VAT on sales in Spain for non VAT reg company

what would you do?

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A UK company trades in the UK as an estate agent but is below the VAT threshold and has no wish to register for VAT.

They have just sold a property in Spain and the "customer" in Spain will not pay them until they give them, a VAT number,in fact they cannot seem to understand why the company is not VAT Reg.  The VAT would seem to be due in Spain as the property is in Spain, but if there were UK VAT Reg they would just send a reverse charge invoice and the Spanish customer would be happy.  Equally if they were VAT reg in Spain and they charged VAT the customer would be willing to pay it and reclaim.

As I see it there are 3 options, 1. register for VAT in Spain (costly and loads of hassle), 2. register for VAT in the UK (obviously not desirable) or 3. start a brand new entity just for these kinds of sales and register that one alone for UK VAT (I know there will be an issue with a connected company there).

What would you do?

Replies (1)

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chips_at_mattersey
By Les Howard
17th Jan 2019 17:21

There is a technical question as to whether Spain operates a reverse charge for land-related services, and whether that would apply in this instance.
If the client is likely to continue to do this sort of transaction, a new legal entity in Spain is an option.

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