Transfer of business activity, residence and others

Goods and personal effects imported by natural persons who transfer their normal residence to the customs territory of the European Union from a third country shall be admitted with exemption from import duties and tax exemption.

For the purposes of applying the corresponding deductible, the following are considered personal property and furniture items and objects:

• Those intended for the personal use of the interested parties or for their home needs (furniture and objects, household linen, etc.)
• Provisions corresponding to normal family provisions, domestic animals that may live in the home, as well as portable instruments of mechanical or liberal arts necessary for the exercise of the interested party's profession. In no case should personal property, by its nature or quantity, have any commercial character.
• Bicycles and mopeds, privately used motor vehicles and their trailers, camping caravans, pleasure boats and privately used tourist aircraft.

The requirements established in Regulation 1186/2009 on franchises and in the regulations governing VAT and IGIC (Canary Islands) are, for the most part, coincident and can be summarized as:

• The applicant must have resided outside the customs territory of the Union (for customs exemption) or the Community (for VAT and IGIC exemption) for at least 12 consecutive months prior to the transfer.

•  The applicant must move or intend to move his or her habitual residence to Spain.

• The imported personal property must have been in the possession of the interested party for at least 6 months before the transfer (the period for exemption from VAT or IGIC will be 12 months in the case of motor vehicles, trailers, caravans, transportable homes, recreational boats and tourist aircraft acquired under exemptions provided for diplomatic or consular regimes).

• Goods must be declared for free circulation within 12 months of establishing residence in the customs territory of the Union or before such movement, provided that the person concerned undertakes to establish himself in the customs territory of the Union within 6 months and, where appropriate, provides a guarantee.

• Imported personal property must be used in the new residence for the same purposes as in the previous one.

• Imported goods may not be loaned, pledged, rented or transferred for a fee or free of charge without prior notification to customs until 12 months have elapsed since the admission of the declaration of release for free circulation.

• To enjoy the VAT or IGIC exemption, the goods must have been acquired or imported under the normal tax conditions in the country of origin and must not have benefited from any exemption or refund of the fees accrued on the occasion of their departure from said country. country.

This circumstance may be proven by any means of evidence. The following are some examples of evidence that could be used (in some cases it may be necessary to provide several):

• The deed of sale or mortgage may be taken into account if accompanied by another document proving that the acquired property constituted the habitual residence.
• Proof of tax domicile
• Address on the interested party's ID document
• Home insurance contracts in which the property is listed as the habitual residence
• Proof of electricity, water or gas consumption or the existence of a fixed telephone line with an internet connection that proves permanent occupation of the home
• Proof of designation of the home as a domicile for the purposes of notifications from banks, insurance companies, property administrations, public entities, etc.
• Employment contracts of the interested party, his/her spouse, school registrations of his/her children and any other document that may indicate consistency with the residence declared as habitual residence.

As proof of compliance with this requirement, the following documents must be provided:

• Document proving the cancellation of your previous residence outside the customs territory of the Union

• For Spanish citizens who move their residence to Spain, they will be deregistered as residents in the Spanish Consular Registry abroad.

• For citizens of other nationalities, if their countries do not require consular withdrawal or issue any other official withdrawal document in the country of residence, any other document may be provided by which the change of residence is communicated or requested to an authority in the country of origin (e.g. communication of change of residence to the tax, health, pension, etc. authorities)

• One of the following documents, depending on the applicant's citizenship:

  • In the case of Spanish citizens, national identity document (DNI)

  • In the case of citizens of an EU Member State or another State party to the Agreement on the European Economic Area, application or registration in the Central Register of Foreigners. (Ministry of Interior)

  • In the case of citizens of other countries not included in the previous sections, application or foreign identification card (TIE). It certifies legal residence in a specific place in Spain and is granted after meeting certain requirements (Ministry of the Interior)

To prove this circumstance, a detailed list of the goods to be imported must be provided, indicating their estimated value and, at least approximately, the date of acquisition.

The request for customs exemption and VAT exemption will be made in the import declaration (DUA) itself without any prior application being necessary. In box 37.2 of said declaration, the codes 101 for the VAT exemption, 303 for the IGIC and C01 for the customs exemption must be recorded.

The definitive importation from a third country to Spain (EU) of the goods must be carried out within a period of twelve months from the date on which the interested party has established normal residence in the customs territory of the European Union.

As an exception to the previous period, exemption may also be granted to personal property declared for free circulation before the interested party has established his normal residence in the customs territory of the EU by means of a commitment to actually establish himself there within a period of six months. . This commitment will be accompanied by a guarantee in the form and for the amount determined by the relevant Customs authorities. In this case, the goods must be cleared and leave the Customs premises, without prejudice to their being introduced into private premises and subject to the storage requirements established by each company.

The following will be excluded from the franchise for transfer of residence:

• Alcoholic products
• Tobacco and tobacco products
• Commercial means of transport
• Professional use materials other than portable instruments for mechanical or liberal arts

In relation to alcoholic products and tobacco products, amounts that exceed those provided for in their respective regulations (referenced below) will be excluded from the VAT and IGIC exemption (applicable in the Canary Islands).

For a period of twelve months from the date of acceptance of the declaration for free circulation, personal property admitted with duty-free treatment may not be loaned, pledged, delivered for a fee or free of charge without the customs authorities having been informed of this.

If these operations are carried out, they will give rise to the application of the import duties corresponding to the affected goods, according to the rate in force on the date of the loan, pledge, rental or transfer, based on the customs value recognised or admitted on the date by the customs authorities.

No. If they are original sculptures, it would not be appropriate to analyze their possible tariff exemption, since they are classified under heading 9701 and are exempt from import duties. However, the correlation between exemption from import duties and exemption from VAT requires a unique qualification of such sculptures.

We should distinguish between finished and unfinished sculptures.

For the joint analysis of the franchise and the exemption, it should be noted that if the object or purpose of the finished sculptures is the sale, they would not benefit from the consideration of personal property and effects and therefore, the franchise or exemption would not apply.

If the finished sculptures were part of the furniture as decorative elements, a part of their sculptures could be intended for personal use as decorative material in their home, so they could be considered included in the concept of art furniture. 2 of Regulation (EC) 1186/2009 and article 29 of Law 37/92 (VAT Law).

In conclusion, it will depend on the number of sculptures you import, how they are imported and how they are declared. Thus, those sculptures that are considered to be of decorative use for your residence may be imported free of import duties and VAT exemption. However, such sculptures would be conditional on compliance with the limitations on sales established in article 8 of the aforementioned Regulation and article 28.Dos.6 of the VAT Law: 12 months from importation in both cases.

Unfinished sculptures do not fall under the concept of decorative furniture, so the franchise and exemption for change of residence do not apply.

As with sculptures intended for sale, unfinished sculptures are not eligible for the exemption or deductible for transfer of the business premises. In both cases, semi-finished or finished products and raw materials are excluded from these benefits, as established in article 31 of the Regulation and 37 of the VAT Law.

Import duties and VAT will be applied based on its customs value and VAT tax base. Incomplete sculptures with the characteristics of complete ones are classified in heading 9701 with exemption from import duties and, in application of article 91.Uno.4 of the VAT Law, will be subject to the tax rate of 10% for this tax.

A distinction must be made between sculptures for decorative use in one's home and those intended for transmission in the exercise of one's professional activity. The former are exempt from import duties and VAT exemption if they meet the formal and temporal requirements and cannot be transferred during the twelve months following their importation. Import duties and VAT will be applied to the latter depending on their customs value and their VAT tax base. The finished sculptures and those incomplete but with the characteristics of complete, would be classified in heading 9701 with exemption from import duties and, in application of article 91.One.4 of the VAT Law, will be subject to the tax rate of 10% for this tax.

Raw materials and other elements that are not considered complete will be taxed based on their tariff classification for import duties and at a 21% VAT rate.

If goods considered investment or portable instruments necessary for the exercise of the importer's trade are imported, these will enjoy duty and exemption in application of article 28 of the Regulation and 37 of the VAT law (investment goods) or article 3 of the Regulation. and 28 of the VAT Law (transfer of residence), respectively.