Foreign companies: registering for VAT in Spain

Foreign companies wishing to offer their services or goods here in Spain are generally required to register for Spanish VAT here: known as IVA – Impuesto sobre el Valor Añadido.

Compared to setting up a free-standing Spanish company, this process is straightforward and quick.  On presentation of all of the required documents  at a local tax office in Spain, your company’s Spanish tax/ VAT number is issued immediately.

The key, therefore, is to ensure that you prepare the correct documentation at your end. This is as follows:

1. A certificate produced by the Company Registry in the country where your company was incorporated. This document should state the registered address of the company and a list of directors.

The certificate must be issued recently as the Spanish Tax Authorities will wish to have evidence that the company is still in good standing.

2. Two notarised representation documents:

a) A Power of Attorney to your Spanish representatives to obtain your company’s Spanish tax code on your behalf.

b) A letter authorising them to represent you in future communications with the Spanish tax authorities.  This letter is, in general, required at the outset, however it is a simple process for you to change representatives at a later date.

All of these documents should be legalised in your country with the Hague Apostille and then translated into Spanish by a sworn translator.

Registered Office in Spain

From a tax point of view, it is not necessary for you to have your own registered office here, as all Tax Office correspondence will automatically go to your representatives.

Of course, as you expand here and wish to have your own people on the ground in Spain, you will most likely require your own office. This will be considered as a Permanent Establishment for Spanish tax purposes, and your company will be required to submit annual company tax declarations.

If your company wishes to take on Spanish employees, it will need to be registered at the Spanish Social Security Office, by presenting Form TA6 along with supporting documentation.

For further information and assistance, please visit our website at www.spainaccountants.com . 

2014 residents tax returns

The Agencia Tributaria system for filing the 2014 annual residents’ tax returns opens in late April, so now is a good time to start to prepare ! Here’s an overview of the Spanish online tax filing system for residents, including how to pay your tax bill and claim any refunds due.

The tax year to be filed is 1st January – 31st December 2013, and returns must be filed by 30th June 2014.

Spanish tax returns are prepared using a software known as PADRE, which is produced by the Agencia Tributaria and can be downloaded from their website,  www.aeat.es  from late April onwards.  This is an offline program into which you enter details of your taxable income, which creates a file to be submitted online via the Agencia Tributaria website.

The return consists of the following principal sections:

1. Work-related income (Rendimientos de Trabajo): Employment, occupational pensions;

2. Savings income (Rendimientos del Capital Mobiliario): Interest, dividends, annuity pensions;

3. Rental income (Rendimientos de Bienes Inmuebles);

4. Self-employment income (Actividades Economicas);

5. Capital gains and losses (Ganancias y perdidas patrimoniales);

6. Reductions in taxable income (Reducciones de la base imponible): pension contributions.

7. Tax credits (Deducciones en cuota):  For tax withheld on all sources of income and tax paid abroad.

Tax for married couples

The PADRE software  has very useful function which calculates the tax due if spouses claim separately and jointly, and allows you to choose the option which gives the least total tax payable.

Tax payments

Where there is tax due, you have the option of paying all of it at once, or to make split payments (pagos fraccionados): 60% on 30th June and 40% at the beginning of November. There is no interest charged for this option.

The tax can be paid by presenting the return at your bank, or by specifying direct payment in the actual tax return. The latter option is very convenient but note that in order for it to be accepted, you need to file your return at least one week before the 30th June deadline.

Tax refunds

If the return shows that a tax refund is due, you simply need to enter your bank account number into the program before filing online. No supporting documentation needs to be included at the time of filing of the return, however this may be requested later in writing by the Agencia Tributaria. Tax refunds in Spain, especially where there are multiple sources of income, can be very slow to arrive.

For further information and assistance, please visit our website at www.spainaccountants.com .

Frontalier tax returns

If you live in France but work across the border in Switzerland  then you are, as you are probably aware, know as a travailleur frontalierand a special set of tax rules apply.

Depending on in which canton you work, Swiss income tax may or may not be withheld from your salary and this will affect how you need to declare your income in France.

1. Salaries not subject to income tax in Switzerland

If you work in one of the following cantons, then no Swiss income tax should be withheld from your salary and you should declare your salary for normal taxation in France.  If Swiss Social Security is deducted, then it is the net amount received (net imposable) that is taxable in France.

VAUD, VALAIS, BÂLE-VILLE, BÂLE-CAMPAGNE, BERNE, JURA, NEUCHATEL, SOLEURE

You will need to complete Declarations 2047 (Suisse), 2047 and 2042.

2. Salaries subject to income tax in Switzerland

If you are employed in any other Canton, for instance Geneva, then your employer has the right to withhold Swiss income tax from your salary.

In this case, you have the right to claim a credit in your French tax return. This credit is equal to the French tax payable on the income. What this means is that there will be no further tax payable in France.

If Swiss Social Security is deducted, then it is the net amount received (net imposable) that is taxable in France.

The forms to complete are 2047 (Suisse), 2047 and 2042.

For further information and assistance, please visit our website at www.franceaccountants.com