VALUE ADDED TAX (VAT)

Output VAT (VAT charged to our clients)

Input VAT (VAT charged to our suppliers)

The difference between Output VAT and Input VAT can be:
- Positive: VAT Due

- Negative: - VAT Refund

- Carry-forward
Big companies  monthly
Rest of companies  quarterly
The Value Added Tax Rate can be:

- The standard rate is 21% (vis attractiva)

- The reduced rate is 10% (list)  hotel
- The super-reduced rate is 4% (list)  books
- Exempted of VAT (list)

B2B - Destination Principle: It means that in an international trade, VAT must be

collected by the country of destination.

- Exportation: Exempted of VAT (we don’t charge VAT when we export)

- Importation: VAT paid in the customs area
- EU Sale: Exempted of VAT (we don’t charge VAT to another EU country)
- EU Purchase: VAT paid through the Reverse-Charge-Rule (Inversión del Sujeto
Pasivo, auto-repercutir el IVA)

We are a Spanish company. We have domestic sales of 100,000€ + 21% VAT.

We purchase 40,000€ of product to a single supplier:
a) Supplier is from Madrid
b) Supplier is from Shanghai
c) Supplier is from Berlin
TYPES OF EXEMPTION IN VAT:

- Full Exemption: We don’t charge VAT because of the Destination Principle.

We keep the right to deduct the Input VAT.
- Limited Exemptions: We don’t charge VAT because the product/service is
exempted. (Aunque fuera una venta interior, estaría exento; por ejemplo, si
vendieses plasma o sangre destinada a la investigación).
We can’t deduct Input VAT.