[vc_row][vc_column][vc_column_text]VAT in Spain is a tax extended throughout the European Union on the consumption of goods and services.
Individuals and companies, charge their customers VAT to compensate for the VAT that they themselves are taxed.
Most businesses (and other persons carrying out an economic activity) need a VAT number in Spain to do this.
Businesses are obliged to register for VAT in Spain for the following cases:
- when the business carries out the supply of goods or services taxed with VAT
- when the business receives services for which it is liable to pay tax
- when the business supplies services for which the customer is liable to pay tax
- when the business makes an intra-EU acquisition of goods.
More about the intra-EU acquisition of goods
It is the intra-EU acquisition of goods that is the important part for this blog post.
This is because if a company carries out operations with other businesses throughout the European Union it is subject to ‘double taxation’.
This double taxation is in the sense that the one that receives the goods or the services,
- will be subject to the VAT of the country of dispatch without being able to deduct it as an expense
- and will also have to pay the VAT of the country the business or individual is based in.
A refund can be requested to offset this double taxation. However, this process may seem complicated if it has to be done often.
Special Tax regime between EU countries
For these cases, the VAT Directive proposes a special regime, for the economic operators who sell or buy products or services to other countries members of the European Union.
Under this special regime, supplies of goods and services are exempt from VAT in the Member State of origin – when they are made to a taxable person in another Member State who will account for the VAT on arrival.
Practically, this means that being registered as an Intra-Community Operator allows business to issue invoices without VAT.
However, parties must be able to check quickly and easily that their customers in another Member State are taxable and hold valid VAT identification numbers.
How is this verification achieved?
This verification is done through the VIES (VAT Information Exchange System) owned by the European Commission – and made up of data retrieved from the different EU Tax Administrations.
In Spain, the request of the registration in the ROI (“Registro de Operadores Intra-comunitarios”) is done through the census declaration (model 036) before the Tax Administration.
The registration, however, is not automatic and must be accepted by the Administration since they usually require more information about the reasons for registration, documentation that accredits it, and with which company or companies it is going to work, etc.
Once this review occurs, the Tax Administration resolves by accepting or rejecting the request.
Sounds complicated! Can Lexidy help me with my VAT in Spain?
Yes, if you need help with any legal matters relating to VAT within Spain, and between other E.U. member states then get in touch today – or just start a live chat.[/vc_column_text][vc_raw_html]