VAT on Imports and Exports: Key Points for Tax Advisers

VAT on import and export transactions: key points for tax advisers

Introduction

Value Added Tax (VAT) in international trade is one of the most complex and fundamental areas for tax advisers. Import and export transactions have their own tax implications and also affect the financial, logistics and documentary management of businesses operating internationally.

1. Applicable legal framework

• Law 37/1992 of 28 December on Value Added Tax and its implementing regulations.
• Regulation (EU) No 952/2013 establishing the Union Customs Code (UCC).
• Directive 2006/112/EC on the common system of value added tax.

2. VAT on imports: taxation, chargeability and deduction

2.1. Taxable person and taxable amount

An import is the entry of goods from a non-EU country.

The taxable person is the importer, who is usually also the customs declarant.

The taxable amount includes:

• The customs value (CIF value).
• Customs duties.
• Taxes charged at customs other than VAT.
• Incidental expenses up to the first destination in Spain (transport, insurance, etc.).

2.2. Chargeability and accounting for import VAT

Import VAT becomes chargeable when the goods are released for free circulation.

Since 2015, certain operators have been able to opt to defer import VAT (Article 167(2) of the VAT Act) and include it in their monthly VAT return (Form 303) instead of paying it at customs. This option is available to importers registered for monthly refunds under REDEME and to large companies.

2.3. Deducting VAT incurred on imports

Provided the goods are used for a taxable, non-exempt business activity, the VAT paid or deferred is deductible in the relevant tax period.

Careful accounting and documentary traceability is essential (customs declaration, commercial invoice, proof of payment, etc.).

3. Export of goods: exemption with the right to deduct

3.1. Requirements for the exemption (Article 21 of the VAT Act)

• The goods must be dispatched outside the territory of the European Union.
• There must be proof of exit (a duly validated customs export document).
• The seller must have a direct connection with the transaction.

3.2. Nature of the exemption: full exemption

• The exemption allows deduction of VAT incurred on purchases linked to the export (input VAT).
• It does not affect VAT refunds for exporters using the equivalence surcharge scheme or for exempt operators.

3.3. Indirect exports and chain transactions

• Pay particular attention to the involvement of logistics operators, freight forwarders and commission agents.
• Analyse which party carries out the dispatch and retains control over the transport.

4. Intra-Community versus extra-Community trade: a comparison

• Intra-Community acquisitions are not subject to VAT at the border, but the purchaser must self-account for VAT (Article 84(1)(2) of the VAT Act).
• The intra-Community operator must be registered in the Register of Intra-Community Operators (ROI) and state the supplier’s and customer’s VAT identification numbers.
• Exports outside the EU may be exempt under Article 21 of the VAT Act, but they require more extensive documentary evidence.

5. Recent developments and case law

• The e-commerce VAT package (July 2021) affects imports of low-value consignments and the Import One Stop Shop (IOSS) platform.
• The One Stop Shop (OSS/IOSS) system simplifies distance sales.
• Recent case law from the Court of Justice of the European Union and the Spanish Supreme Court should be analysed carefully on a case-by-case basis. Specific references are not included here without prior documentary verification.

6. Good practices for tax advisers

• Review customs declarations and import/export invoices in detail.
• Maintain rigorous records, including invoices, transport documents, contracts and customs declarations.
• Check that zero-rating or exemption is correctly applied and consistently recorded in the accounts.
• Assess whether deferring import VAT is appropriate.
• Keep up to date using official sources: the Tax Agency, the Official State Gazette (BOE) and the Official Journal of the European Union (OJ EU).

Conclusion

Correctly applying VAT to international transactions requires deep, up-to-date technical knowledge. Tax advisers play a key role in preventing risks and optimising businesses’ cash flow. Proper tax planning and efficient document management make it possible to use the benefits of the rules in force, avoid liabilities and ensure taxpayers have legal certainty in transactions with non-EU countries.