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VAT refund for TAX FREE purchases

 

In this article, we explain when you must manage a VAT refund for TAX FREE purchases and what requirements the customer must meet to request it.

Important: the VAT refund for TAX FREE purchases is a customer right when the legal requirements are met. It is not an option for the seller.
Contents
  1. When the TAX FREE refund applies
  2. What requirements the customer must meet
  3. What you must do as a seller
  4. What happens in transactions involving Ceuta or Melilla
  5. Summary
1️⃣ When the TAX FREE refund applies

VAT paid by travellers must be refunded when the customer meets the requirements established in VAT regulations.

This obligation is based on Article 21.2.º and Article 117 of the Spanish VAT Law, as well as Article 9.1.2.º B of the Spanish VAT Regulation.

2️⃣ What requirements the customer must meet

The customer is entitled to request a refund of the VAT paid on the purchase invoice, together with the corresponding corrective invoice, when these requirements are met:

  • The customer must be an individual whose habitual residence is outside the European Union and must be able to prove it with a passport, identity document or other valid document.
  • The purchased goods must effectively leave the European Union within 3 months following the month in which the delivery took place.
  • The goods must not constitute a commercial shipment. In other words, they must be occasional purchases for personal or family use or as gifts, and their nature or quantity must not suggest that they are intended for commercial activity.
Please note: the customer must be able to prove that they meet the requirements before the refund is processed.
3️⃣ What you must do as a seller

If the customer meets the requirements, you must manage the VAT refund and issue the corresponding corrective invoice.

In Spain, TAX FREE is managed through the Spanish Tax Agency’s DIVA system and the Electronic Refund Document, also known as DER.

  • Check the documentation provided by the customer.
  • Verify that the requirements of the travellers’ VAT refund regime are met.
  • Manage the DER where applicable.
  • Check the digital stamp before making a direct refund, if you are managing the refund yourself.
  • Issue the corresponding corrective invoice.
  • Keep the supporting documentation for the transaction.

You can find more information from the Spanish Tax Agency: DIVA digital stamping for companies

4️⃣ What happens in transactions involving Ceuta or Melilla

If you receive a TAX FREE refund request related to Ceuta or Melilla, first check the sales tax ID you operate with.

  • If your sales tax ID is Spanish: we recommend contacting a company specialised in VAT refunds. For example: Innova Taxfree.
  • If your sales tax ID is not Spanish: the process may be more complex, as the 21% TAX FREE refund is designed for Spanish companies and is not regulated in the same way under the OSS system.
Recommendation: if you have doubts about how to manage these cases, contact a TAX FREE specialist or review the Spanish Tax Agency’s instructions for managing the DER directly.
5️⃣ Summary
  • TAX FREE is a customer right: it is not an option for the seller.
  • The customer must be habitually resident outside the EU: and must prove this correctly.
  • The goods must leave the EU: within the legally established period.
  • The purchase must not be commercial: the goods must be for personal or family use or as gifts.
  • If the refund applies: you must refund the VAT and issue the corresponding corrective invoice.

 

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