By: Marcel Miró
It is common knowledge that exportation is at the forefront of the ABC of management books, even more so as the Spanish domestic market is truly weak.
However, when we export we come across an added difficulty because we have to finance the VAT borne, whenever our tax returns are negative, with it taking an average of one year to recover this.
With the disappearance of the now old exporters’ system, in which limits were placed upon the amounts on which there was entitlement to refunding, we have considerably improved our tax system with the application of the monthly VAT refund system, named REDEME in tax jargon. As a system of a voluntary nature, this offers the possibility of recovering VAT in very short periods of time (we may speak of 10 days here), especially when companies make every effort to present full, complete information to the Administration. However, as nothing in life is free, in addition to the so-well-known form 303, companies must present a form 340, which is nothing other than an electronic VAT register book, albeit with some information that had not been requested until now. When it was first introduced, few of us dared to use it and suffer certain unresolved practical aspects in tax regulations.
Nevertheless, practical experience shows us that we are always in the hands of the Tax Administration, which, ultimately, may process the refund rapidly or, on other occasions, delay it, should it deem this to be appropriate, due to reasons foreign to the VAT-refund procedure.
This is where an alternative scenario that may prevent us from having to wait for VAT refunds may be considered.
If our company commercializes products destined for the EU or for exportation and a considerable amount of our products or materials originate from third-party countries, it may be of interest for us to use the figure known as a bonded warehouse (DDA in Spanish), which is one of the existing systems in which VAT is suspended.
In the case of the bonded warehouse, there must be an importer to mediate between the exporting company and our own, which will be the one really importing the country. The importer will release the goods for free circulation and put them in the bonded warehouse for handling, with the importer thereby settling customs duties without paying the VAT on importation.
As a consumer of these materials or a trader of these products, our company will be able, following the commercial transaction with the importer, to acquire the goods located in the bonded warehouse, settling the VAT via form 380, with this VAT being offset automatically and not paid.
We live in a peninsula surrounded by strategically-located ports with which commerce may be generated in order to supply the entire European market.
Let’s be clever and take advantage of the few opportunities available to us. www.pbs.es