VAT in Spain
Any business trading with another European country which belongs to the European Union (EU) must be aware of the Tax implications
A special tax system regulates these transactions and they are subject to certain rules and obligations. If your business qualifies to obtain the European VAT number, the VAT rate to be applied on the transaction will be zero or even on specific cases considered exempt from VAT – but this will depend on each case.
The first step that a business must take when the decision has been made to start trading with another European country belonging to the EU will be to formally request at the Inland Revenue to be registered with the European VAT number.
Standard Inland Revenue Procedure:
- Check that the entrepreneur/business has its activity correctly registered.
- Check by way of a personal visit that the premise where the activity takes place is real.
- Check that all the Fiscal & Accountancy formalities have been fulfilled.
In some cases the Inland Revenue will go a step further and also request proof of the European Union supplier/client which you are planning to do business on the short term.
The research into each company prior to granting the European Vat number has been increased in the last years in order to minimize fraud cases, as some companies that did not have any right where requesting to register to avoid paying the corresponding Vat Tax. Unfortunately, the extra individual research is causing a delay obtaining the VAT European number.
Once the European VAT number has been granted you should bear in mind that this is not forever, and can be cancelled by the Inland Revenue if they consider necessary for example if there has been a period of 12 months in a row where no transactions have taken place with another European country.
- All products being purchased or sold using the European VAT number must be backed up with proof of all the movements made up to its destination.
- Every company or entrepreneur involved on each EU transaction is required to hold the European VAT number and you must ensure that the same is in force at the time of the purchase or sale. The validity of the EU VAT number can be checked directly at the Inland Revenue web page www.agenciatributaria.com. If the information received by the Inland Revenue is negative then the full Spanish VAT should be charged.
The entrepreneur or company should fulfil all the tax and accountancy formalities and special tax forms should be presented on a quarterly or annual basis depending on the volume of the transactions.
Do not hesitate to contact one of the motivated accountants of our law firm in marbella now!