Foreign business selling to Spanish customers need a VAT number in Spain in two cases: if they store goods in Spain or if they are doing distance sales in excess of 35,000 Euro . In this article we focus on the storage of goods in Spain, for further sale.
The first thing to bear in mind is that the Tax Authorities consider that using a warehouse located in Spain, either as owner or a lessee, is a Permanent Establishment (“PE”) for VAT purposes. Therefore, a foreign entrepreneur operating a rented warehouse in Spain would be treated as established in Spain, with all the obligations involved (charge VAT, Vat number, quarterly tax returns and the like). For all purposes he would be treated as a domestic taxable person.
However, if a foreign business uses a fulfillment center, that is, a warehouse operated by a third-party, the warehouse would not be considered a PE of that company. This is because the seller would not own or rent a physical space within the Spanish territory. The entrepreneur would only be receiving a logistic service. Therefore, that company would not need a Spanish VAT number and would not be considered to be established in Spain for VAT purposes.
Read on to know more about the VAT implications of sellers using Amazon fulfillment centers
However, if the foreign business is going to buy and storage goods in Spain from European suppliers he would need to get a Spanish VAT number. Moreover, he would need to get access to the VIES registry of the European Union, because these transactions are intra-community acquisitions.
Note that any Spanish supplier delivering goods to the fulfillment center should charge Spanish VAT if the goods are not exported in a short period of time (one month). In this respect, the recovery of such Input VAT could only be accomplished following the procedure for non established entrepreneurs which is not very fast. H
It is noteworthy to remark that the PE for VAT purposes does not mean, in any way, that a company should be deemed to be operating in Spain through a PE for Corporation Tax. As stated in most Tax Treaties signed by Spain the use of facilities in Spain for the purpose of storage, display or delivery of goods or merchandise does not constitute a PE. Therefore, the profits of such foreign entrepreneurs could not be taxed in Spain. To avoid misunderstanding, it is important that the main activities are performed outside Spain. For example, the orders are received in the abroad, invoices are issued abroad and payments are handled there. The business cycle should be wholly performed abroad, except that the physical delivery is performed from the warehouse located in Spain.
To obtain a Spanish VAT number, when needed, a Certificate of Good Standing of the foreign entrepreneur is needed. This Certificate must be issued by the competent authority of the country of residence (Chamber of Commerce, Registry of Companies…). The purpose of the Certificate is to probe that the company has been incorporated and is existing under the laws of the relevant country. The Certificate must be translated into Spanish, legalized and sealed with the Hague Apostille.
The Spanish VAT number is no more than the Spanish Identification Number (“NIF”) preceded by an “ES” of ESPAÑA. Any foreign entrepreneur involved in cross border transactions would need a VAT number. However, if such entrepreneur only intervenes in domestic transactions, a NIF would be enough.
Finally, and as practical advice, any foreign entrepreneur doing business in Spain should consider opening a bank account for the purpose of paying taxes, because foreign bank accounts are not allowed, and appointing a fiscal representative to deal with the Tax Authorities. The fiscal representative need not be Spanish, but if he is foreign he should also get a NIF.