Eligibility for refund
A foreign taxable person is entitled to recover Spanish VAT if the following conditions are satisfied:
- The claimant does not have residence, a seat or a fixed establishment in Spain from which it carries out taxable transactions; or it has a fixed establishment in Spain but it is not involved in the transactions carried out within the VAT territory and;
- Has not carried out any taxable transactions in Spain, except for:
- Certain tax-exempt cross-border transport from/to non-EU countries;
- Supplies for which the reverse charge mechanism applies;
- Allocate the goods or services acquired to the performance of transactions entitling the taxable persons to deduct the input VAT pursuant to the current legislation in the member states where they are established and according to the applicable deduction percentage in such state.
VAT cannot be recovered on:
- Entertainment expenses;
- Food and drinks, tobacco;
- Goods and services considered as gifts to employees, clients or third parties;
- Jewels and precious stones.
VAT on accommodation, restaurant and travel expenses will be refundable only to the extent the expenses are deductible for personal and corporate income tax purposes.
VAT incurred on car rentals and fuel, in principle, will be fully refundable if the car is exclusively used for business activities.
If the application relates to a calendar quarter, the amount for which application is made may not be less than EUR 400; if the application relates to a period of a calendar year or the remainder of a calendar year, it may not be less than EUR 50.
The application must cover a period of not less than a calendar quarter (e.g. from 1 January to 31 March) in one calendar year and not more than one calendar year, unless the period represents the remainder of a calendar year (e.g. from 1 November to 31 December). The application can relate to invoices or import documents not covered by previous applications in respect of transactions carried out during that calendar year.
If the claimant has submitted a refund claim and subsequently receives additional invoices, the claimant must cancel the previously submitted claim, if he cannot cancel the claim, the Spanish tax authorities recommend that the claimant file a written explanation that, due to extraordinary circumstances, it was unable to cancel the claim.
According to EU Directive 2008/9/CE, the Spanish Tax Authorities can request to the taxpayer claiming the VAT refund the submission of an electronic copy of an invoice where the taxable base on the invoice or import document is at least EUR 1,000 (EUR 250 where the invoice relates to fuel costs). The serial number used in the application form must be mentioned on the documents.
The Spanish tax authorities may request additional documents/ information from the claimant, third parties or the tax authorities where the claimant is established (e.g. authorization document from the foreign taxpayer stating that payment may be granted to a third party).