On 31 December, the United Kingdom will leave the European Union. We would like to list the tax consequences for business operations between Spain and the United Kingdom from 1 January 2021.
What will change with regard to taxation?
1. The sale or purchase of goods to or from British companies will be regarded as export or import. Incoming goods will have to be declared to Spanish customs, accompanied by a DUA (customs) document, and VAT will have to be paid to customs. British companies will have to register with Spanish Customs using an Economic Operator Registration and Identification (EORI) number.
2. Transactions of goods and services are no longer considered intra-community and therefore these transactions are no longer declared via EU 0% VAT declarations and/or Intrastat.
3. If Spanish companies sell goods over the Internet to British private individuals, the distance selling regulations will no longer apply.
4. British companies wishing to reclaim VAT paid in Spain can no longer do so digitally via the HMCR portal. In this case, a Spanish resident will have to be appointed as the company’s tax representative in Spain. The same applies if a British company has to register for VAT in Spain as a result of the obligations laid down in Spanish VAT legislation.
5. In general, services supplied by a Spanish company to a British company will be considered ‘realised on British territory’ and no Spanish VAT will have to be charged. However, there are a number of exceptions (such as consultancy, accountancy, personnel assignment, auditing, etc.) where Spanish VAT will have to be invoiced if the actual execution takes place in Spain. In case of doubt, we recommend having the exact nature of the service analysed by us.
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