You need to understand the ins and outs of the Spanish VAT system to take on the Spanish market. If you don’t yet, read on as we break down everything you need to know about Spanish VAT and how it affects your business.
Spanish VAT for Amazon Sellers
If you sell through Amazon based in Spain or to customers in Spain, you must understand how Spanish VAT for Amazon sellers works to stay compliant with the law and avoid penalties.
VAT is crucial to get it right to maintain good standing with the Spanish tax authorities and your customers.
This blog will discuss Spanish VAT, including what it is, when and how to register, and how to comply with your VAT obligations as an Amazon FBA seller.
Whether you’re just starting as an Amazon FBA seller or looking to expand your sales to Spain, this guide will provide you with the essential information you need to succeed. So, let’s get started and demystify the Spanish VAT system!
What is Spanish VAT?
In Spain, VAT is known as Impuesto sobre el Valor Añadido (IVA) and is administered by Agencia de Administración Tributaria. It’s a tax on goods and services at each stage of production and distribution.
The standard rate of IVA in Spain is 21%, but there are also reduced rates of 10% and 4% for certain goods and services.
As an Amazon FBA seller, you’re responsible for charging and collecting the correct IVA on your sales to customers in Spain. You’ll also need to pay IVA on the fees charged by Amazon, such as FBA storage fees and referral fees.
When do you need to register for Spanish VAT?
You need to register for Spanish VAT if your annual sales to customers in Spain exceed €10,000, previously €35,000, not until the 1st of July 2021. This threshold applies to sales made within Spain only.
You should also note that if you are required to register for Spanish VAT, you must do so within 30 days of meeting the registration threshold. If you fail to register on time, you may be subject to penalties and fines.
Therefore, monitoring your sales closely and registering for VAT as soon as you meet the threshold is essential.
How do you register for Spanish VAT?
Registering for Spanish VAT can be complex and time-consuming, especially for Amazon FBA sellers who may need to become more familiar with the Spanish tax system. But we will provide a step-by-step guide for you.
Step 1: Obtain a Spanish tax identification number (NIF)
To register for Spanish VAT, you’ll need to obtain a Spanish tax identification number (NIF). You can obtain a NIF by filling out an application form and submitting it to the Spanish tax authorities. You can also get a NIF online through the Spanish tax agency’s website.
Step 2: Determine your VAT registration type
There are two types of VAT registration in Spain. These are the general registration (REDEME) and simplified registration (REDEME-S).
General registration is required for businesses with an annual turnover of more than €6 million, while simplified registration is available for small businesses with an annual turnover of less than €6 million.
As an Amazon FBA seller, you’ll likely fall under the simplified registration category.
Step 3: Submit your VAT registration application
After obtaining a NIF and determining your VAT registration type, you can submit your application to the Spanish tax authorities. You can submit your application online through the Spanish tax agency’s website or in person at a tax office.
Step 4: Wait for approval
Once you have submitted your VAT registration application, you’ll need to wait for approval from the Spanish tax authorities. The approval process can take several weeks or even months, so it’s essential to plan accordingly.
Step 5: Set up your VAT compliance process
Lastly, after being approved for Spanish VAT registration, the next step is to set up your VAT compliance process. This includes maintaining accurate records of your sales and purchases, submitting periodic VAT returns, and collecting and remitting VAT on your sales.
Frequently Asked Questions
What happens if I don’t register for Spanish VAT?
It is crucial to register for Spanish VAT if you are required to do so. If you don’t, it could lead to penalties, fines, and even backdated VAT payments for the period you should have been registered.
That’s not a fun situation, especially if you’ve been selling to customers in Spain for a while.
Not registering for Spanish VAT can also harm your business reputation, which you definitely want to avoid.
So, if you’re not sure about whether you need to register or need help with the registration process, it’s a great idea to seek the advice of a tax expert or accountant.
How often do I need to file my Spanish VAT return, and what happens if I miss the deadline?
If you register for Spanish VAT, you must file your VAT return monthly or quarterly, depending on your sales volume.
If your annual sales are less than €6,000, you are not required to file VAT returns. If your annual sales are between €6,000 and €150,000, you can choose to file VAT returns every quarter.
Lastly, if your annual sales exceed €150,000, you must file monthly VAT returns.
The filing deadline is generally the 20th of the month following the reporting period. Failure to file your VAT return on time can result in penalties and fines, and in severe cases, the Spanish tax authorities may revoke your VAT registration.
Can I use the reverse charge mechanism to avoid registering for Spanish VAT?
The reverse charge mechanism is a VAT collection mechanism that applies when a supplier and a customer are registered for VAT, and the customer is responsible for paying the VAT instead of the supplier.
However, the reverse charge mechanism does not exempt you from registering for Spanish VAT should you meet the sales threshold.
As long as you are required to register for Spanish VAT, it would be best to do so regardless of whether you use the reverse charge mechanism.
We hope this guide has helped you understand the applicability of Spanish VAT for Amazon sellers. Remember, staying compliant with the Spanish tax authority is crucial to avoid issues as you grow your business’s market.
Check out Sterlinx Global for more professional and personalised guidance.