Specific issues on purchases by non-resident travellers in Spain (EU)

Minors may lack the capacity to act in tax matters and, therefore, may not be eligible for a VAT refund. 

For this purpose, a distinction must be made between the capacity to act necessary to acquire the power of disposal over an asset (whether one can make the purchase) and the capacity to act in tax matters (whether one can be entitled to a refund).

• Regarding the legal capacity necessary to acquire the power of disposal over the property: Article 1263 of the Civil Code allows unemancipated minors to enter into contracts relating to goods and services of everyday life appropriate to their age in accordance with social customs. Therefore, it will be necessary to analyze each case individually (for example, whether the minor is emancipated or not; their age and social customs, whether the type of good being acquired corresponds to the normal habits of the minor...).

• Tax capacity: Article 44 of the General Tax Law states that "minors and incapacitated persons in tax relations derived from activities whose exercise is permitted by the legal system without assistance from the person exercising parental authority." Therefore, the same criteria established in the previous section apply here.

The above implies that an individualized case-by-case analysis is necessary, and the return and, therefore, the CONFORM visa of the Electronic Refund Document (hereinafter DER) may be accepted if it is determined that the minor has the necessary capacity to carry out the acquisition of the item in question.

To do this, the following must be assessed:

• The child's age, considering that children under 10 years old rarely have the capacity to make purchases,

• The nature and quantity of the goods, taking into account that the goods must be intended for their personal or family needs, so they must be related to the needs and habits of the minor.

• Purchase frequency.

If we consider customs and practices, it should be taken into account that children under 14 years of age do not usually have sufficient maturity to make purchases without the mediation of their legal representatives. Therefore, these minors under 14 years of age also lack the necessary legal capacity to request and obtain a refund of the VAT paid on their purchases.

This issue is especially sensitive in the case of children under 10 years of age, who will rarely have the capacity to act to make purchases and who may be being used by their legal representatives for this purpose. In this case, the DER should be issued in the name of these individuals, who are the ones who can complete the purchase.

Re-imports of goods definitively exported to third countries are not exempt.

When goods are rejected for being defective, they are re-imported and will be exempt since they cannot be considered to have been preceded by a definitive export.

The corresponding amount for the defective merchandise must therefore be returned.

The delivery of the new good will be subject to the VAT, being able to enjoy the exemption if the requirements of article 21.2 of Law 37/1992 and 9 of the DR 1624/1992.

There are duty-free shops in ports and airports. (DUTY FREE). These stores are under customs control. In this type of store, deliveries of goods are exempt from taxes provided the purchaser is traveling to a third country, a circumstance that will be confirmed with the boarding pass. This exemption does not apply to goods that constitute a commercial shipment. This means that, under the conditions indicated, sales made do not include the VAT (without prejudice to the pricing policy of the duty-free store).

Citizens of the European Union (i.e. nationals of a Member State with a passport of that Member State) who reside permanently in a non-EU country may also benefit from the exemption provided for in Article 21. 2 of the Law of VAT and can request a tax refund. This is also the case for Spanish diplomatic and consular staff residing in countries outside the European Union. Travelers who provide services in Spanish embassies or consulates located abroad may benefit from the exemption provided for exports under the traveler regime, regardless of whether they are considered taxpayers for the purposes of the PIT.

The requirements established by the VAT regulations in order to enjoy this tax benefit must be met at the time of accrual of the same (time of making the goods available to the travellers), so habitual residence outside the European Union must be a fact at that time.

As regards evidentiary documents, there is freedom of proof. Habitual residence outside the European Union may be proven by any means of proof admissible by law. It is the traveller who must prove by any legally valid means of proof that he or she is actually a resident outside the European Union.

In the case of acquisitions of goods by staff of foreign diplomatic missions accredited and resident in Spain and of career consular offices, the applicable exemption regime is that provided for in article 22. eight of Law 37/1992 and its implementing regulations.

No. From the exemption of the VAT In the case of deliveries of goods under the passenger regime, deliveries of goods intended for equipment are excluded (e.g. tires, fuel) or supplies for any means of transport for private use.

This exclusion applies both to deliveries of such goods to travellers and to deliveries of such goods made in duty-free shops.

Yes. Both electronic systems propose a coordinated mechanism for recording deliveries of goods exempt from tax refunds. VAT to travelers.

This mechanism is explained in the information note on Order HFP/187/2018 (in relation to keys A5 and A6) as well as in the Frequently Asked Questions document v.1 in question number 3.13 (regarding key A3).

Both documents are available in the section dedicated to SII of the Tax Agency portal.

Residents of the United Kingdom, provided they meet the requirements set out in the regulations, will be entitled to a refund of VAT under the traveller regime from 1 January 2021, except for residents of Northern Ireland where EU VAT regulations continue to apply.

In this regard, it is important to make the following clarifications:

• The requirements must be met at the time of the accrual of the tax (at the time the goods are made available to said travelers) in order to enjoy this tax benefit. This means that purchases made by British residents before the end of the transition period provided for in the Withdrawal Agreement do not give rise to a right to a refund of tax (due to failure to meet the requirement of habitual residence outside the European Union), regardless of when said residents leave the European Union. Therefore, only purchases made by British residents since January 1, 2021 are eligible for a VAT refund.
• Residents of Northern Ireland are not entitled to a traveler VAT refund as set out in Article 8 of the Northern Ireland Protocol.

Following ratification of the Withdrawal Agreement, the United Kingdom will leave the European Union on 1 February 2020, but a transitional period will be established until 31 December 2020.

During this transitional period, both Union customs legislation and the regulations of VAT continues to apply in the United Kingdom. This means that the United Kingdom remains part of the customs territory of the Union and therefore goods transported to the United Kingdom do not leave the European Union. Movements between both parties continue to be considered intra-community and, therefore, the VAT refund to travelers will not apply until the transitional period ends. That is, in principle, from January 1, 2021.

One of the requirements to be eligible for reimbursement of VAT is that the delivery of goods is made to travelers who reside outside the European Union. This habitual residence will be accredited by means of an identity document, passport or any other means of proof admissible by law.

Therefore, the refund of VAT will only be possible for travelers who are not residents of the European Union, when during the delivery of the goods the identity of the traveler and his or her status as a resident can be reliably verified by the businessman making the sale. outside the European Union. This reliable verification cannot always be carried out when the purchase is made online; Consequently, in these cases there would be no right to a VAT refund.

On the other hand, online purchases destined for a third country or territory in which Value Added Tax is not applied are classified as exports, a subject and exempt operation with the right to deduct the incurred quotas, in accordance with articles 21 and 94 LIVA . Therefore, the price set by the seller should be without the chargeable VAT fee, which would be identical to that of the refund in the case of delivery of goods to travelers. In the purchasing system “click and collect”, la compra es online but the buyer must appear to pick up the merchandise, at which point the identification task is carried out and the right to a VAT refund may arise as long as his/her residence outside the territory of the Union is proven.

In such cases, the three-month period following delivery must be counted from the moment the goods are made available , even if the goods are not delivered to the interested party or are not delivered to another person in the territory of application of the tax and even in the hypothetical case that the goods remain in the seller's warehouse until collected by the buyer (the seller becomes a depositary and is no longer authorized to actually dispose of said goods as if he were its owner).