Spain is a beautiful country filled with wonderful people and culture. It is no wonder that you would want to do business here. It is a fantastic plan for your company, but In order to get your business with Spain started out on the right foot, you will want to do the VAT registration in Spain. It will help out your business ventures considerably. But what exactly does a VAT number in Spain do? Why would you want to get one? What can’t you do without it? A VAT number allows you to enjoy some of the same benefits that a resident of the country has without having to move to Spain. It is like a certification of trust of sorts that you own a legitimate business and want to do it here in Spain.
- 1 CIF Number
- 2 How to get a VAT Number in Spain
- 3 Assign a Point of Contact
- 4 EU and The Company You are Registering
- 5 VAT Number Format
- 6 VIES (VAT number validation)
- 7 Find Out Information Quickly and Easily
- 8 Tax Charges Through the VAT in Spain
- 9 Special Rules for Certain Categories
- 10 How do I Bill my Client According to the VAT Tax Standards?
There are several reasons that you may want to register to get a number from VAT. It opens up numerous opportunities for you to make more money for your company. In Spain they refer to it as a CIF no residence. That means you don’t live there but get some of the same privileges as a resident of Spain. It entitles you to numerous benefits that are well worth getting a VAT number.
- If you plan on bringing merchandise into the country
- If you are looking to invest in buying real estate
- If you are going to be a stockholder and buy shares in a company that is located in Spain
- If you need a bank account for your corporation
- open a corporate bank account in Spain
How to get a VAT Number in Spain
These activities are generally reserved for only the residents of the country but you can have some of the privileges by being a foreign company with a VAT number. You will simply need to do a Spanish registration of your foreign company in order to qualify. It all needs to be done legally through a Gestor or otherwise known as an accountant. They do the application process. Be sure to have your tax identification from Spain present or it will result in a delay with your paperwork.
Assign a Point of Contact
After you have the Gestor handle some of the necessary forms, there is another crucial thing that you must do. The government in Spain will not allow you to proceed with the process until
you find someone who lives in Spain to represent your company. Make sure you trust this individual as they will be the person who is representing your company’s interests. You need them to serve for tax purposes as a point of contact. Some companies will do this service for you for a fee.
EU and The Company You are Registering
If you wish, once you finished the Spanish registration of your foreign company, you may qualify for application to get a VIES number. VAT Information Exchange System is the technical name for it. This is a VAT number for Europe as a whole. This opens you up to even more exciting business opportunities.
VAT Number Format
It may be confusing at first when you begin the process to get your VAT registration in Spain but the numbers are fairly similar if you learn them.
- If you own a company that is limited, your number format will be B 99999999.
- Your number will be A99999999 If your business is a SA company.
- Your number sequence will be ESB99999999 or ESA99999999 if you qualify to be part of the VIES system. It is not automatic that you will be VAT registered in Europe however.
VIES (VAT number validation)
There is a database of companies online that was formed by the European Union. They refer to it as the VAT Information Exchange System. For a shorter name that is easier to recall it can be referred to as VIES. This will let you know if a business has qualified for approval. There are taxes but if a business sells merchandise to another business in a different country and both qualify and are part of the database list then they don’t have to pay taxes from VAT. If you are both in the same location then the tax is charged.
Find Out Information Quickly and Easily
Do you need to know if a company that you are doing business with is approved? It is easy with the list of companies From VIES. This makes invoicing easier and whether you need to put the VAT or not at the top. Just scan through the easy to read databases that are electronic and ran
by the EU at a tax office ran by the membership community. They ensure that all information is transferred to the main database. This system keeps businesses operating successfully in Europe and helps to watch for any irregular activity to get it under control quickly. Only a few countries in Europe have their own separate database that is kept on the web.
What If You Have a VAT Number in Spain but Can’t Find Your EU Number?
You do not automatically qualify to be in the EU database simply because you have been through the VAT registration in Spain. That is a misconception that is often made by new companies in Spain’s registry. You can send an invoice to any company outside of the borders but to be in the VIES system, you must fill out the application. The good news is that you pass the requirements, you just need to apply for membership. After they receive the application, they send in someone to see if your business is open. It is a requirement to have your office be fully operational.
What About the Canary Islands and Other Areas Outside of the VAT System?
A business won’t show up in the VIES database if they are located somewhere like the Canary Islands as well as a few more places. These are outside of the area that the VAT system operates. They may have their own rules and regulations regarding the tax system. Ceuta and Melilla, for example, have their own tax system know as IPSI.
Tax Charges Through the VAT in Spain
VAT Taxes are Charged based upon certain merchandise.
- There is a general standard rate of tax of 21 percent on most goods and items in Spain. Not all merchandise falls under these standards. There are other tax amounts that fit unique situations. Read on to find out more.
- There are rates that are lower set at 4 percent and ten percent.
- If you buy a new building or any kind of merchandise, you will pay a 10 percent tax on it. Other products in this category are supplied for your health, sporting events and other entertainment and new hotels and restaurants.
- The 4 percent rule applies to things that one needs to survive in life comfortably. These are life’s necessities and what may be considered a necessity to one person may not be considered one to another. Certain things to read and some grocery items are on this list.
Special Rules for Certain Categories
There are basic tax rules that apply to certain situations in Spain that are exempt from VAT taxes or are given special rates. Some of these are:
- Farming and animal raising for purposes of consumption in some way.
- Companies that book travel arrangements
- Very old classic items like antiques
- Things that are not included to be taxed according to Vat registration standards, are companies that sell insurance and financial agencies.
- Fees that doctors charge as well as dentists.
- The profession of teacher
How do I Bill my Client According to the VAT Tax Standards?
The VAT tax is applied to customers that live in Spain and to customers who aren’t n the European Union. Taxes may also be charged to those who are in the EU in certain situations.
- The sale occurs within two countries that are both in the VIES VAT database.
- When a service is performed in a place that accepts the Reverse charge rule.