Please remember that, according to Spanish tax regulations, you are required to apply the equivalence surcharge on sales made to retail traders under this special regime.
What is the equivalence surcharge?
It is a special VAT regime aimed at spanish self-employed individuals who sell directly to the public. Under this regime, the retailer is not required to declare VAT on their issued invoices, but instead bears an additional surcharge on the VAT of purchases made from their suppliers.
You can find an official and clear explanation of this regime at the following link from the Spanish Tax Agency:
What does the equivalence surcharge special regime consist of?
What should you do?
Apply the equivalence surcharge on the invoice when selling to a customer who is a retail trader (covered under this regime).
You should be aware that, although legally it is the customer’s responsibility to inform you that they are under the regime (Art. 163 LIVA), the obligation to apply the surcharge is yours (Art. 159 LIVA). This means that, even if the customer does not notify you, you are still responsible for applying it if the circumstances suggest they are a retailer.
Remember: This only applies to Spanish customers and sellers.
How can the store be exempted from applying the surcharge?
Only if the customer provides written and signed proof that they are not subject to the equivalence surcharge regime. This document must be retained for the statute of limitations period of the tax. We also recommend:
- Requesting and filing the customer’s census status certificate.
- Keeping a copy of the result of the online consultation with the Spanish Tax Agency regarding the customer’s applicable regime.
This approach was confirmed by the resolution of the TEAC dated 07-11-2007.
To avoid tax contingencies, it is essential to act proactively: if you have any indication that a customer is a retail trader, you must apply the surcharge unless they explicitly and formally prove otherwise.