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VAT practical manual 2021.

Regime of the Union

1. Definitions

  • Entrepreneur or professional not established in the Member State of consumption: any entrepreneur or professional who has established the headquarters of his economic activity in the territory of the Community or who has a permanent establishment there, but who does not have such headquarters in the territory of the Member State of consumption or has a permanent establishment there.

  • Member State of identification:

    • The Member State in which the entrepreneur or professional has established the headquarters of his economic activity.

    • Where the business or professional does not have the headquarters of his or her economic activity in the Community, the only Member State in which he or she has a permanent establishment will be taken into account.

    • Where the entrepreneur or professional does not have the headquarters of his economic activity in the Community, but has a permanent establishment in several Member States, the State he chooses from among the Member States in which he has a permanent establishment.

    • Where the business or professional does not have the headquarters of his economic activity or any permanent establishment in the Community, the Member State in which the dispatch or transport of the goods begins and, if there is more than one, the Member State chosen.

    The option for a Member State shall be binding as long as it is not revoked and shall be valid for at least the calendar year in which the option is exercised and the following two years.

  • Member State of consumption:

    • In the case of the provision of services, the Member State in which the provision of services is deemed to take place.

    • In the case of intra-Community distance sales of goods, the Member State of arrival of the dispatch or transport of the goods to the customer.

    • In the case of supplies of goods by an interface, when the dispatch or transport of the delivered goods begins and ends in the same Member State.

2. Scope

The following may benefit from the Union regime:

  • Entrepreneurs or professionals established in the Community, but not in the Member State of consumption, who provide services deemed to have been provided in the latter, to recipients who do not have the status of entrepreneur or professional.

  • Businesspeople or professionals who carry out intra-Community distance sales of goods.

  • Electronic interfaces that carry out domestic deliveries of goods under the conditions provided for in Article 8 bis.b) of this Law.

The Union regime shall apply to:

  • All services provided by entrepreneurs or professionals covered by this regime who are located in a Member State other than that in which the entrepreneur or professional covered by this special regime has the headquarters of his or her activity or a permanent establishment.

  • All intra-Community distance sales made by businesses or professionals covered by this regime.

  • All domestic deliveries made through electronic interfaces subject to this regime under the conditions provided for in Article 8 bis.b) of this Law.

3. Identification for the purposes of this regime

The operator number for the purposes of the Union Regime when Spain is the member state of identification will be the tax identification number already assigned by the State Tax Administration Agency to the entrepreneur or professional.

4. Formal obligations

The formal obligations in the event that Spain is the identifying member state are the following:

  • Have a tax identification number.

  • Declare the start, modification or cessation of operations covered by this special regime (form 035).

  • Submit a self-assessment for each calendar quarter, regardless of whether you have carried out transactions to which this special regime applies.

    The self-assessment must be submitted during the month following the period to which it refers.

  • Pay the tax corresponding to each self-assessment within the self-assessment submission period.

  • Keep and maintain a record of the operations included in this special regime.

    This register shall be available to both the Member State of identification and the Member State of consumption and shall be kept for a period of ten years.

  • Issue and deliver invoices for all operations covered by this special regime.

5. Modification of self-assessments

Any modification to the figures contained in the self-assessments submitted will be made in the self-assessment corresponding to a subsequent period submitted within a maximum period of three years from the date on which the initial self-assessment to be modified should have been submitted.

6. Deduction of the supported quotas

  • In the event that Spain is the identifying member state, entrepreneurs or professionals covered by this special regime will not be able to deduct in the periodic self-assessment corresponding to this regime (form 369) the quotas incurred in the acquisition or importation of goods and services intended for carrying out the operations covered by it.

  • For the quotas supported in the territory of application of the Tax:

    1. If, in addition to the operations included in this regime, they carry out others for which they are required to submit periodic VAT self-assessments, they will be deducted in said self-assessments.

    2. If they do not carry out these other operations and are not established in the Community, they will request a refund using the procedure provided for in article 119 bis of the VAT Law , without requiring that the existence of reciprocal treatment in favor of businessmen or professionals established in the territory of application of the Tax be recognized, nor the designation of a tax representative in Spain.

  • For contributions incurred in other Member States:

    1. If they are established in the territory of application of the Tax, they will request the refund through the procedure provided for in article 117 bis of the VAT Law .

    2. If they are not established in the territory of application of the Tax or the rest of the Community, they will request the refund by the procedure provided for in the regulations of the Member State in which they were borne in development of Directive 86/560/ EEC , of the Council, of November 17, 1986, without being able to require the recognition of reciprocal treatment or the designation of a tax representative in that Member State.

  • In the case of business owners or professionals based in the Canary Islands, Ceuta or Melilla, who are not established in the territory of application of the Tax or in the rest of the Community and who do not carry out operations other than those covered by the special regime that require them to submit self-assessments under the general regime of VAT:

    1. They will request the refund of the fees paid in Spain through the procedure provided for in article 119 of the VAT Law .

    2. They will request the refund of the fees incurred in other Member States through the procedure provided for in article 117 bis of the VAT Law , in application of Directive 2008/9/ EC .