In many European countries, there is no distinction between the procedures for registering for local VAT, and registering on the European Union list of Intracommunity Operators, knows as VIES (VAT Information Exchange system). For instance in France, when a company obtains a French VAT number they are automatically assigned an EU VAT number, which is just their French / tax code with an “FR” in front. Simple and effective.
Immediately after registration, the company will be able to find themselves on the EU database of Intracommunity Operators. There is a lookup page on the official EU site http://ec.europa.eu/taxation_customs/vies/ .
Spain is very different. When a company is assigned a Spanish tax / VAT code, it will not automatically appear on the VIES database. A separate application needs to be made using a general purpose form, Modelo 036. This form can be submitted online by anyone with an electronic certificate issued by the Spanish Tax Office. However approval times are very slow. The central Tax Office in Barcelona is now telling us to allow up to six months for processing.
So what is the situation for the company while their VIES application is being processed ? The following specific situation is the one that has been causing some our clients problems: they have a supplier in another EU country who refuses to invoice them without VAT unless they can actually find them on the VIES database. So, for instance, a Dutch supplier will charge the client Dutch VAT. This VAT is not recoverable as part of the regular Spanish VAT returns.
So in order to recover the Dutch VAT, the client would need to submit a separate request which would need to pass via both the Spanish and Dutch tax authorities for authorisation. This could take some time to be processed (dare I say especially at the Spanish end !) and although the issuing state is required to pay interest for payments that are late, it is obviously not an ideal solution and worse for the business cashflow in the crucial start-up period of any business.
So this is a common problem that comes up with our clients. The advice which we give them is: “strictly speaking, your EU suppliers should be able to invoice you without VAT because you are registered for VAT in Spain. That is all that is required by EU Law- namely the Sixth Directive. You can send them proof of your Spanish VAT registration (Modelo 036/037) to demonstrate this to them”. However, in practice we find that this is often not enough to convince the supplier. A tax form in Spanish means nothing to them, and given that VIES registration in their country is most probably automatic with local VAT registration anyway, they understandably but wrongly assume that Spain is the same, and that if they cannot find their Spanish customer on the VIES then it means that they are not registered for VAT in Spain !
This bureaucratic mess designed by the the Spanish Tax Authorities is not only causing a great inconvenience to newly established businesses here, but is putting off potential investors into Spain and prejudicing our economy.