Indirect tax ebook - Spain

Reporting

VAT Returns
VAT returns are normally prepared on a quarterly basis. They are due for submission within 20 days of the quarter end.

For large taxpayers (revenue exceeding €6,010,121.04 in the preceding calendar year) and for taxpayers that are included in the special registry for monthly VAT refunds, VAT returns must be filed for a monthly period. They are due for submission within 20 days of the period end. 

Annual returns
Annual Summary returns must be submitted by 30 January of the following calendar year. 

Recovery of input VAT
Recovery of input tax is based on holding a valid VAT invoice. For taxpayers that file periodic VAT returns in Spain, the tax shown on the invoice can be deducted (i) in the VAT period in which it is received and accounted for or delivery of goods or services have been executed or (ii) within the following four years. Therefore VAT on invoices received before transactions were effected can be deducted only when the time of supply has taken place.

Non established taxpayers can generally recover VAT borne in Spain if certain conditions are met. Among others, the following requirements must be complied with:

• The claimant must be a taxpayer established in the EU or in a country that has signed an agreement with Spain for the refund of indirect taxes to non-established traders (i.e. Monaco, Switzerland, Norway, Canada, Japan and Israel, among others). 
• The claimant must be entitled to recover VAT according to the VAT legislation of its country of origin and to Spanish VAT legislation.
• During the period that the claims refers to, the claimant must not have made in Spain deliveries of goods or rendering of services other than those in which the taxpayer is the trader to whom the services are rendered.

Taxpayers established in non-EU countries must appoint a tax representative resident in Spain to handle the claim.

Restrictions
VAT is generally not recoverable when incurred on: 

• Jewellery and works of art
• Food, drink, tobacco and entertainment.
• Travel, accommodation and restaurant, except when they are deductible for personal income tax or corporate tax purposes.

VAT is only recoverable when the goods and services are affected direct and exclusively to business activity. Input tax on goods and services that are used partly for private purposes cannot be deducted. Only 50% of the VAT incurred on the purchase of cars and car related supplies and services is recoverable.

Sales lists/VAT information exchange system (VIES)
The recapitulative statement of intra-Community operations includes the intra-Community supply and the acquisition of services subject to the VAT of the Member State in which the recipient is established (that is, to which the reverse charge rule applies), as well as the intra-Community supplies and acquisitions of goods.

The recapitulative statement of intra-Community operations will have to be filed monthly. However, if the volume of intra-Community supplies of goods and services does not exceed €100,000 per quarter, the return has to be filed quarterly, for 2010 and 2011. For future years, the threshold will be €50,000 per quarter. As soon as the threshold is surpassed, the return will have to be filed monthly.

Penalties
Late payments, without a request from the Tax Authorities, are subject to a surcharge of 5%, 10% or 15% when the payment is made within 3, 6 or 12 months of the deadline respectively. When the payment is made after 12 months of the deadline a surcharge of 20% plus delay interest is applicable. Late payments after a request from the Tax Authorities are subject to fines of between 50 and 150%, plus interest. If a penalty is not disputed by the taxpayer, if no appeals are filed against the penalty and payment of the penalty is made within the deadline, a 25% reduction of the penalty applies.

• Introduction
• Scope
• Registration
• Tax rates
• Reporting & filing
• General tax application/Time of supply