In this article, we explain when you must refund VAT and issue a corrective invoice if the customer proves that the transaction must be subject to the reverse charge mechanism.
- When the reverse charge mechanism applies
- What to do if you have already issued an invoice with VAT
- What happens if the order has not yet been shipped
- Summary
If a customer informs you that they are a reseller, the VAT reverse charge mechanism may apply to the sales transaction.
It is recommended that the customer proves this with a certificate issued by the Spanish Tax Agency, before or at the same time as the transaction.
If the order has already been shipped or is in the customer’s possession and the customer proves their reseller status, you must refund the VAT and issue the corresponding corrective invoice.
The new invoice must be correctly issued without VAT, under a specific invoicing series and with a mention that the reverse charge mechanism applies to the transaction.
- Review the documentation provided by the customer.
- Issue the corresponding corrective invoice.
- Refund the VAT amount initially charged.
- Keep the documentation proving the customer’s reseller status.
If the customer informs you of their reseller status before the order has been shipped and you decide to cancel the order after becoming aware of this status, there is no tax rule requiring you to complete the transaction.
- If the customer proves they are a reseller: the transaction may be subject to the reverse charge mechanism.
- If the order has already been shipped or is in the customer’s possession: you must refund the VAT and issue a corrective invoice.
- If the order has not yet been shipped: you may cancel the transaction after becoming aware of the reseller status, where appropriate.
- In all cases: keep the supporting documentation provided by the customer.