COUNTRY TAX PROFILE: SPAIN
Goods imported into Spain from a non-EU country must be cleared for customs when they reach the Spanish borders (International Airports or Sea Ports).
The customs declaration is usually prepared and filed by an appointed carrier or freight forwarder. This procedure gives rise to import duty and taxes levied by the Customs Authorities. Let us remind that import duty is levied on a good having a minimum value of € 150 and import VAT is due on a product valued at least at € 22. Small goods with a value under the mentioned thresholds are exempt of duty and taxes, except in case of mail ordering.
In the course of international commerce, it is the recipient or the consignee of the cargo which usually pays the customs taxes in the country of arrival.
However, the competitive pressures of the market or issues related to the ownership of the goods can justify, in certain circumstances, that the foreign shipper bears import duties and taxes in Spain. In such a case, we talk of a shipment or a sale under DDP terms (Delivery Duty Paid).
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 an invoice corresponding to the taxes prepaid to the shipper.
C. Can my company reclaim import VAT for DDP shipment to Spain ?
YES! But this possibility is limited to companies established in certain countries.
D. Which countries have a VAT refund reciprocity agreement with Spain ?
Overseas companies established in the following countries are eligible to recover import VAT in Spain for DDP shipments:
The 27 others EU countries | Canada | Switzerland | Norway | Japan | Monaco | 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:
- purchases or imports of moulds and other toolings or equipments used to manufacture products that will be subsequently exported outside Spain.
- admission fees to commercial or professional events such as tradeshows, fairs, exhibitions, conferences and conventions, congresses, seminars, symposia, colloquia, workshops, forums and so on.
- travel expenses incurred for accommodation (hotels’ fees), catering and transportation in connection with attendance to such events.
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 “recipient” on the Customs document issued in Spain. To read more on the IOR requirements, please go on 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 consumers, you are not eligible for import tax refund under the present procedure. Please contact us to set up an alternative solution.
- 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 Spanish Tax Authorities no later than September 30th of the year following the year of importation (for all overseas companies, established in EU or not).
F. Is VAT refundable when the goods imported into Spain are not sold ?
Even if your company is not selling goods imported into Spain (i.e. there is no transfer of ownership), it can still recover import VAT provided that certain legal requirements are met.
The following cases are concerned:
- Goods imported for international tradeshows or exhibitions (i.e: Temporary Importation)
- Goods imported for repair, alteration or processing (i.e: Inward Processing Relief)
- Goods imported under a hire or leasing contract (e.g: Equipment Lease Agreement)
- Goods imported for warehousing before sale (e.g: Storage for e-commerce purposes)
- Goods imported as technical equipment (e.g: Measuring instruments)
For further details on your specific case please contact us
G. How long does it take before receiving the VAT refund in Spain ?
In Spain, the Tax authorities investigate on each case and make a decision within 4 to 6 months after having received all the documents requested. We remind you that this is an average time limit provided for information purposes only.
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:
- Either because its Spanish annual turnover exceeds the threshold of 6,010,121.04 Euros;
- Or because as a Spanish VAT payer it has opted for a monthly refund of VAT credit.
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 ?
The content published here above is based on information timely as of 1 January 2015, 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.