VAT Deferral Regime on imports. In which cases is it applied, what are the requirements and how is it requested?

what is the VAT deferral regime on importsThe VAT deferral scheme allows some companies and individuals to defer VAT payments on their imports until they present their monthly VAT return and thus set off any import VAT due on the VAT accrued. Read on to learn what requirements need to be met in order to adhere to this scheme.

The VAT deferral scheme falls under the Spanish VAT regulations that came into place in 2015. One major advantage of this scheme is that companies which carry out business in Spain can streamline expenses in relation to goods being imported.

When is VAT deferral on imports applied?

VAT deferral on imports applies in those cases where a company imports goods from non-EU countries. This action generates export duties from the country of origin and related taxes, plus VAT on imports upon arrival into Spain. Furthermore, those who import goods into Spain from non-EU countries must pay VAT on the imports immediately via a Single Administrative Document (SAD, or DUA in Spanish) which involves costs, as there is a time gap between processing the goods in Customs and presenting regular VAT returns.

In order to solve this problem, in 2015 the Spanish Tax Authorities opened up the opportunity for companies to defer import VAT payment.

Previously, import tax was collected as follows:

  • Any Spanish company or non-resident company with a Spanish VAT number bringing goods into Spain were liable to pay 21% VAT on its value.
  • Importation of the goods was only authorized upon payment of this VAT.
  • A rebate on this VAT paid could be requested via the company’s tax returns, thus causing a time lapse between when the payment was made and when the taxpayer received the rebate.

Since 2015, the VAT deferral scheme means:

  • Companies do not need to pay VAT as part of Customs duties
  • Certain Spanish tax authorities’ requirements must be met

What requirements must be met in order to adhere to the Spanish VAT deferral scheme?

In order to apply for the deferral of VAT on imports, the following set of requirements must be met:

  • The VAT declaration and settlement must be within the same calendar year
  • The importer (either companies or professionals) must be registered with the VAT Monthly Return Register (Registro de Devolución Mensual del IVA, REDEME). Companies or professionals carrying out transactions exceeding Euro 6,010,121.04 in aggregate are already obliged to register with this body; however, other companies nevertheless have the option to join.
  • Having requested VAT payment deferral in due time and manner.

How to apply for VAT payment deferral on imports

Should you wish to apply the VAT payment referral scheme to your company, you must file form 036 (Registration Declaration) with the Spanish Tax Agency. As a general rule, the period for submission of said form is between 1st and 30th of November of the year prior to implementation of the scheme.

Newly created companies may request to be included in the VAT payment deferral scheme at the time of setting up the company and joining the Companies Register for the first time.

The deferral scheme will continue annually on an automatic basis as long as no reasons for exclusion are provided or unless the company itself wishes to cease using it.

At the time in which Customs accept the SAD for processing, the relevant checks shall be made in order to ascertain whether the importer has requested application of the special VAT payment deferral scheme and if so, there will be no need for any further action. No VAT deposit shall be made with regards to the import through form 031 (the 031 form is used when a company has not requested application of the VAT payment deferral scheme).

The importing company must include the VAT amount borne on the import in its monthly VAT return (form 303). Refer to section ‘How to consult VAT importation with payment deferment’ on the Online Office of the Spanish Tax Agency to find out the VAT amounts corresponding to each period and related amount due.

As this article shows, managing this issue may be a somewhat complex task that requires advisory services provided by a team of professionals that have thorough knowledge of the Spanish tax regulations in order to avoid making mistakes and thus be perfectly compliant with the law. Therefore, we strongly recommend you consult company advisors in Spain to carry out all these procedures on your behalf and provide you with guidance on all tax and legal obligations that you must meet in order to operate in Spain.

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