RECLAIMING IMPORT VAT IN SPAIN
Goods imported into Spain from abroad must be cleared for customs when they reach the Spanish borders (i.e. International Airports or Sea Ports). The customs declaration is usually handled by an appointed carrier, freight forwarder or customs broker and gives rise to the payment of import duty and taxes.
Let us remind that a customs duty is applicable only when the value of the consignment is greater than €150 while import VAT is charged on commercial consignments of any value. The import VAT exemption that used to be applicable on small consignments valued at €22 or less has been removed since July 1st, 2021. Nevertheless, parcels with a value not exceeding €150 that are shipped to Spanish consumers from a non-EU country can still benefit from an import VAT exemption when the foreign online retailer has opted for the IOSS registration through an Intermediary.
When a DDP terms (Delivered Duty Paid) is used for the shipment of a consignment to Spain, the carrier will generally advance the payment of import duty and VAT to the Spanish customs and will send the corresponding invoice to the shipper. The latter can reclaim import VAT incurred in Spain if certain conditions are fulfilled.
Before you read further, please note that the first key condition to reclaim import VAT in Spain is to hold a customs clearance document also called Documento Único Administrativo (DUA) displaying the name of your foreign company as the Importer of Record (IOR) at destination. Using the name of another company as the Importer of Record (also known on the market as “IOR services”) may lead to a permanent loss of your right to reclaim import VAT. You should therefore get an EU EORI number in order to be able to act as the Importer of Record. Secondly, your foreign company should be the owner of the goods imported into Spain for business purposes.
A. What is a DDP shipment to Spain ?
DDP or Delivered Duty Paid refers to shipments where the shipper (the overseas company not established in Spain) delivers goods sourced from a non-EU country to their final destination in Spain, but already cleared for importation.
The overseas company bears all landed costs, including transportation charges, import duty and taxes levied on the goods by the Spanish Customs Authorities.
B. How import duty and taxes are charged in Spain ?
When sending a Delivered Duty Paid (DDP) shipment to Spain, an overseas company handles the shipment to a forwarding agent like FedEx, DHL or UPS, to name but a few. The latter arranges customs clearance in Spain in the name and on the behalf of the shipper.
The freight forwarder or carrier pays in advance the duty and taxes to Spanish Customs and returns to the shipper an invoice corresponding to import taxes prepaid.
C. Can my company reclaim import VAT for DDP shipment to Spain ?
YES! But under the 13th Directive VAT refund procedure, this possibility is only for companies established in some non-EU countries. When the implementation of the 8th or 13th Directive VAT reclaim scheme is not possible, the foreign company can still reclaim Spanish VAT if registered for VAT purposes in Spain either directly or by appointing a local fiscal representative.
D. Which countries have a VAT refund reciprocity agreement with Spain ?
Foreign companies established in the following EU and non-EU countries are eligible to reclaim import VAT paid on their DDP shipments to Spain: The 26 other EU countries | Canada | Switzerland | Norway | Japan| Monaco| United Kingdom | Israel.
Since January 2015, if your company is not located in one of the countries listed above, it may nevertheless apply for reimbursement of the Spanish VAT charged on the following expenses:
I- Purchases or imports of moulds and other toolings or equipments used to manufacture products that will be subsequently exported out of Spain.
II- Admission fees to commercial or professional events such as tradeshows, fairs, exhibitions, conferences and conventions, congresses, seminars, symposia, colloquia, workshops, forums and so on.
III- Travel expenses incurred for accommodation (hotels’ fees), catering and transportation in connection with attendance to such events.
For DDP shipments specifically, since Spain shares the same border with France (in the southern region), there is also an option for the foreign supplier to clear the goods for customs in France, before the final delivery by truck to the Spanish customer. The advantage of this scheme is that the non-EU supplier can have a relief of import VAT in the EU by using the French import VAT deferment scheme as described in this article: Exporting to EU countries via France | Corintax Consulting
E. What are the requirements for import VAT refund in Spain ?
All the following conditions have to be fulfilled:
- The overseas company (the shipper) should be the Importer of Record (IOR) or the “Consignee” on the Customs document issued in Spain. To read more on the IOR requirements, please go on the page : Prepare your shipment.
- The overseas business reclaiming import VAT refund (the shipper) is a taxable person in its country of incorporation. A Tax certificate proving this status will be required.
- The customer in Spain is a taxable business registered for VAT (e.g. retailers, distributors, industrial companies, etc.). If your clients are private individuals, you can appoint an IOSS intermediary for import VAT relief on low value consignments.
- The amount of VAT for which a refund claim will be introduced represents at least 400 EUR both for non-EU companies and EU based companies.
- The VAT refund claim is submitted to the Spanish Tax Authorities no later than September 30th of the year following the year of importation (i.e. for all the foreign companies, whether established in the EU or not).
F. Can I reclaim Spanish import VAT if the goods are not immediately sold ?
Even if your company is not selling goods imported in Spain (i.e. there is no transfer of ownership immediately after the customs clearance), you can still recover import VAT if some legal conditions are fulfilled.
Below are few examples of import flows for which you can be eligible to reclaim Spanish VAT :
1- You’re shipping goods into the warehouses of an Online Marketplace facilitating your B2C sales in the EU;
2- You’re shipping networking equipment into a data centre in Spain (colocation service);
3- You’re shipping goods for storage in Spain under a consignment sale agreement;
4- You’re shipping a machine or an equipment to be incorporated into a plant built in Spain;
5- You’re shipping an equipment in Spain for rental or leasing purposes;
6- You’re shipping an engine or a machine in Spain for maintenance under a warranty agreement.
G. How long does it take before receiving the VAT refund in Spain ?
In Spain, the tax authorities examine each claim and make a decision within 4 to 6 months after having received the VAT refund application and all the relevant documents. We remind you that this is an average timescale provided for your information only. The Spanish Tax Authorities can decide to run a thorough investigation on a specific claim and will send to the applicant or to its agent a letter of inquiry.
H. Spanish import VAT deferment scheme as from 2015
Since February 1, 2015, the Spanish Tax Law introduced an optional regime of deferment of import VAT levied on goods cleared in the country.
This new scheme allows companies importing into Spain to improve their cash flow, as VAT due on the goods imported is no more paid at the time of customs clearance.
Rather, the amount of import duty corresponding to VAT (approx. 21% of the CIF value) is postponed on Box 77 of the next VAT return of the company. The accounting mechanism known as “reverse-charge” enables to deduct the exact amount of import VAT due and avoid a cash disbursement.
Below are the conditions to fulfil in order to take advantage of the tax relief:
1-) The importer of record should be a company registered for VAT purposes in Spain.
2-) This company should be eligible to file VAT returns in Spain on a monthly basis. It could be either because its Spanish annual turnover exceeds a certain threshold (6,010,121.04 Euros) or the option for a monthly refund of the VAT credit has been exercised. Companies using the special VAT grouping scheme are also obliged to file their VAT returns on a monthly basis.
The option for the new import VAT deferment regime should be formulated by the taxpayer at the moment of commencement of the activity in Spain or, for existing businesses, during the month of November (to come into effect in January of the following year). In both cases, the option is exercised by checking Box 530 of the Form 036, Section F.
Source: Law 28/2014 of 27/11/2014 and Royal Decree 1073/2014 of 19/12/2014.
I. Further help or advice ?
If you have an inquiry about the possibility of reclaiming import VAT paid in Spain, feel free to send us a message (our email address is displayed on the right side of the contact form) or call us by dialing +33-261-536-544.
The content published here above is based on information timely as of […], unless otherwise indicated. Amendments to the tax laws in various EU countries covered here could have been passed recently. Therefore, readers should contact Corintax Consulting for further insights.