage to their accounts. In other words, that the Executive will make a nod to the territories ‘forgiving’ that undue payment, in addition to paying the VAT compensation.

Covid Fund

Likewise, the Government has communicated to the autonomous communities the distribution of An additional 13,486 million euros that were included in the 2021 Budgets of the Covid fund. The money will be distributed according to the adjusted population criteria, following the guidelines set by the regions.

The Treasury has also announced at the council meeting the amount of payments on account that the communities of the regional financing system will receive next year and that it reaches 112,213 million euros, 6.3% more, becoming the highest figure of the historical series.

Beyond this, sources familiar with the meeting complain that the expected reform of the regional financing system has not been addressed, to balance the distribution of funds. This is one of the traditional claims of, for example, the Murcia region, which also came to this meeting with the objective that 4,200 million of the aforementioned Covid fund would be reserved for only the worst-financed communities, among which is its region, Valencia Community and Andalusia, among others.

Giró connects to the meeting

This fiscal policy council meeting has also been charged with a special presence that had been absent for the past four years. Catalonia has not sent its Minister of Economy since then and, today, it has.

Jaume Giró has connected to the appointment by telematic means, in another gesture of the rapprochement between the central and autonomous governments. Likewise, their participation coincides with the fact that the Executive of Pedro Sanchez has agreed to offset the 2017 VAT.

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