Following new changes to the localisation rules with regards to VAT, there are yet more compliance obligations for businesses arising from this change in legislation.
Traditionally, only companies that were acquiring or selling goods within the EU had to register with the EU traders list so that they were able to exchange these goods without charging VAT at source. In these transactions, the VAT was deemed to arise at the point of receipt, so it was the client who accounted for such VAT in their local return via the VAT reversal mechanism. This has not changed.
Before the new changes very few services followed a similar treatment of accounting for VAT at the point of receipt. For the majority services, VAT was charged at source. Now and as a consequence of these new changes in legislation, the VAT on the supply of all services between companies in the EU will also be deemed to have arisen at the point of receipt.
Consequently, all companies delivering or receiving services within the EU should now apply for registration in the EU traders list. Once on this register, the company will have to file an additional return, namely Modelo 349, declaring details of the clients/suppliers and the amounts exchanged in the period.
More importantly, it is obligatory for all companies now, before issuing an invoice without Spanish VAT, to confirm that their client (in another UE country) is properly registered in the EU traders list. Here is how you go about checking whether your customers are registered on that list:
1- Go to http://ec.europa.eu/taxation_customs/vies/
2- Follow the instructions on the screen.
Consequently, any company rendering services without Spanish VAT to another EU company that is not on this register can be subject to a VAT adjustment by the tax office and potentially a fine.
Whilst there is nothing to panic about; this is yet another hurdle the tax authorities have set for us as tax payers in business. We share your frustration with regards to the additional compliance requirements, although of course Rose & Clavel can help you meet these new obligations accordingly, to safeguard your interests and avoid future problems with the tax office.