The Spanish VAT Number Registration
Usually, when it comes to residents and non-residents from a country, there are different requirements to perform transactions and businesses that are needed, in order to avoid frauds and for many other reasons that are related with trade and general agreements between countries, especially in Europe and the European Union.
A clear example of a documentation of this type is the Spanish VAT Number Registration, as one paper we will be discussing in terms of concept and function, how to obtain it in Spain, the main difference by comparing the NIF and the VAT and other related information that might be considered relevant at some point before, while and after obtaining the document that is particularly important to businessmen and entrepreneurs.
Table of Contents
What is the VAT Number?
In details, the Valued Added Tax or VAT is an identification number every person or company that performs economic activity involving exportation of goods from Spain to other countries in Europe and the world must have.
In fact, there are specifically two cases in which the VAT number is required as mandatory documentation to have; when individuals that carry out businesses from Spain to other countries without having physical companies or offices, also known as non-resident companies, and; for those enterprises that are physically present in the country and among their businesses they export products to other countries in the EU, these are also known as resident companies.
Without the VAT, companies would not be able to submit invoices and carry out other important legal and accountable procedures to export products and services to Europe from Spain. In other words, it would be illegal to perform such economical activities without the VAT number Spain and involves severe penalties.
Where to Register Your VAT Number
In Spain, particularly for non-residents or foreigners that live in the country and want to make businesses internationally by exporting goods, it might confusing to differentiate the VAT identification from the NIF, being two completely distinctive sort of documents, with specific purposes.
In details, the NIF or “Número de Identificación Fiscal” is the one-of-a-kind number or identification that companies and self-employed individuals must have, in order to make business and carry out economical activities within Spain, being the base of the invoice submitting of such enterprises and entrepreneurs to calculate tax and other duties.
On the other hand, the VAT identification is the requirement that allow companies to make businesses outside the country, with this Spanish VAT number acting as legal flag and permission to export products and services out of Spain.
Therefore, the NFI has a more national approach to cover the Spanish territory, whereas the VAT has an international scope of being used to trade and export goods out of Spain, although the general confusion between the two documents remain.
How to get the Spanish VAT Number
For those interested on getting the VAT number and start making business internationally by exporting goods out of Spain to other nations in Europe, the first step going to a physical office in the country that corresponds to the Spanish Tax Agency or “Agencia Española Tributaria” as the specific national department that address this and other matters.
To begin with, before getting started with gathering different requirements and papers to apply for the VAT number in Spain, there is something to be absolutely clear about; it will not be given unless it is categorically needed by the applier in question, proving that actually they are having business and trading with companies located in other European Countries.
In order to prove that this is in fact true, the Spanish Tax Agency will demand different documentation, such as invoices, budgets, emails, transactions and accountable books belonging to the company that can show in a more clear way its financial status in general, and like this they can decide if the applier is a suitable candidate to have the VAT identification number. After 15 days, the Spanish Tax Agency will be able to give a verdict on giving the VAT or not.
In some regions, inspectors are sent to study the current status of the enterprise, when it is a resident company in Spain, so they have the responsibility to check physical conditions, legal requirements, taxes, invoices and accountability. If the office and inspector in general consider the VAT is not needed, unfortunately it will not be approved.
Where to Register Your VAT Number
Depending in the nature of the enterprise or company involved, there might be possibility that it needs a VAT number to make business in Spain, even when such enterprise or self-employed does not have any direct Spanish client, but are resident companies of the nation.
For instance, logistic centers and subsidiaries or branches in Spain must register a VAT number in Spain, even when those work as departments to bring products and services to other European countries.
Now, a VAT number must also be requested by companies known as non-resident enterprises that while work in Spanish soil, they directly do not have physical offices in the country. This is the particular case for telecommunication businesses, technical equipment installation and foreign trading operations.
Lastly, self-employed people who would work in Spain for a short or limited period of time would have the responsibility of applying for a VAT number, especially when such activities to carry out during that time would generate income when exporting products, services and even knowledge.
About the VAT Tax in Spain
The VAT number is actually considered an indirect tax for exporters of raw material, different products and services from Spain to other European countries, which is paid by buyers of the different articles. Of course, such tax payment depends on different matters and particularly the product and industry involved.
VAT Number and Invoices
There are actually three types of VAT taxes that are paid by buyers and expressed on invoices in a clear way. First, there is the super-reduced VAT that charges customers with only 4 percent of the total value of the product, when they are considered of first necessity, such as milk, rice, bread and others
The second is the reduced VAT, charging 10 percent on invoices and involving food products that are not considered of first hand. Lastly, the general VAT tax is the one included on leisure products that can be included from care products to plastic, reaching from 8 to 21 percent.
How to do VAT Returns
Those businesses and companies that have a VAT number and are running economical activities in Spain must carry out the VAT returns. In details, this VAT returns is the actual declaration and accounting record of the different incomes where VAT is discounted, which must be separated from the regular invoices and delivered every month and being the most common format in the EU.
The VAT number is an important requirement for international businesses and companies in general that perform economical activities in Spain, specifically those that export products to other nations in the European Union, so it is important to know how to get it.
Now, it is recommendable to have an accountant that is capable of managing the whole VAT aspect, among invoices and VAT returns so owners and focus on making the businesses as profitable as possible.