Buying within the EU, self-assessing and invoicing: acquisitions, reverse charge and invoice wording

Diego runs a limited company that sells climbing gear through an online shop based in Valladolid. He orders 6,000 € worth of ropes from a German manufacturer, and the invoice arrives without VAT, with a line in German he does not understand. Pleased, he books the purchase as if the tax did not exist. Months later, his accountant explains that he should have declared 1,260 € of VAT on that purchase, and that he could have deducted it in the same self-assessment return. Getting it right would not have cost Diego a single euro; getting it wrong forces him to correct returns already filed.

Buying goods from another Member State

Article 15 defines an intra-EU acquisition of goods as obtaining the power to dispose of tangible movable goods dispatched or transported to Spain, to the buyer, from another Member State. It does not matter who arranges the transport: the seller, the buyer, or a third party acting for either of them.

Article 13 makes these acquisitions taxable when they are made for consideration by a business, a professional or a legal person, and the seller is a business or professional. Article 71 locates them in Spain when the dispatch or transport arrives here. It is the exact mirror of the exempt supply in the previous module.

Not every purchase from another Member State qualifies. Article 13 excludes, among others, purchases from a business under a small-business exemption scheme in the Member State of origin. The Agencia Tributaria explains it this way: such a supplier has no intra-EU VAT number and charges no VAT, and the Spanish buyer does not account for an intra-EU acquisition.

Article 14 opens another exit, designed for those who cannot deduct. Acquisitions are not taxable when made by persons carrying out only transactions without a right to deduct, by those under the special scheme for agriculture, livestock and fisheries, and by legal persons not acting as businesses, as long as they stay below a threshold.

That threshold is 10,000 euros of purchases from other Member States in the previous calendar year, excluding the VAT paid there; non-taxation lasts in the current year until that figure is reached. They may opt to be taxed for at least two years. New means of transport and goods subject to excise duties fall outside.

Who declares and when: the buyer

For an intra-EU acquisition, article 85 makes the person who makes it liable for the tax. The German supplier does not charge Spanish VAT; Diego calculates it and declares it. The taxable amount follows the general rules, by reference from article 82: the total consideration for the transaction.

The chargeable event follows that of similar supplies of goods, through the reference in article 76 to article 75. The Agencia Tributaria's practical VAT manual spells it out: the 15th of the month after the transport begins, or the invoice date if the invoice is issued earlier.

Advance payments to the supplier bring nothing forward. Article 76 expressly rules out, for these acquisitions, the advance-payment rule of article 75. Diego can pay part of the order in advance without that payment having any effect on his self-assessment return.

Deducting what you have self-assessed

Article 92 lists VAT on intra-EU acquisitions of goods among the deductible amounts. Deduction remains subject to the general rule: it is allowed only to the extent the goods are used in transactions that give a right to deduct. For a business that deducts everything, the end result is neutral.

The document supporting the deduction is not an invoice with Spanish VAT, because none exists. Article 97 accepts the original invoice from the supplier making the supply, provided the acquisition is properly entered in the VAT return. Without that entry in the self-assessment, the invoice alone supports nothing.

The right to deduct arises when the tax becomes chargeable, according to article 98, and article 99 allows input VAT for each period to be deducted globally from the VAT due, including VAT on intra-EU acquisitions. That is why the VAT due and the VAT deducted can appear in the same return.

Neutral does not mean optional. A business that can deduct only part of the tax, or that uses the purchase for transactions without a right to deduct, really bears what it cannot deduct. And whoever leaves out the VAT due loses the support for the deduction, because article 97 requires the acquisition to appear in the return.

Services received: the reverse charge

Something similar happens with services. Article 84.Uno.2.º makes the business or professional receiving the supply liable for the tax when the provider is not established in Spain. This is the reverse charge (inversión del sujeto pasivo): the customer declares the VAT instead of the provider.

The rule has exceptions in the same paragraph. It does not apply, among other cases, to exempt supplies under article 25, to lettings of immovable property that are taxable and not exempt, or to services whose recipient is not established in Spain either, except business services under article 69.Uno.1.º.

The Reglamento del IVA calls an intra-EU acquisition of services a supply taxable and not exempt in Spain, made by a provider established in another Member State, where the recipient is the person liable. An Irish agency running Diego's advertising invoices him without VAT, and Diego declares the 21 %.

For these services the general chargeable event applies: when they are performed. Article 75 provides for one special case. If the recipient is the person liable, the service is supplied continuously for more than one year and there are no advance payments, the tax becomes chargeable every 31 December for the elapsed portion.

Deduction works as it does for goods. Article 92 accepts VAT on transactions under article 84.Uno.2.º, and article 97 requires the original invoice or the accounting voucher for the transaction, entered in the VAT return. If the provider is established in the Community, its invoice must meet article 226 of the VAT Directive.

The invoice for an intra-EU transaction

The invoicing regulation, approved by Real Decreto 1619/2012, requires an invoice in every case for supplies of goods sent to another Member State under article 25. Its article 4 rules out a simplified invoice for them, however small the amount: a full invoice is mandatory.

Spanish invoicing rules also apply to services that a business established in Spain supplies in another Member State when the customer is the person liable, unless the customer issues the invoice in the provider's name and on its behalf. The designer in Valencia invoices Munich under Spanish rules.

Article 6 lists the content of every invoice. On top of the usual details, it requires the customer's tax number for an exempt supply under article 25 or for a transaction in which the customer is the person liable. For the issuer, the Spanish number or that of another Member State used for the transaction is valid.

• The customer's VAT number assigned by another Member State, for exempt supplies and reverse-charge transactions
• For an exempt supply, a reference to Directive 2006/112/EC or to the provision of the law that exempts it, or a statement that the transaction is exempt
• When the customer is the person liable, the wording «inversión del sujeto pasivo»
• If the invoice mixes exempt and non-exempt transactions, or reverse-charged and ordinary ones, the taxable amount of each shown separately

The exemption wording can take three forms, under letter j of article 6: a reference to the provision of the Directive, a reference to the provision of the law, or a plain statement that the transaction is exempt. For a supply to Lyon, «operación exenta, artículo 25 de la Ley 37/1992» meets the requirement.

The wording «inversión del sujeto pasivo» is required, under letter m, when the buyer or recipient is the person liable. It is the one on the designer's invoice to the German customer. Since no Spanish VAT is charged, the invoice shows no tax amount: the person receiving the service calculates and declares the tax.

The deadline for issuing the invoice also changes. With a business customer, the invoice must be issued before the 16th of the month following the month in which the tax becomes chargeable. For exempt intra-EU supplies, article 11 counts from the start of the dispatch or transport: before the 16th of the following month.

Where they are declared: modelo 303 and modelo 349

All these transactions go through two returns. The periodic self-assessment under article 164, which for a small business is modelo 303, records the VAT due on intra-EU acquisitions and reverse-charge transactions, a condition article 97 attaches to their deduction.

Article 79 of the Reglamento del IVA requires the recapitulative statement from anyone making exempt supplies under article 25, taxable intra-EU acquisitions, intra-EU supplies of services and intra-EU acquisitions of services, among others. Article 80 requires each supplier and buyer to be identified with the total taxable amount of the transactions with them.

The general rule is monthly: for each calendar month, within the first twenty days of the following month; July may be filed up to 20 September. It becomes quarterly when, neither in the quarter nor in any of the four previous ones, intra-EU supplies of goods and services exceed 50,000 euros, excluding VAT.

If the threshold is crossed mid-quarter, the months elapsed are filed within the following twenty days. The return for the last period of the year is due within the first thirty days of January. The modelo 349 guide covers codes and boxes; here, remember that each transaction goes into the period in which it becomes chargeable.

What Diego should have done

Go back to the German ropes. Diego bought goods that reached Valladolid from another Member State, from a business that invoiced him without VAT: an intra-EU acquisition taxable in Spain, for which he is liable. He had to account for 21 % on 6,000 €, deduct it in the same return and report it on modelo 349.

His mistake did not make him pay more tax, but it left a deduction he was entitled to without support and forces him to correct returns already filed. Checking the supplier's VAT number in VIES and opening an account in the books for self-assessed VAT prevents nearly all of these surprises.