If you sell your products or services to other countries members of the European Union, or you buy from them, you need to register your business in the ROI ( Intra-Community Operators Registry) if you want to benefit from the IVA zero rate that applies to transactions between these traders.
If you buy.
As a consumer, when you buy goods in other country under the IVA (VAT), in your invoice you find the IVA rate corresponding to that country. This tax is obviously paid to the country of origin.
If you were to operate in this way as a business too the payment of tax that is made to other EU country cannot be offset with the Spanish IVA that you collect along with your incomes. This would add to the cost of your purchase and reduce your profit.
To avoid that, the European VAT legislation allows companies to issue invoices without IVA to foreign companies within the EU with the condition that these companies are properly registered and their European VAT numbers appear in database for that end.
With this sole registration you can ask to your suppliers in other country to issue you an invoice with IVA zero rate.
If you sell.
Once again the determining factor is weather you are selling you a business or not.
When you sell to a non VAT registered business or individual you have to apply the IVA of Spain in most cases.
However, there is a particular rule that applies in cases of providing services by electronic means via automatic processes without the intervention of human workers.
Read our post: IVA on internet sales and electronic services.
If you are asked by a foreign business to issue them an Intra-community invoice, that is, without IVA you are expected to make a checkup of your client prior to this to verify that it is actually registered as an european trader.
If this was not the case, you simply issue your invoice with IVA.
Issuing an invoice without IVA to a non-registered business can have consequences. The Tax Office could claim from you the IVA that you should have collected!!.
Related: Effect of Brexit on customs and VAT
How to make an intra-community invoice?
The Intra-community invoice should contain the same information than a regular invoice with these two basic differences.
Your Vat number should appear complete, this is, preceded by the letters ES indicating the country.
When issued to a ‘ROI registered’ company,our invoice will not contain IVA.
Registration as European Trader is included for free in our business package for autonomos.