VAT Exemptions: Exports, Imports, and International Services
VAT Exemptions for Exports
Why has Spain established this disclaimer of VAT? Goods exported from Spain are not subject to VAT. This allows Spanish businesses to compete effectively in international markets, as they are not disadvantaged by having to pay a tax that will be paid again when the goods reach their final destination.
With respect to the taxpayer in exports, there is no reverse charge, even if the exporter is a person not established. It’s the same solution (see the next section) given to exempt intra-Community supplies.
Exempt International Services
International Services A list of international services are exempt, as set out in Article 22 of the VAT Act. From that list, we can highlight the following, by reference to Article 1:
- Services relating to vessels engaged in international navigation (4).
- Services relating to aircraft in international navigation (8).
- Goods and services in the field of diplomatic relations (9).
- Goods and services related to international bodies (10 and 11).
- Goods and services related to the forces of the states that are part of NATO (12).
- Deliveries of gold at the Bank of Spain (13).
- Passenger transport by sea or by air whose origin or destination is outside of Spanish territory.
The result is the exemption of the service and the right to deduct input tax.
VAT on Imports
Imports are one of the three taxable transactions for VAT. Importation consists of goods entering the interior from a third country. The concept includes the output of goods from a free zone or abandonment of a customs procedure by a good that came into Spain from a third territory.
Taxpayer, Tax Base, and Accrual
The taxpayer (Article 86) is the one who made the import, which can be an entrepreneur but also can be an individual.
The tax base is the customs value plus customs duties, plus expenses.
For the accrual basis (Article 77), the same rules apply as for the accrual of customs duties on imports. That is, it serves the admission of the customs declaration of the goods (Art. 201 of the Community Customs Code).
Deduction and Settlement
With respect to deduction, if the importing party is a business, it has the right to deduct input tax. For end-users, there is no right of deduction. To deduct, one must be in possession of the document certifying the payment of import tax.
With respect to settlement, the customs administration clears the share of VAT, together with the duties, upon submission of the importer’s declaration.
Note the difference between the taxes charged on delivery/entry, where the employer must calculate the fee.
Free Zones and Warehouses
Free zones and warehouses refer to non-Community goods. These are places where it is considered as if the goods were not in the customs territory of the European Union.
This takes into account goods bound for an area or warehouse, and goods held in an area or warehouse that result in the delivery of goods. The consequences are twofold: First, the provision and even intra-Community acquisition is exempt by reason of their destination or location, and there is also the right to deduct input VAT. The second consequence is that the output of a zone or free warehouse is conceptualized as assimilated import (considered then that makes the taxable importation).