In other news of the blog we explained everything you needed to know about intracommunity invoices without VAT. Following this path, today we want to talk about intracommunity VAT registration. This is a somewhat complex process due to the related international formalities. For that reason, we will go step by step to unravel all the doubts that this procedure may cause.
What is intracommunity VAT?
Intracommunity VAT is a special taxation system that applies to commercial activities between companies in European Union countries.
The export or sale of goods or merchandise or the provision of services from Spain to the EU are exempt from VAT. However, it should be mentioned that when the purchase of goods or merchandise is from an EU country to Spain, VAT is payable. In this case a self-assessment mechanism is applied whereby the transaction is accounted for as higher input VAT and output VAT.
We must also remember that when the sale is to private individuals (final consumers), it is taxed in the country of origin. The VAT in this case must be reflected in the invoice.
The first step: registration of intra-community operators
When a company or self-employed person needs to carry out commercial operations within the European Union (EU), they need to be registered in the Register of Intra-Community Operators (ROI). Also known as VIES census, this registry will generate a special NIF (special tax identification number) for intracommunity VAT registration, known as intracommunity operator number or NIF-IVA.
Registering in the registry has great benefits for companies and freelancers. It would allow them to carry out transactions with customers and suppliers in other EU countries with a VAT exemption.
The theory: how to register with the ROI
In order to register in the register of intra-community operations (ROI) it is necessary to fill in the census form 036 at the Tax Agency (Agencia Tributaria). This procedure can be carried out both at the time of registration of the company and at a later date. Boxes 582 must be checked and box 584 must indicate the date on which the first intracommunity commercial operation is expected to be carried out. Once the Treasury accepts the request, the company or self-employed person receives the NIF-IVA.
The time of this procedure is less than 3 months since it is requested. If more than 3 months pass without a positive response from the ROI, it means that the application has been denied. The reason why the registration takes so long to be carried out is because the Treasury usually performs certain checks to avoid possible fraud. Some of these may involve a visit by a tax inspector to the company’s head office in the weeks following the application. On other occasions it may request documentation proving the existence of suppliers or clients who are going to carry out intra-community operations.
The practice: intracommunity VAT registration
If a company or self-employed person wishes to make an intracommunity delivery or export, he must check that the supplier with whom he will carry out the operation is registered in the register of intracommunity operations of his country. This is the only way to issue a VAT-free invoice. To do so, you have to look up the VAT number of the European customer on the Tax Authorities’ website. If the supplier is not registered, it is necessary to charge the VAT applicable in Spain.
If the case is the opposite and it is the self-employed or company that imports, they will have to provide their intra-community VAT number to the European supplier. This, in turn, will make the necessary checks in their country and will be able to issue an invoice without VAT.
It is very important, if goods and merchandise are exported, to keep the carrier’s documents proving that the merchandise has been sent to the destination country. This way, if there are any subsequent problems, you can prove that the operation has been carried out.
Intracommunity VAT return forms (303, 349)
Form 303 of the quarterly VAT return must include the information relating to these operations. The intra-Community VAT borne and the simultaneous output VAT to which the self-assessments of the intra-Community acquisitions give rise will be included in boxes 10, 11, 36, 37. The intra-Community investments will go in boxes 38 and 39 and the intra-Community deliveries of goods or services in box 59. In the form 390 of the annual VAT summary, these operations will also have to be reflected.
The form 349 or recapitulative declaration of intracommunity operations summarizes all the intracommunity movements carried out. It only needs to be filed once a year if the annual amounts are less than €35,000 in the case of supplies of goods or services. It also does not have to be filed if the amounts of supplies of goods to another member state are less than €15,000. If the amounts are greater than these amounts respectively, it will be necessary to present it every 1, 2 or 3 months.
The management of this type of international operations is complex, so we recommend that a tax advisor be consulted so that he/she can monitor the whole process and advise the client at all times.
As with any other management, the intra-community invoice is issued when a service has been performed or a good has been delivered. The difference lies in the fact that this type of invoice only concerns the intra-community area. The main characteristic is that it does not include VAT, as long as the necessary conditions are met for this to occur (both parties must be registered in the ROI).
These invoices must be accounted for in the same way as any other sales transaction. However, as these invoices may not add VAT, it is advisable to use accounts exclusively for these transactions.
We hope we have been able to convey the importance of carrying out the necessary steps when offering or demanding goods or services to other EU member countries. It is essential to be, either as a company or as a self-employed person, registered in the ROI so that the Tax Agency assigns to the company or individual a code for the registration of intra-community VAT: the NIF-VAT. With it, and checking that the company with which you are going to manage an exchange also has its respective code in your country, you will be able to issue an invoice without VAT. These invoices must be accounted for, both issued and received, and presented on form 349 for the purpose of reporting to the Tax Agency.
As we have commented in previous sections of this article, although the process of obtaining the NIF-VAT number is simple, all the steps that follow this step are complex. Moreover, they are related to international transactions, which is why it is highly advisable to rely on transparent and reliable tax advisors.
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