Reverse Charge in Spain

Spanish reverse charge for non-established companies

According to art 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses. Spain has introduced an extended version of this reverse charge. Where a non-established supplier sells goods to a taxable person, domestic reverse charge applies. It is not relevant if the supplier is registered or not. Regarding the customer, it is not relevant if it is established or VAT registered. Even when the customer is not VAT registered, reverse charge applies, hence requiring this customer to register and account for VAT. For services, however, domestic reverse charge would only apply where a) the supplier is not established, b) the service is located in Spain according to the exceptions to the B2B rule (e.g. admission to events, land related, etc.) and the c) the customer is established in Spain for VAT purposes.

When domestic reverse charge applies on sales of goods in Spain, the invoice should be issued under the supplier's Spanish VAT number to the customer's Spanish VAT number, show VAT at 0%, and include a reference to the domestic reverse charge.

If the supplier's warehouse or other presence in Spain creates a fixed establishment for VAT purposes, this treatment may not apply and the domestic sale should be reviewed separately.

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Spanish reverse charge on B2B Services

Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located. According to the general B2B rule, any business not established in Spain supplying services to a Spanish registered customer will not charge any VAT and the transaction will be reverse charged by the customer. There are however a number of exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in Spain:

• Services connected to immoveable property are located where the property is located.
• Passenger transport services will be located where the transport takes places (apportioned if necessary).
• Catering services are located where the catering takes place Short term leasing of means of transport are located where the vehicle put at the disposal of the customer.
• Access to conferences, fairs and exhibitions is located where the event takes place.

There are additional exceptions to the B2B rule such as certain intermediary services, freight services and others. Also, Member States can implement the Use and enjoyment rule also deviates the place of supply from the usual B2B rule.

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Reverse charge on specific goods in Spain

Domestic reverse charge may also apply on certain specific goods or services. This regime is often introduced on products that are more likely to be used for carousel fraud purposes. The customer and supplier conditions for this reverse charge to apply change depending on the goods traded. IT equipment: Reverse charge applies on mobile phones, video-consoles, laptops and tablets. For this RC to apply, there're two scenarios based on value and customer conditions:

• Where the customer is a "reseller", RC applies irrespective of the threshold.
• If customer is not a "reseller", RC applies on supplies above 10k €.

Resellers (companies buying and selling these goods as their usual business) need to apply for a certificate. They will provide this certificate to their supplier as a proof of the need to apply RC. Supplies of natural gas and electricity: Reverse charge always applies on supplies of natural gas and electricity provided the supplier is not established, and the customer is a taxable person. Other goods: Reverse charge applies to the following goods and services applies in any case.

• Emission rights and emission units
• Supplies of waste.
• Supply of certain gold products
• Raw or semi-manufactured silver, platinum and palladium.
• Supplies of gas and electricity, when the supplier is a non-established company, and the customer is a taxable person VAT registered in Spain.
• Construction services.
• Certain supplies of immovable property.

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