For those entrepreneurs or professionals who are not established in the Spanish VAT territory, but they are in another Member State of the Community, there is a special procedure provided for in Article 119 of the Spanish VAT Act to claim back the VAT borne in Spain in connection with transactions that they have carried out in said territory.
Since 2010 the European VAT Directive changed the procedure for requesting the VAT refund, so until December 31, 2009 the taxpayers who wished to use this application for refund had to submit this (using the Form 361) in Spain, while from January 1, 2010 the taxpayers who wish to submit this application must do so through an electronic portal enabled for this purpose by the tax authorities of the Member State where the applicant is established.
In any case, it is regulated by the European Directive that it will be the tax authorities of the Member State where they have borne the VAT who must process and, where appropriate, to order the refund of the VAT. For such purposes, the legislation also establishes the possibility for the Tax Administration to require, from its counterpart in the Member State of establishment of the taxpayer, the correction of errors that are detected in the application, who shall forward the communication to the applicant. In practice, this three-way communication (destination Member State, the Member State of establishment and applicant) can sometimes result in a loss of information for the applicant, as has occurred in the case decided by the Court.
In that case, the applicant, a businessman or professional established in Germany, filed correctly and on time, through the website of the German tax authorities, the applications for refunding the input VAT borne in Spain for the periods 1Q, 2Q and 3Q of 2010. However, given the lack of answer regarding the resolution of the requests, resubmitted an application in May 2012, which was rejected by the Tax Administration for being late.
The applicant brought a claim alleging that he had submitted within time the relevant applications, but in the absence of resolution within four months available for the Tax Authorities to resolve, resubmitted the application in May 2012, the latter being understood as a “reminder” and not as a new application.
Given these arguments the Spanish Tax Administration said it received earlier applications containing errors, so it was communicated to the German tax authorities to proceed with the correction thereof, a fact that never came to the attention of the taxpayer. The taxpayer filed an appeal before the administrative Court, claiming that the request of the Spanish Tax Authorities must be notified to the company and not the German tax authorities, which never happened, so it must be resolved according to the applications firstly filed.
The Court agrees with the taxpayer and accepts its claims in the sense that, first, the national legislation in this respect, i.e. the VAT Act, Regulations and Ministerial Order approving the Form, is silent on concerning the procedure to follow after the filing of the application but only refers to the way it must be filed, i.e. through the web portal of the Tax Administration of the Member State of establishment, so that in any case the procedure for correcting errors by the taxpayer must be regulated in the law of the Member State of establishment and, on the other hand, there is no proof or evidence in the record referred to the Court of communications between the two Member States or even directly with the applicant, so the Tax Authorities cannot prove the assertions made to the effect that the applications were defective.
Our recommendation in this regard is always to review the information and evidence available by the tax authorities in cases where the request is denied by lack of notification, no response requirements or communications failed, etc, since it is common to find cases where there has been no due diligence by the Administration regarding communications with the taxpayer.
A copy of the resolution in Spanish, with number 2884/2013, is attached.
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