Two destinations, two regimes
A sale to a business in another member state is an intra-EU supply: exempt here, with the tax accounted for by the buyer in their own country. A sale destined outside the Union is an export: also exempt, but for a different reason, with different proof and with one reporting consequence that is always forgotten. An intra-EU supply goes on Modelo 349, the recapitulative statement of intra-EU transactions; an export does not. The 349 covers intra-EU transactions, and putting a sale to Morocco or the United States in there creates a mismatch that sooner or later gets queried.
The two also appear in different boxes of Modelo 303, and that distinction is what later justifies why a company invoicing millions charges so little output VAT.
The export exemption is proved with the customs declaration
The exemption does not apply merely because the goods went away: it applies if you can establish that they left the customs territory of the Union. The document that establishes it is the export DUA, the Spanish single administrative document, together with its proof of exit, which is why the customs file of a ceramics company matters as much as its sales ledger.
And here is the point where we have seen most VAT reclaimed: who appears as the exporter. On sales agreed on terms under which the foreign customer collects the goods at the factory and arranges the transport, the DUA frequently ends up in a third party's name and the Spanish seller is left without proof of exit. The exemption is then disputed, and the amount at stake is the VAT on the entire transaction. It is resolved before the contract is signed, by agreeing who clears the goods and who hands over the proof, not afterwards.
The customs file is kept for the same four years as everything else, and it is kept whole: the declaration, the proof of exit, the transport document and the invoice that ties them together. An exemption evidenced by three of those four is an exemption evidenced by half.
Tiles are exported, but the clay bodies, the glazes and the machinery are very often imported. Import VAT is settled at customs or, if the deferral scheme is opted for and its conditions are met, included directly in the periodic return with no prior outlay. It is a cash-flow decision with effects for a whole year; it is studied with the company's own figures in front of us.
When input VAT does not come back on its own
A company that sells almost everything abroad charges little and bears a lot. The result is a credit balance which, under the ordinary regime, is carried forward and claimed as a refund in the last return of the year. For many exporters that means financing the tax authorities for eleven months.
There is a register that allows refunds to be claimed monthly, with the added obligations that come with it — among them filing the record books electronically — and its own registration calendar. It is not automatically better: it changes the rhythm of your cash flow and increases the monthly workload. It is one of those decisions taken with the cash-flow forecast in hand, and one that, taken lightly, complicates more than it solves. We cover it in invoicing abroad from Spain.
Who writes to us from Castelló
| Who | What has to be put in order |
|---|---|
| Manufacturer exporting outside the Union | Proof of exit, who appears as exporter and which box of the 303 applies |
| Distributor selling both inside the Union and to third countries | Keeping intra-EU supplies apart from exports so that the 349 does not mix them |
| Company importing glazes and machinery | Import VAT and whether the deferral scheme suits them |
| Self-employed sales agent in the sector | Intermediary services, where they are located and when they carry Spanish VAT |
| Technician posted abroad to install | Days outside Spain, tax residence and which part of their pay may be exempt |
Our way of working in Castelló de la Plana
Remotely, and starting at customs. We ask for a year's customs declarations, cross-check them against the invoices and against the 349, and that comparison almost always reveals what needs correcting. After that, the ordinary work: quarterly returns, annual summaries and the year end, with the figures explained before anything is filed.
We are lawyers, so we will also tell you the uncomfortable part: if an exemption is not properly evidenced, we are not going to wave it through because it has been applied for years. It is corrected, and corrected before an inspection does it, which is what article 27 of the Ley General Tributaria, the Spanish general tax act, and its four-year limitation period are there for.
A Castelló sales agent earning commission in three countries
The ceramics industry around Castelló lives on self-employed sales agents who sell on behalf of one or several manufacturers. Their invoice is not for tiles, it is for commission, and commission is an intermediation service whose place of supply depends on who pays it. Take an agent who in one year is paid by three principals:
| Who pays him | Commission | VAT | On the 349? | Withholding |
|---|---|---|---|---|
| Castelló manufacturer | 40,000 € | 21 %: 8,400 € | No | Yes, if his activity code is professional |
| Italian manufacturer | 15,000 € | No: the Italian manufacturer self-assesses it in Italy | Yes | No |
| United States glaze supplier | 5,000 € | No: service supplied outside Spain | No | No |
What matters is that it makes no difference where the tile the agent sold ends up: the Castelló manufacturer's commission carries Spanish VAT even if the order ends up in Casablanca, because the one receiving the intermediation service is the manufacturer and it is here. Conversely, the Italian commission carries no VAT even if the end customer is in Vila-real. Where each service is taxed is set out in where each service is taxed.
All of this holds for the agent who intermediates in someone else's name: the customer signs the order with the manufacturer and the agent only collects a percentage. Some agents buy the goods in their own name and resell them, even if they call it commission. In that case the law treats the agent as having received the goods and supplied them himself, so he is no longer providing an intermediation service: he is selling tiles, under the rules for supplies of goods, exports and the 349 for goods. And for income tax he stops being a professional and becomes a trader. The agency contract has to say which of the two is being done, and practice must match what it says.
The Castelló sales agent's calendar
| When | What he files |
|---|---|
| 1 to 20 April, July and October | 303 with the Spanish commission, and the Italian one in its own box; 349 with the Italian one; 130 unless at least 70 % of his income carries withholding |
| By 30 January | The same returns for the fourth quarter |
| January | 390, the annual VAT summary, and ask each Spanish principal for the withholding certificate |
| April to June | Income tax return with withholding and prepayments subtracted |
If you represent manufacturers abroad, the form is tell us who you invoice.
What almost nobody in Castelló asks until the manufacturer terminates: when an agency contract ends, the agent may be entitled to an indemnity for the customers he brought in. It is money that arrives in one go, sometimes the equivalent of a year's commission, and its tax treatment is not obvious. Whether it carries VAT is a disputed question, and for income tax there may be room to treat it as income generated over several years. It is examined with the contract and the termination agreement in front of us, before the invoice is issued, because the way it is documented weighs on the answer.