SPAIN: FISCAL WAREHOUSE UNDER DDA LICENSE
The DDA license (Depósito Distinto del Aduanero) is an authorization allowing to operate a VAT warehouse in Spain. Importing companies that use this type of warehouse are exempted from paying in advance VAT normally due at the time of clearance of goods introduced into Spain.
In terms of cash flow, it is a real asset for EU companies importing goods originating outside the EU area into Spain.
How the scheme works ?
When importing goods from a country not belonging to the European Union, the cargo is placed in a tax warehouse previously approved by the Spanish tax authorities.
Customs clearance procedures are normally conducted and, if applicable, only customs duties are paid to the relevant authorities. The Value Added Tax (VAT), which represents the largest part of import taxes (around 21% of the CIF value) is suspended. The foreign importer will not be required to pay it as long as the goods remain stored in the VAT warehouse.
It is recalled that the VAT warehouse does not necessarily belong to the importing company. The latter can indeed use the facilities of a carrier company or a logistics service provider (“3PL”) specialized for this kind of operations.
Goods eligible for storage in a Spanish DDA warehouse
The law 28/2014 of November 27, 2014, amending the Spanish VAT Law 37/1992 of December 28, 1992, has established a list of goods which can benefit from Spanish import VAT exemption under the DDA warehouse regime.
This new regulation is applicable to imports of goods carried out in Spain as from January 1, 2016. The warehouse owner will be now jointly and severally liable for the VAT debt and only goods listed below are eligible to the VAT suspension scheme:
- Goods subject to excise duties (such as alcohol, tobacco, mineral oils,…)
- Goods originated from a part of the Community Customs Territory where the EU VAT Directive is not applicable (France: Guadeloupe, Martinique, French Guiana, Mayotte and La Réunion Island. Spain: Canary Islands. Greece: Mount Athos. United Kingdom: Channel Islands. Finland: Åland Islands).
- Goods listed under Annex V of the EU VAT Directive 2006/112/EC (Potatoes – Olives – Coconuts – Brazil nuts and cashew nuts – Other nuts – Coffee, not roasted – Tea – Cereals – Husked rice – Grains and oil seeds (including soya beans) and oleaginous fruits – Vegetable oils and fats and their fractions, whether or not refined, but not chemically modified – Raw sugar – Cocoa beans, whole or broken, raw or roasted – Mineral oils (including propane and butane; also including crude petroleum oils) – Chemicals in bulk – Rubber, in primary forms or in plates, sheets or strip – Wool – Silver – Platinum (palladium, rhodium) – Copper – Nickel – Aluminium – Lead – Zinc – Tin – Indium).
Removal of goods from the fiscal warehouse
If necessary, the EU business can withdraw the goods stored in the tax warehouse in Spain. The operation will be carried out under total exemption from VAT, provided that it falls within one of the following scenarios:
- The goods withdrawn are sold to a Spanish company registered for VAT
- The goods withdrawn are shipped to another country within the European Union, especially as a VAT exempt intra-Community supply
- The goods withdrawn are re-exported to a country outside the European Union
A SDD document used to discharge the procedure must be filed to the Customs Authorities by the warehouse-keeper.
A UK company receives from its Spanish customer a purchase order for the supply of industrial machinery. The British company in its turn orders the machines from its supplier located in the USA. The goods will be dispatched directly from the premises of the American supplier to the end customer located in Spain. For some commercial reasons, the UK company chooses to act as the importer of record (IOR) in Spain. Hence, it will have to pay customs duties (if any) and the Spanish import VAT.
This import tax may be recovered by filing an EU VAT refund application through the electronic portal of the UK tax authorities (HM Revenue & Customs). The disadvantages of this procedure are, however, many:
- The payment of a large amount of VAT can weaken the company’s cash-flow
- The repayment of VAT by the Spanish Tax Office may take several months
- The cash disbursed is retained out of business for a long time
- Due to a rigid formalism related to the tax documents (Customs documents, invoices, etc.), a risk of rejection of the VAT reimbursement claim is always present.
In such a situation, the UK company could use the VAT warehouse procedure in Spain. This would be surely the best way to permanently remove VAT on imports and optimize cash flow.
BENEFITS OF DDA PERMIT IN SPAIN
- No pre-payment of import VAT
- No timeout for repayment of VAT
- 48 hours of storage are enough to benefit from the scheme