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Taxation of commission agents

VAT
Consultation: 

Hello,

I am considering registering as self-employed and offering intermediary services in return for a commission, in the typical role of a commission agent.

I would connect suppliers of agricultural raw materials with buyers, and the suppliers would pay me a commission. Most suppliers and customers would be outside the European Union and Spain.

To carry out this activity, do I need a special “licence” or must I register in any particular “register”? Also, to substantiate my income, is a commission agreement signed by the supplier enough, or should I also have a copy of the proof that the raw materials bought by the buyer were shipped or received?

Thank you very much in advance.

Short response: 

You do not need a specific licence because you are not exporting directly and are simply an agent bringing the parties together. However, you must issue the relevant invoice to substantiate your income.

Long response: 

You do not need a specific licence, as you are not carrying out the export yourself and are simply an agent bringing the parties together.

However, we strongly recommend registering with the relevant Association of Commercial Agents. This offers tax advantages exclusive to commercial agents (for example, the deductibility of a vehicle). You are considered a professional; for tax purposes, the question is which heading should be used to classify a commercial agent, whether an individual, legal entity or entity under Article 35.4 of the General Tax Law. The classification is under Group 631, Section 1 (trade intermediaries).

The following should be taken into account. For VAT purposes, transactions are subject to Spanish VAT only if the recipient company is a business or professional established in Spain and the services are for its registered office or permanent establishment in Spain. Also, if an agent established in Spain provides services to a company established in the EU but with no establishment in the territory where Spanish VAT applies, promoting the sale of goods in countries outside the EU.

Mediation is deemed to take place in the territory where Spanish VAT applies when the recipient is a business or professional and the services are for its registered office or domicile in Spain.

If the mediation is not deemed to take place in the territory where Spanish VAT applies, Spanish VAT should not be charged.

If the mediation is deemed to take place there, it is exempt as a service supplied by an intermediary acting in the name and on behalf of third parties in an export transaction.

To substantiate your income, you must issue an invoice. Otherwise, many customers of commercial agents issue the corresponding invoice themselves. It is important to have one. Your income will also be known to the tax authorities simply because it reaches your bank account, so you should be able to substantiate it.

In your case, we recommend:

1. Issue an invoice, or have the end customer issue it (a fairly common practice).

2. Keep the signed contract.

3. Keep proof that the raw materials were dispatched and received.

4. Keep proof of payment.