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Can I deduct VAT when shopping?

The VAT means “Value added tax”, a consumption tax that is applied to the supply of goods and services rendered, carried out within the territory of the State, by economic operators in the exercise of a business, art, or profession.

This tax always rests on the final consumer, even if it is paid to the State by the entrepreneur, craftsman or professionals who provide the service or transfers the goods. An operation is relevant for the purposes of VAT (and therefore must be documented by an invoice, a receipt, or a fiscal receipt), when the following three conditions are fulfilled:

  • Objective: the operations must concern the sale of goods or services;
  • Subjective: the operations must be carried out by companies, artists, or professionals in the exercise of their activity;
  • Territorial: operations must be carried out in the territory of the Republic.

The passive subjects, with special exceptions, must certify the operations carried out if they fall within the scope of application of the VAT through the invoice.

The invoice

The invoice is the fundamental document for the certification of commercial operations. It generally must be issued by the person who performs the sale of the goods or the provision of services. Its purpose is to identify the subjects among whom the commercial transaction took place and the object of the operation carried out.

The invoice is issued by companies and professionals and must contain a series of indications, without which the document cannot be considered valid for value added tax purposes.

The document must contain the following indications:

  • Issuing date and the progressive number that uniquely identifies it;
  • Company, name, or name and surname, residence of the seller or lender and assignee or buyer, of the tax representative and location of the permanent establishment for non-residents;
  • VAT number of the seller or lender and VAT number of the transfere or buyer or, in the case of a taxable person established in another Member State of the European Union, VAT identification number assigned by the Member State of the establishment;
  • Nature, quality, and quantity of the goods and services involved in the transaction and fees and other data necessary for determining the tax base, including those relating to assets sold as a discount, premium or rebate;
  • Fees related to other goods sold as a discount, premium or rebate and rate, amount of tax and taxable amount, rounded to the specified amount;
  • Date of first registration or registration in public registers and number of kilometers traveled, of the hours sailed or of the hours flown, if it is an intra-community transfer of new means of transport.

In most cases, the invoice must be issued within 24 hours of the same day on which the transaction is carried out (so-called immediate invoice).

Obtain an EU VAT number

The regulations are different from country to country. Most companies will not have an EU VAT number. Companies (even outside the EU) can request an EU VAT number at any time. Companies within the EU that meet a minimum income threshold are required to apply for an EU VAT number.

Note that many European countries can issue national (non-EU) tax numbers or other tax identification numbers. Those that are not EU VAT numbers, cannot be used to reduce the amount of VAT payable.

Visitors from outside the EU, have the right to obtain a refund of the VAT paid on the goods they have acquired during their stay in the European Union

Being able to deduct VAT from purchases you make abroad would be an important saving for any tourist. Can anyone apply? In which countries? What steps must be followed?

The first point that must be made clear, is that residents of the European Union who visit EU countries can not benefit from it. VAT free purchase is only possible for residents of non-EU countries. Residents of EU countries must always pay VAT. On purchases in other member countries. Example- Spaniards who do not reside in Spain or the European Union and go to a third country, as well as residents in the Canary Islands, Ceuta, and Melilla, have the right to VAT refund on purchases made in the rest of the national territory.

So, who has the right to deduct VAT when they visit our country? Visitors from outside the EU have the right to obtain a refund of the VAT paid on the goods they have acquired during their stay in the European Union, provided that the goods are declared to Customs upon departure from the EU, together with the documents of VAT refund.

How can I do it

When making a purchase at a store you must notify the store that you are going to request the refund of the tax. In many places, you can see the sticker “Tax-Free” at some point of the establishment. Do not think that this will mean an automatic refund of the VAT. As a discount on the final price at which the product is presented. The usual, is that they give you some forms in which to register your purchases. Documentation that you must keep to carry out the subsequent refund management.

How many ways are there to manage the return?

Basically there are two. The first is that the traveler himself remits the invoice issued by the merchant and processed by the customs office. And to the establishment where he made the purchase. It is then, within a period of fifteen days, the establishment itself that passes all VAT paid by check or bank transfer. The second way is to request reimbursement through collaborating entities previously authorized by the Tax Agency. In this case, you will be deducted a commission.

Is it possible to deduct VAT from any purchase?

No. Returns can only be made on durable consumer goods. You can have problems with the spare parts for vehicles. That is, it is not applicable to services such as hotels, transportation, or food or drink consumed within the Union.

The VAT paid in countries outside the European Union can also be recovered. As long as there is a reciprocal agreement with your country.

The recognition of reciprocity of treatment is made by resolution of the General Director of Taxes. The authorization of the refund of the tax is conditional. Upon strict compliance with the requirements and procedures set forth in articles 119 of the Law and 31 of its Regulations. In addition, the content of recognition will have to be determined in order to determine its scope.

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