Reverse Charge & “Call Off Stock” in Spain
In Spain, service providers are generally obligated to declare and remit VAT for the services they provide to the State Tax Agency. However, for certain types of service transactions, this responsibility is transferred to the service recipient, provided they are registered taxpayers. This transfer of VAT reporting and payment obligation is known as the “reverse charge” mechanism.
Learn all about reverse charge and “call off stock” in Spain in our complete guide below.
VAT Reverse Charge in Spain
The reverse charge mechanism is designed to both prevent fraudulent activities and streamline the VAT process. Under this system, the recipients of services must account for the applicable VAT using the reverse charge method. This results in both an output tax liability and a corresponding input tax credit on their VAT returns. In instances where the recipient is involved in making taxable supplies, this mechanism does not entail any actual cost, including no impact on cash flow. Conversely, for recipients who also supply exempt services, the amount of input tax credit they can reclaim is restricted to a certain proportion, reflecting the partial recovery of VAT paid.
Domestic Reverse Charge
Article 84 of the VAT Act specifies that the reverse charge mechanism, primarily an anti-fraud measure known as the “domestic reverse charge,” applies to the following types of supplies, whether conducted domestically or across borders:
- Gold in its unrefined state or in partially refined forms, as long as the gold has a fineness of 325 parts per thousand or higher.
- Supplies of gas and electricity.
- Supplies involving:
- Newly generated waste materials from industrial processes.
- Residues from melting processes and other recyclable materials consisting of ferrous and non-ferrous metals and their alloys, slag, ash, and scale.
- Industrial residues containing metals or their alloys.
- Semi-finished products like ingots, blocks, plates, bars, grain, shot, and wire rod made from non-ferrous metals (excluding nickel), derived from these residues and materials.
- The trading of rights related to greenhouse gas emissions, including certified emission certificates and emission reduction units.
- Provision of real estate in situations of bankruptcy and related procedures.
- Certain services related to the construction, repair, and maintenance of immovable property.
- Supplies of silver, palladium, and platinum, except for transactions under the special scheme for second-hand goods, works of art, collectors’ items, and antiques.
- Supplies of IT devices such as cell phones, video game consoles, laptops, and digital tablets under specific conditions. The recipient must either be:
- A habitual reseller of goods, regardless of the supply amount, or
- A non-reseller, provided the total number of items supplied on a single invoice exceeds EUR 10,000, excluding VAT.
Recipients of reverse-charged supplies are required to meet certain obligations. One key obligation is to inform their suppliers, either before or at the time of the transaction, that they are registered taxpayers. This ensures proper compliance with VAT regulations under the reverse charge mechanism.
Selling in Spain?
Spain – “Call off stock”
When non-resident suppliers are involved in the international distribution of goods to Spain using consignment stock or call-off stock arrangements, they may be required to register for Spanish VAT.
In a consignment stock arrangement, the transferor sends goods to a warehouse, where they are held until sold to a final customer by a consignee. During this time, the stock remains under the control of the transferor. In contrast, call-off stock involves a supplier transferring goods to a warehouse, where a pre-identified customer can access and take the goods as needed. Typically, this warehouse is owned or controlled by the customer.
According to Article 16 of the Spanish VAT Act, a foreign consignor transferring consignment or call-off stock from outside of Spain to a Spanish warehouse generally needs to register for Spanish VAT. If the stock is moved from another EU Member State, the transaction is often considered an intra-Community acquisition by the consignor of their own goods. The subsequent withdrawal of the goods from the warehouse by the consignee is treated as a domestic supply within Spain.
However, if certain criteria are met, such as the consignee or client being registered for Spanish VAT, and the consignor not being established in Spain but registered for VAT in another EU Member State, the supply by the foreign consignor may be exempt from Spanish VAT.
In situations where the foreign consignor’s supply of consignment stock is exempt from VAT, the eventual client becomes responsible for the VAT payment. This is done through the reverse charge mechanism at the time the goods are withdrawn from the warehouse.
Last Updated: 13/12/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
