If a business has paid VAT on commercial activities carried out in a EU country in which the business is not based, there is a possibility to obtain a refund of the tax from the country of origin (cross-border VAT recovery in Spain) if certain conditions are met.
Formal Requirements for Cross-border VAT Recovery in Spain
In order to qualify for a refund of the VAT incurred on invoices paid abroad, certain requirements must be fulfilled, namely:
- Having an invoice for all business-related expenses incurred issued to the business itself.
- Keeping copies of such invoices for the term required under each country’s laws.
- Submitting an application for VAT refund only with regard to deductible purchases pursuant to the Spanish laws. For example, accommodation expenses are refundable, but restaurant expenses are not.
- Having paid an amount higher than 50 euros – any amount below that threshold is not refundable.
Highlights of the Cross-border VAT Recovery in Spain:
- The deadline to submit an application is 30 September of the year following the invoice date.
- For amounts higher than 400 euros, refund may be requested on a quarterly basis; otherwise, only annual applications are allowed.
- A separate application must be submitted for each country in which the business has made purchases. This is because each State manages VAT independently, thus applications are handled separately by the tax authorities of each country.
- The decision usually takes about four months, although it may take up to eight if additional information is required.
There is a single procedure in place to recover the VAT incurred within the European Union. Beyond EU boundaries, VAT may be refunded only in countries having a reciprocal agreement with Spain. This is the case of Monaco, Switzerland, Canada or Japan, although restrictions are greater in the latter.
Many businesses have not applied for cross-border VAT recovery in Spain yet. Please contact our firm if you have any question or concern or if you need any help throughout the recovery procedure.
Bettina Náray
