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How to get a VAT number in Spain

Getting a VAT number in Spain for non-EU business, specially for Chinese based companies can be a painful experience. Logic would suggest that the Spanish Tax Office should be happy to release VAT numbers, since VAT registration normally means that a foreign tax payer is going to submit tax returns in Spain. But as sometimes happen, the reality is far from the logic. The caution, if not reluctance, of the Spanish Tax Office to allow VAT registration derives from the cases of massive fraud which took place a few years ago. This fraud (called carrousel fraud) seems to be under control nowadays, but the inertia of deep scrutiny has remained since then.

Chinese companies selling online in Europe, whether as Amazon sellers or using any other platform, must register for VAT and submit the VAT returns. In the case of Amazon sellers, if the are storing goods in different fulfilment centers throughout Europe, they must be registered in all the countries where they store goods. Even if they are not storing goods in different countries, if their sales in a country different from their registration country exceed the threshold for distance sales, they must also register there.

Getting a VAT number in Spain requires making an application to the Tax Office. Said application must be accompanied by a set of documents in order to (i) probe the existence of the company (ii) grant a Power of Attorney (PoA) to a fiscal representative who must be resident in Spain (for non-EU business).

This PoA must be granted by the legal representative of the foreign business and must be a public Deed, that is, signed before a notary or a public officer. The Tax Office will check that the person granting the PoA is the legal representative of the company.

So far so good. The problem is that the Tax office will not accept a PoA granted abroad, even if the signatures have been formalized before a notary, unless the PoA is further legalized or authenticated. The authentication is not necessary when the PoA has been granted in a country which is part of the Hague Convention on the Apostille (1961). In these cases, the PoA must only be apostilled to be accepted in Spain.

And here comes the problem with Chinese companies and business willing to get a VAT number in Spain.

China is not part of the Hague Convention on the Apostille (1961), which abolishes the requirement of legalization of foreign public documents. Therefore, for a Chinese document to be valid in Spain, it must (i) be signed before a Chinese notary and (ii), subsequently, legalized by the Ministry of Foreign Affairs of the People’s Republic of China and (iii), finally by the corresponding Spanish consulate in China, in that order.

1. Signature before a notary

For the notarization of the document before a Chinese notary, the interested party (or an authorized person) must go to the notary office (in Chinese, 公证 处). The notary will prepare a notarial deed (in Chinese, 公 证书) from the document with a photocopy of it and incorporating a translation into Spanish (therefore, the subsequent translation of the documents is not necessary).

2. Legalization

For the process of legalization (in Chinese, 双 认证), the documents are presented and collected in anyone of these places:

1.      The agencies authorized in Beijing by the Legalization Department of the Ministry of Foreign Affairs of the PR China (listed here).

 

2.      The Office of Foreign Affairs of the People’s Government of the province issuing the document (in Chinese: 省级 人民政府 外事 办公室).

Consequently, both the delivery and the collection of the document, once legalized, takes place in the Chinese agency or Office of Foreign Affairs, so that the interested party does not need to go to go at any time to the Spanish Consulate General at any time.

3. Other ways to get the VAT number in Spain for Chinese business

There are other ways to get the PoA authenticated.

One easy solution is flying to Hong Kong. Hong Kong, although part of the People’s Republic of China, is an independent tax and legal jurisdiction. Hong Kong is member of the Hague Convention, so the PoA can be signed before a Hong Kong notary and then apostilled to be valid in Spain. Moreover, several Hong Kong notaries will handle the obtention of the apostille for PoA’s signed in mainland China and posted to their offices. From the Spanish standpoint this would be perfectly acceptable, as long as this procedure is valid according to the laws of Hong Kong.

The second course of action would be to grant be PoA directly before any Spanish Consul. Do not confuse this option with the legalization explained before. There, the PoA was signed before a Chinese notary and then legalized at the Spanish General Consulate. In this new alternative, the business can use a shortcut and grant a PoA directly before any Spanish Consul. The latter are deemed to be Spanish notaries, so the validity of a PoA granted before them is the same as if the client comes to Spain and signs the PoA before a notary. The only drawback of this alternative is that, currently, Spain only has three Consulates in China (Beijing, Shanghai and Guangdong).

At Tax Partners we provide a full range of VAT services for foreign business in Spain, including VAT filings for  Amazon sellers