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Spain introduces import VAT deferral

  • Nov 3, 2014 | Richard Asquith

Spain introduces import VAT deferral

Spain is set to launch an important import VAT postponement regime which will offer importers major cash-flow incentives. It will join similar schemes in the UK and other EU member states.  However, the Dutch and Belgian Dutch deferment schemes remain the most attractive given their potential to avoid cash payments altogether.

The new scheme should come into force from 2015.

VAT on EU imports

Any company bringing goods into the European Union for the first time, an ‘import’, will have to pay import VAT to the tax authorities of the country of entry before the goods could enter into ‘free circulation’ in the EU Single Market. In Spain, this would mean an importer paying 21% Spanish VAT.

Spanish VAT scheme

The new Spanish scheme will instead allow an importer to delay the payment of Spanish VAT until the time of the next VAT return. Initially, it will only be available to ‘large’ tax payers on monthly returns. To qualify for this category, annual sales must be above €6 million or have already opted for the monthly refund regime.

Since Spanish VAT returns are monthly for these large payers, and not due till the 20th of the month following the return end, this means a potential delay in any import cash payment until up to 50 days after the goods enter Spain.  The reality is therefore that this scheme will not be practical for non-resident foreign companies.

If the goods are sold in Spain, then there is a corresponding output VAT charge to the importer’s customer, which can be offset against the import VAT in the next return. This would mean the importer would never actually have to pay the import VAT in cash.

If the imported goods are sold in another EU country, an ‘intra-community supply’, then there will be zero VAT on the sale. This would leave the importer with having to pay the import VAT at the time of the next Spanish VAT return. If there were no further sales within Spain with Spanish output VAT, then the importer would have to make a VAT credit claim through its VAT return to recover the original import VAT. This may take some months and providing documentary proof to the Spanish tax authorities who will launch an investigation.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.