VAT on Intra-Community Deliveries and Distance Sales in Spain

Posted on Feb 4, 2025 in Law

Intra-Community Deliveries

Intra-Community deliveries refer to the supply of goods where the state of origin is Spain and the state of destination is another country within the European Union.

As a rule, Intra-Community supplies are exempt, requiring the concurrence of two circumstances:

  • The purchaser is a business person who is identified for VAT purposes.
  • In the destination state, a Community acquisition is subject to VAT.

The taxpayer is the party who delivers the goods, even if the delivery is made by a person who is not established on Spanish territory. In this case, the reverse charge mechanism does not apply.

Regarding deductions, all Intra-Community supplies are entitled to a deduction, both subject and not exempt, as well as taxable and exempt. The settlement period is monthly, and a refund is available if applicable at the end of the period.

Intra-Community transactions are still, in short, under an exemption scheme in the state of origin, subject to the state of destination. There is a correlation where the exemption is recognized in the Intra-Community transaction, and the subject is recognized in another country where the Community delivery is intended.

Distance Sales

There are two types of distance sales:

  • Sales-entry distance (Article 68.3)
  • Sales-out distance (Article 68.4)

Sales-Entry Distance

These are deliveries of goods conducted in Spanish territory where the issue begins in another member state of the European Union and ends in Spanish territory. Three conditions must be met:

  1. The seller issues or transports the goods.
  2. The recipient is a non-taxable person.
  3. The total amount of annual supplies-outlet exceeds a certain threshold.

The taxpayer is the business person, even if the seller is not established on Spanish territory. The reverse charge mechanism does not apply in this case.

Sales-Out Distance

Article 68.4 regulates sales-out distance. The operation is not subject to VAT as a sale because the transport begins in Spanish territory and ends in another state of the European Union, provided that three conditions are met:

  1. The seller arranges the transport.
  2. The recipient is a non-taxable person.
  3. The total amount of annualized sales exceeds a certain threshold.

In these cases, the VAT settlement period is monthly, and there is a right to a refund at the end of the period (Article 116 of the Act).

Deduction of Input Tax

For the entrepreneur, VAT is a mechanism of impact and deduction. Deduction is the process of recouping the taxes charged on purchases. The deduction is formalized in the periodic self-assessment. In some cases, the deduction may result in a refund for the employer. The rationale for this deduction is to seek competitive neutrality for the company in the market. The deduction applies to both purchases of goods and purchases of investment goods.

Requirements for Deduction

Subjective Factors

Only the employer who is a taxable person may deduct the tax. The end consumer has no right to deduct.

Objective Elements

There are three objective elements for deduction:

  1. The acquired asset is allocated to the business, as opposed to being intended for private use.
  2. The acquired property is used in taxable transactions, whether fully taxable or tax-exempt, conducted in Spanish territory.
  3. The property is not included in the list of goods excluded from deduction under Article 96, such as food, drinks, tobacco, jewelry, etc. However, companies engaged in these sectors can deduct them.

To deduct the tax, it is required to hold a complete invoice.