VAT examples between Spain and Germany

06.2014

Two decisions issued by the Spanish tax authorities (dated 15 February 2011 and 7 March 2011) are particularly noteworthy in the context of trade between Spain and Germany.

A German company purchases goods from a Spanish company, with the goods located in Spanish territory. After the purchase, the goods remain in Spain for some time before being resold. In the first sale, the German company receives an invoice from the Spanish supplier including Spanish VAT. The German buyer may use either its German or Spanish VAT identification number (NIF).

Subsequently, if the German company sells the goods to another Spanish company, it must issue the invoice under its Spanish VAT number but without charging VAT, as it is likely not established in Spain. The Spanish purchaser would then self-assess VAT under the reverse charge mechanism. Conversely, if the German company sells the goods to a non-Spanish entity and the goods remain in Spain, the seller should also issue the invoice under its Spanish VAT number without charging VAT.

In all these situations, the transactions are not intra-Community supplies, since there is no physical transport of the goods between Member States — they are purely domestic supplies within Spain. Therefore, the seller is not necessarily required to charge VAT.

++ Published at the tax newsletter of the German Chamber of Commerce in Spain related to VAT news ++