Information on VAT on goods imported into Spain
May 26, 2023
As an international company with employees in Spain, you may encounter financial burdens about VAT Reporting for Goods Imported into Spain.
In this article, we will discuss the VAT reporting system in Spain and how you can alleviate the financial burden of importing goods.
When importing goods into Spain from non-EU countries, VAT is imposed upon import, in addition to import duties.
If the importer is a taxable person and intends to use these goods for business or professional purposes, they can deduct the paid VAT by submitting the appropriate VAT return on a monthly or quarterly basis.
However, this deduction entails a financial cost for importers during the time between customs clearance and VAT return submission.
If there is insufficient output VAT, the receivable VAT must be carried forward to future periods, further delaying the recovery of VAT paid on imports.
To alleviate this financial burden, import companies can choose to include the VAT paid on imports in their VAT returns without having to pay the tax upfront at the Customs office during goods clearance.
The deferred payment system allows the Customs Office to assess the VAT due on import, but payment will be required later when the transaction is included in the monthly or quarterly VAT return.
If the importer has a full right to input VAT deduction, imports won’t result in any actual payment since VAT payable and receivable offset each other, similar to the settlement of intra-community acquisitions.
While the deferred payment system can help bypass the current time gap between payment and deduction or refund of such VAT, there is a cost in terms of a considerable administrative workload required by the new system.
Importers who choose this scheme must file monthly VAT returns and submit their issued and received invoices to the Tax Office within four days of receipt or issuance.
This creates a significant administrative workload for small and medium-sized businesses, making the choice for the new VAT import system a real challenge.
Employing In Spain is aware of the financial burden of importing goods from non-EU countries, which is why we offer VAT services to assist businesses with their VAT reporting needs.
As an international company with employees in Spain, it is crucial to understand the VAT reporting system for imported goods and consider the new VAT import system.
Contact us today to schedule your appointment with our professionals, who can help you meet your employment goals and objectives.
