Surely on some occasion, either on a website or when making an invoice, you have seen the subject of intra-community VAT. But do you really know what it is?
This most unknown VAT can actually be something interesting if you are self-employed or a company and invoice countries in the European Union. But, how about we talk to you more about it? We go there with all the information you need.
What is intra-community VAT
To make it easy for you to understand, intra-community VAT is the one that is imposed when the purchase operations of goods or services are between a company that resides in a country of the European Union, and a different one, also in the EU.
I'll give you an example. Imagine that you are an editor. And at one point they ask you to work for a month for a website in France. Here we are talking about two different countries.
When making the invoice, instead of entering the normal VAT, the intra-community VAT is used since we are talking about an operation that exists between two different countries, both in the European Union.
As a general rule, Intra-community VAT is usually focused on import and export operations. But with the Internet and the possibility of working remotely from all parts of the world, this has become more open to other freelancers.
In conclusion, I could tell you that it is a special VAT taxation system. But there are some points to keep in mind. For example, when it comes to goods that are transported from Spain to another EU country, then that does not have VAT; Nor should it have it if they are services to other clients from EU countries.
But if they are acquisitions, that is, something you buy from other countries and they bring it to Spain, then you do have VAT.
Intra-community VAT regulations
If you are interested in knowing more about intra-community VAT, the first thing is to know what regulations govern it in Spain and in the European Union in general. So, these are:
- On the one hand, the Law 37/1992, of December 28, on Value Added Tax, better known as the VAT Law.
- On the other hand, Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. This comes from the European Union and is common to all countries.
How is the proccess
Imagine that you have a client who is from another country in the European Union. You are going to carry out an operation and you consider that it would fall under intra-community VAT. However, you have to check it.
As a freelancer, or as a company, You have the obligation to verify that your client is really in the Registry of Intra-Community Operations in their country. And only when you verify that it is actually there, will you be able to make an invoice that is exempt from VAT.
To do this, it is best to go to the Tax Agency's website and, with the client's VAT NIF, make sure that it is present in that registry.
What happens if it is not found? So, the invoice that you will have to send must necessarily include Spanish VAT, that is, 21%.
For your part, if the invoice has to be made to you, you have to give that person your intra-community NIF so that he can check if you are actually in the registry. If so, you will receive the invoice without VAT. Otherwise, you will pay VAT for that country.
How to request your intra-community NIF
To request the intra-community NIF, and to be able to operate with intra-community VAT, it is necessary that, first of all, you enter the Registry of Intra-community Operations, better known as ROI. To do this, you will have to request your registration, something that is done at the Treasury.
You will have to Submit form 036 where you must request registration by marking box 582. For your part, you must also indicate in 584 the approximate date of when the first intra-community operation will be carried out.
Now, if you are already registered as self-employed, then the ROI needs you to check box 130. Because in reality you are not registering, but you are going to make a small modification.
The Tax Agency takes about three months to accept or deny inclusion. And if after those three months you have not received a response, it is considered denied. In addition, you should know that many times, when you want to enter the ROI, you will have to endure several inspections to see if what you are doing is really something "legal" or if you are trying to cover up something.
If you are lucky enough to be accepted, They will automatically give you a VAT NIF, which will actually be a number with the acronym ES, for Spain, and your NIF.
I leave you two examples:
- The first, from a situation in which you have been accepted to be in the ROI. This way, if you buy something in other countries such as Germany, France, Italy... you can have the invoice arrive VAT-free, since you are within the Registry and have a different system.
- The second, if they have not accepted you to be in the ROI. Here you will have to bear the VAT of the other country when making a purchase, unless the company or client decides to assume it themselves and does not charge you for it, of course.
As for issuing invoices, since that actually depends on whether the other person is in the Registry or not, in reality it should not affect you and you will have to enter the VAT if it is not in the Registry. (and don't put it if it is). Although at this point I cannot give you 100% security and I recommend that you consult with a manager who will be able to give you the most appropriate answer.
The fact is that intra-community VAT may be fine when many operations are carried out between countries in the European Union. But if it is only one or two a year, it may not be worth facing inspections since the Treasury is more aware of you. What do you think of intra-community VAT?