The digital economy has made international business expansion commonplace, with an increasing number of businesses in Spain choosing to offer their products and services to member countries across the European Union. Fortunately for ecommerce businesses, these types of intracommunity operations (i.e., cross-border transactions between two member countries) are free of tariffs and offer additional tax benefits.

However, not all businesses in Spain can perform cross-border transactions across the EU and take advantage of the associated benefits. As a measure to prevent fraud, tax identification is mandatory for businesses involved in intracommunity transactions; only self-employed individuals and companies in Spain with an intracommunity value-added tax (VAT) number are permitted to conduct such transactions.

What’s in this article?

• What is an intracommunity VAT number?
  
• What is an intracommunity VAT number used for in Spain?
  
• Who needs an intracommunity VAT number in Spain?
  
• How to obtain an intracommunity VAT number in Spain
  
• How to check an intracommunity VAT number in Spain
  

What is an intracommunity VAT number?

An intracommunity VAT number is a tax identification number for business professionals who conduct—or intend to conduct—cross-border operations within the European single market. These transactions are subsequently reported using Form 349.

An intracommunity VAT number can also be called a European VAT number, an EU VAT number, or—by its Spanish acronym—NIF-IVA. Although the terminology varies, it refers to the same identification number in all cases. In Spain, an intracommunity VAT number consists of the prefix “ES” followed by a Tax Identification Number (NIF), and it is in one of the following three formats:

• ESX12345678
  
• ES12345678X
  
• ESX1234567X
  

As shown above, an intracommunity VAT number in Spain always includes the country prefix followed by nine characters. The first, the last, or both of these characters can be alphabetic, while the remaining characters are numeric.

What is an intracommunity VAT number used for in Spain?

Having an intracommunity VAT number is beneficial for both tax authorities and businesses in Spain to:

• View the tax information of any business professional within the EU.
  
• Facilitate customs operations and the VAT refund process.
  
• Avoid significant penalties or surcharges for conducting cross-border transactions across the EU without proper identification.
  
• Conduct intracommunity operations without incurring the VAT rates in Spain. Instead, businesses either:
  
  • Pay VAT in the destination country: The VAT of the country where the goods or services are sold is paid, which often occurs when the purchasing party is not registered with an intracommunity VAT number.
    
  • Don’t pay VAT: This is quite common in transactions between businesses (e.g., a supplier providing materials to a trading company that manufactures products to sell to customers).
    

Note that to access these tax benefits, businesses in Spain must include their intracommunity VAT number on the invoices they issue when selling their products to other businesses; they also must request the respective VAT numbers from those buyers. Additionally, businesses must make sure that any incoming invoices correctly display both their own and their supplier’s VAT number.

Who needs an intracommunity VAT number in Spain?

An intracommunity VAT number is required in Spain for self-employed individuals or companies that meet certain conditions that depend on the tax domicile of the self-employed or individual business.

Peninsular Spain or the Balearic Islands

• They receive services from businesses that don’t have headquarters in a Spanish territory in which VAT applies
  
• They are VAT taxpayers (i.e., businesses and self-employed individuals that collect VAT from buyers) with the corresponding certificate.
  

Peninsular Spain, the Balearic Islands, or a Spanish territory where VAT is not applied (i.e., Canary Islands, Ceuta, and Melilla)

• They sell or buy goods or services subject to VAT in the rest of the EU. Note that they will need a VAT number regardless of whether purchased goods or services are used to carry out a commercial activity in another country.
  

Peninsular Spain or the Balearic Islands

• They sell services that, according to the Agencia Tributaria’s (AEAT) special rules, are provided in another EU member country.
  
• The buyer of the services acts as the taxable person for operations (i.e., the destination country’s VAT is charged).
  

How to obtain an intracommunity VAT number in Spain

To obtain an intra-community VAT number in Spain, you must follow the application process by completing the steps below.

• Download Form 036, a census declaration that you can find in PDF format. You can also fill the form out electronically via the AEAT’s official website.
  
• Under “Reasons for filing,” select that the reason for updating your information in the Register of Business Persons, Professionals and Withholders is to process your registration in the Register of Intra-community Operators (ROI).
  
• Go to the “Value Added Tax” section to indicate that you want to become part of the ROI and enter the date on which you expect the first transaction with another EU company to take place.
  
• After submitting Form 036, the AEAT will have three months to approve the application. Once approved, you will be assigned an intracommunity VAT number and you will be included in the VAT Information Exchange System (VIES). This is a tool developed by the European Commission for searching tax data on companies in Europe.
  

How to check an intracommunity VAT number in Spain

To verify an intracommunity VAT number is valid, you must use the VIES system mentioned above. Below are ways to check the VIES system.

• Through the AEAT: Whether you want to check an intracommunity VAT number from Spain or from another country, simply enter the number you’d like to validate in the designated text field of the AEAT website. After clicking “Submit,” you will get the verification result.
  
• Through the European Commission: The process is also very simple, although it involves a few more steps:
  
  • Click on the first drop-down and select the member country on the European Commission website. For example, if it’s a Spanish territory, check “ES-Spain.”
    
  • Enter the VAT number to be checked in the “VAT number” text field.
    
  • Optional: You can also select the member country and enter the VAT number of the individual conducting the verification for your records.
    
  • Click on the “Check” button to receive the result.
    
• Through Stripe Tax: If you use Stripe Tax to simplify the collection and calculation of VAT on your sales, the tool enables you to automatically verify your customers’ intracommunity VAT numbers. This helps you apply the correct tax exemptions or reverse charges. In addition, Tax is regularly updated with the latest changes to tax rates in any of the more than 50 countries where it is available. (View the list of excluded territories.)
  

Whichever method you choose to verify an intracommunity VAT number, there can only be two results:

• Valid: The intracommunity VAT number is correct; the tax data exists and is displayed on screen.
  
• Not valid: The intracommunity VAT number is incorrect; it is not part of the database of the country in question. This could be for a few reasons:
  
  • The intracommunity VAT number is incorrect.
    
  • The intracommunity VAT number is not registered to conduct intracommunity operations.
    
  • The AEAT registration has not been completed.
    

Be aware that even after you have completed your registration in the ROI, it might take some time for your incorporation to be reflected in the VIES database. To address doubts about the validity of an intracommunity VAT number, it is advisable to also consult the tax administration of the country to which the company belongs. For instance, if it’s an intracommunity VAT number of a company in Spain, you will need to contact the AEAT. The agency will verify whether the number is valid or invalid, and it will also provide you with the company’s name, address, and whether it is a self-employed individual or a company.