Spanish VAT treatment of International Organisations
- Feb 1, 2013 | Richard Asquith
Under the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax establishes a VAT exemption to International Organizations. However, under Spanish VAT, there are some variances, reviewed below.
International Organisations VAT exempt
The article from the Council Directive that establishes this exemption is article 151. This article establishes the following:
1. Member States shall exempt the following transactions:
(a) the supply of goods or services under diplomatic and consular arrangements;
(b) the supply of goods or services to international bodies recognised as such by the public authorities of the host Member State, and to members of such bodies, within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements.
Spanish VAT exemption variance
However, Spanish legislation establishes on article 20. uno 12 of the VAT law 37/1992 that International Organizations will be exempt from VAT provided that the exemption has been recognized by the Spanish Tax Authorities.
Therefore, before the exemption is applied Spanish legislation establishes that the International Organization must provide a certificate from their home Tax Office stating that the exemption has been recognized.
Additionally, Spanish Legislation establishes throughout Royal Decree 3485/2000 that the certificate and recognition of the exemption must be granted before the operations take place.
Furthermore, the Spanish Authority also requires that the international body has to submit a specific form to the Spanish Tax Office requesting the exemption to apply to all operations in Spain. Once this has been done, you can state on the invoice that the operation is VAT exempt according to the Council Directive rule. The form to be submitted is form 363.
Nevertheless, in the event that the tax office does not respond positively to the request within 10 days after the request has been submitted, it is understood that the exemption would not apply and VAT must be charged to the operations performed with that international organization.
The above mentioned opinion is reinforced by the Spanish General Tax Directorate Ruling V2488-11 issued on October 18th 2011 that states that in order to the exemption to take place a certificate issued by the tax office prior to the operation that takes place has to be in place. If not, VAT has to be charged and the exemption will not apply.