International VAT Meeting 2011 Düsseldorf – April 5 th 2011 SPAIN

1. International VAT Meeting 2011 Düsseldorf – April 5th 2011 SPAIN

2. Agenda • Allocation of VAT-exemption for chain transactions / impact of incoterms • Definition of supply of goods with installation vs. supply of services • Simplification rules for consignment stocks or call-off stocks • Creation and archiving of e-invoices • Application by choice of the reverse charge-mechanism • Necessity and verifiability of VAT ID numbers

3. First supplier ES First customer DE Place of supply ES Allocation fo VAT-exemption for chain transactions / impact of incoterms Case E: Variation Moving supply moving supply First customer DE Last customer FR First supplier ES

4. Allocation of VAT-exemption for chain transactions / impact of incoterms • Case E variation - Answer • Triangular operation: • According to Spanish VAT Law the products must be send directly form Spain to the entrepreneur who will be the recipient of the subsequent delivery. • Customer is determined at the beginning of the transport, intention to bring the goods to the other EU member state, interruption of the transport is for logistical purposes (other solution if the products are send to a stock consignment in FR where the ownership is transferred). • Spanish rules do not establish the requirement that the transport is undertaken in total by only one entrepreneur. • No requirements regarding the transporting party are set forth. • → Exempt intracommunity delivery form ES to DE. DE undertakes an triangular operation.

5. First customer ES Last customer EU Place of disposal ES Allocation fo VAT-exemption for chain transactions / impact of incoterms Case F Chain transaction localsupply movingsupply First customer EU Last customer EU First supplier ES

6. Allocation of VAT-exemption for chain transactions / impact of incoterms • Case F – Answer • The first supplier performs a local supply in Spain, also ending in Spain (coherent with case B). • → The supply is taxable in Spain at 18% • The first customer performs a moving supply from Spain to Germany → Registration(coherent with case D) • → The delivery is exempt in Spain • Decisive for the allocation of the moving supply is according to the Spanish tax authorities‘ opinion who declares the intracommunity delivery and the intracommunity acquisition (resolutions dated 4.10.93 and 8.09.94).

7. 2. Definition of supply of goods with installation vs. Supply of services • Construction work (delivery or service) • The concept is not ruled neither in the VAT Law nor in commercial regulations. • According to Spanish civil law and doctrine the difference consists in that in the case of a construction work the constructor guarantees a certain result. Turn-key contract. • If a construction work or a simple service has been agreed upon must be determined according to the specific circumstances of the case (denomination of the agreement, transfer or ownership and risks, guarantees, training of employees in the use of the finished products). • Construction works qualify as a single transaction.

8. 2. Definition of supply of goods with installation vs. supply of services Supply of goods / service

9. supplier EU 2. Definition of supply of goods with installation vs. Supply of services Case G customer ES supplier EU dormantsupply supplyofgoodswithinstallation

10. 2. Definition of supply of goods with installation vs. supply of services • Case G - Answer • Spanish transposition of article 36 VAT-Directive (transported goods with installation) foresees two additional requirements: • - The assembly must imply the quiescence of the products and • The costs of the assembly must exceed 15% of the total price of the assembled products. • The transport of the raw material by the supplier form the other EU member state to Spain qualifies as non-taxable event (≠ registration) • The supplier performs a dormant supply in Spain • The reverse charge mechanism applies (≠ registration) • → The supply is taxable in Spain at 18%

11. supplier EU 2. Definition of supply of goods with installation vs. supply of services Case H customer ES supplier EU localsupply supplyofserviceswithinstallation Case H – Answer: Same treatment as in Germany

12. supply of goods with installation customer EU customer EU 2. Definition of supply of goods with installation vs. supply of services Case I customer EU processor ES movingsupply

13. 2. Definition of supply of goods with installation vs. supply of services • Case I - Answer • Object of the agreement is a movable good since after its assembly it is send to Spain. • Since the customer provides with relevant elements of the product the taxable event fulfilled is always a service. • → Case I does not exist according to Spanish rules.

14. supply of services with installation customer EU customer EU 2. Definition of supply of goods with installation vs. Supply of services Case J: Same treatment as accroding to German rules customer EU processor ES B2B service

15. supplier EU 3. Simplification rules for consignment stocks or call-off stocks Case K customer DE supplier EU Localsupplyofgoods warehouse

16. 3. Simplification rules for consignment stocks or call-off stocks • Case K - Answer • The supplier performs an fictitious intracommunity supply outside of Spain • → The supply is not taxable in Spain • The supplier performs fictitious intracommunity acquisition in Spain (registration) • → The acquisitions is exempt in Spain. However it must be declared in the EU sales and acquisition return. As the case may be also intrastat returns • The supplier performs a local supply in Spain • The reverse charge mechanism applies • → The delivery is taxable in Spain at 18%.

17. 3. Simplification rules for consigment stocks or call-off stocks • Case K – Variation • The supplier acquires or leases the warehouse • Answer • The supplier constitutes a PE for VAT purposes in Spain that must not necessary be also a PE for direct tax purposes. • The supplier performs a fictitious intracommunity delivery outside of Spain • → The supply is not taxable in Spain • The supplier performs a fictitious intracommunity acquisition in Spain (registration) • → The acquisition is taxable at 18% in Spain. EU sales and acquisition return and as the case may be intrastat returns. • The supplier performs a local delivery in Spain • The reverse charge mechanism does not apply (registration) • → The delivery is taxable in Spain at 18%

18. SupplieES E 3. Simplification rules for consignment stocks or call-off stocks Case L: Same treatmet as according to German rules customer EU supplier ES localsupplyofgoods warehouse

19. 4. Creation and archiving of e-invoices • Creation of e-invoices: • Basically same requirements as in Germany • Same transmission means. Additionally the tax authorities can authorise other means. • Spain: No transposition draft of 2010/45/EU yet. • General requirements of archiving • Same rules as in Germany with the following specialities. • - Archiving of incoming and outgoing invoices in the same way as they are received or send. • - For tax purposes 4 years in readable format. For mercantile purposes 6 years. • - Invoices in paper must be kept in Spain. E-invoices in Spain or abroad

20. 5. Application of the reverse charge mechanism Reverse charge mechanism: Article 84.One.2 span. VAT Law • Reverse Charge when place of supply is in ES and the supplier or service provider is not established in Spain. • Reverse Charge applies thas both in case of deliveries and services. • Exception: Reverse Charge is not applicable in case of services that do not fall under the general B2B rule (Article 44 VAT Directive) if both entrepreneurs are not established in Spain.

21. 5. Application of the reverse charge-mechanism Case M supplier EU customer ES localsupplyofgoods Local supply of goods from EU to ES → reverse-charge mechanism applies. Taxable in Spain at 18% Case N customer ES supplier EU localservice Repair services rendered by EU to ES in Spain → reverse-charge mechanism applies. Taxable in Spain at 18%

22. repair services in ES 5. Application of the reverse charge mechanism Case O customer FR supplier EU repairservices in ES • Repair services rendered by DE to FR in Spain → Reverse-charge mechanism applies. Not taxable in Spain. No registration neither of DE nor of FR

23. 5. Application of reverse charge-mechanism Case P customer FR supplier EU Services related to immovable property in ES Services related to immovable property in ES Services related to immovable property by DE to FR in Spain → Reverse-charge mechanism is not applicable. DE must get registerd in Spain and charge Spanish VAT at 18% to FR. FR can ask for the refund according to the special procedure foreseen for non-established entrepreneurs

24. 5. Application of the reverse charge-mechanism Case Q lessee ES Supplier EU service renting out an officebuilding Office building • The supplier renders a service in Spain • Due to the renting of the office building the supplier constitutes a PE for VAT purposes in ES which not necessarily constitutes also a PE for direct tax purposes. No personal means are necessary according to Spanish VAT Law in order to constitute a PE for VAT purposes. DE must get registered in Spain and charge Spanish VAT to ES at 18%.

25. 6. Necessity and varifiability of VAT ID numbers • VAT ID numbers • Conformity of the EU resident customer has to be checked before the first supply of goods and services: • https://aeat.es/viesdist.htmlor • http://ec.europa.eu/taxation_customs/vies/vieshome.do • Note: • Third country customers: It has to be possible to prove that the products left Spain with destination to the third country. Possible evidences e.g. customs documents, invoices copies, contracts, orderings, transport documents, any other evidence.

26. 6. Necessity and verifiability of VAT ID numbers

27. 6. Necessity and verifiability of VAT ID numbers