Tax Representation in Spain -5/28

To be able to carry out its activity in the European Union as a company, it is mandatory to obtain an intra-community VAT number in the country of destination of the taxable transactions.

A foreign company carrying out taxable transactions in Spain must be identifiable, i.e. register with the Spanish tax authorities in order to obtain an intra-Community VAT number and must declare the latter, even in the absence of turnover. In order to be able to register for Spanish VAT, a foreign company must, in certain cases, settle a Tax Representation and so appoint a Tax Representative established in Spain who will be responsible for carrying out the tax formalities incumbent on it.

Tax representation and VAT registration

Companies that are liable for VAT in Spain or that have to fulfil reporting obligations even though they are not subject to Spanish VAT must set up a tax representation, in particular, for companies that carry out one of the following activities:

  • Introduction into Spain of goods from France or another Member State (intra-Community acquisitions and similar transfers).
  • Intra-Community supplies from Spain to another Member State.
  • Consignment sales and transfers of goods.
  • Deliveries with assembly.
  • Triangular operations.
  • Services located in Spain.
  • Organization of conferences and cultural events (shows).
  • Ticket sales.
  • Construction companies that carry out work with individuals or entities not subject to VAT
  • Companies which supply services for the rental of buildings, subject to VAT.
  • Companies that provide intermediary services in the rental of buildings.

Cosmopolite assists you as a tax agent or tax representative and manages your registration in Spain as well as all reporting and information obligations.

As such, the tax representative is in charge of many responsibilities including:

VAT REGISTRATION

In case of a Tax Representation, the tax representative of the foreign company takes care of the administrative formalities and the tax declaration of its taxable transactions in Spain:

  1. Obtaining a Tax identification Number (NIF) and registering with Spanish VAT
  2. Intracommunity transaction declarations and Intrastat declaration
  3. Spanish VAT accounting obligations
  4. Tax domiciliation
  5. Keeping a record of invoices issued and received
  6. Registration in the REA “Registro de Empresas Acreditadas” (Registry of Accredited Companies)

REA Registration

Foreign companies that act as a subcontractor in construction sites located in Spain must register in the “Registro de Empresas Acreditadas” (REA) before the start of the work.

The purpose of the REA is to check that companies working in the construction sector meet all the conditions in terms of capacity and quality in the prevention of accidents at work.

Your tax representative assists you in the registration of your company with the REA as well as in all communications with the Spanish administration regarding the movement of workers.

EORI – NIF

The Economic Operator Registration and Identification Number (EORI) is a unique number assigned by each EU Member State and valid throughout the EU Community. The EORI number is required in all customs operations carried out within the EU that require an identifier, as is the case for imports and exports.

From now on, Foreign companies carrying out import and export operations from Spain must communicate an EORI number issued by their EU administration. Spanish legislation also requires that this EORI number be associated with a Spanish Tax Identification Number (NIF) in order to be able to carry out all customs formalities in Spain.

The Intrastat declaration concerns supplies and acquisitions of goods between entrepreneurs entering and leaving the Netherlands. It is submitted to the Centraal Bureau voor de Statistiek (CBS), which will verify and monitor monthly the amounts of intra-Community transactions carried out by taxable persons on the basis of their VAT returns to determine whether Intrastat declarations need to be submitted.  Taxable persons will be informed by letter during the first month for which the obligation to declare applies.

Your tax representative assists you in obtaining your NIF in Spain as well as in all the formalities relating to the EORI-NIF association.

What are the VAT rates in Spain (IVA)?

The VAT rate in Spain is 21%, with reduced rates of 4% and 10%.

The 10% rate applies to certain goods and services, such as the purchase of newly built properties, hotels and restaurants, health products, and entertainment and sports activities.

The 4% rate applies to goods considered basic necessities, such as certain foods and reading materials (newspapers, magazines, books).

Who should charge IVA (Spanish VAT)?

You are required to charge Spanish VAT if:

  1. You are established in Spain and the beneficiary is a private person in the EU or a company in Spain.
  2. You are established in the EU, you sell to individuals in Spain and the total annual sales in Spain have exceeded € 10,000. Your company can apply the VAT rate of the country of origin until this threshold is reached. Once achieved, Spanish VAT must be applied in the current and subsequent years, and Spanish VAT returns must be submitted to the competent authorities. When applying Spanish VAT, the invoice must follow the rules of a Spanish invoice and include the NIF given to the foreign company in Spain. Note that an EU company has the option to apply Spanish VAT instead of the VAT of their home country from the start, before the amount of €10,000 is reached.

How do I recover Spanish VAT (IVA)?

You can request a refund of the IVA for the IVA paid or incurred in Spanish territory if you meet all of the following conditions :

  1. If you are a VAT taxpayer in your country of residence.
  2. If you are established in the territory of the European Union, including the Canary Islands, Ceuta and Melilla, or if you reside in one of the countries where there is a reciprocal agreement (Canada, Japan, Norway, Monaco, Israël, United Kingdom and Switzerland).
  3. If you do not own a company in Spain (or if you have a company but the company has not made any transactions).
  4. If you have not made any transactions in Spanish territory, or if you have only made transactions with the right to a refund, consisting of:
  • Supply of assets and services, including intra-Community transport, in which the taxpayer is the recipient of those transactions (‘taxpayer investment’).
  • Transport related to the import and export of goods, or directly related to the delivery of goods in a free zone, bonded warehouse or similar warehouse, and similar customs and excise procedures. Certain specific provisions of ancillary transport services are exempt from the tax.

If the applicant does not reside in the European Union, it is necessary to appoint a representative in Spain through a publicly recognized power of attorney. Candidates residing in a country of the European Union may nominate a representative if they so wish.

IVA claims can only be made for the immediately preceding year or quarter. The application may also cover a period of less than one quarter, where this represents all the operations carried out over a full year, provided that they end on 31 December of the year in question.

European VAT rules are multiple and often complex: https://europa.eu/youreurope/business/taxation/vat/vat-rules-rates/index_fr.htm

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