I am registered in the EU and have a TAX ID number for my company. Why is there tax on my invoice?

You are reading this article because we have sent you an invoice and have added 21% Spanish VAT (value added tax) but you have a EU VAT number and feel that you should not be paying VAT on inter community transactions.

Having an EU TAX ID for your company DOES NOT automatically entitle your company to be tax exempt when performing EU cross-border transactions. Your company MUST ALSO BE registered with the local and/or national tax agency in your country to perform EU cross-border transactions.

When we take on a client, we will verify their EU Tax ID "status" against the VIES (VAT Information Exchange System) system which is the search engine run by the European Commission which is using the tax records directly from each member state in the union.

Here is the link to their checker and additional information.

If we are not able to verify that your TAX ID is registered for EU cross-border transactions, then we are obligated, by tax law, to add the Spanish VAT at 21% after which you are able to recoup that tax in your home country using the reverse charge system, your accountant will be familiar with the procedure.

As an example of a company not eligible for tax exemption on invoices, in the first screenshot below you can see that the client submitted their VAT number to us, but according to VIES, their VAT number is not eligible for EU cross-border transaction relief and requires them to be registered with their local/national tax authority before they can become eligible for tax exemption status. In this case we are obligated to apply Spanish VAT at 21% on any of their invoices and they would need to recoup that Tax in their country of registration.

failed vies lookup

Below is a screenshot of our own company and as you can see its valid for EU cross-border transactions and any invoices sent to us from a country within the EU should be without VAT.

jucra views lookup results

  • tax id, vies, EU cross-border transactions
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