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V0189-22 7 February 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · reciprocidad de trato

UK businesses may claim VAT refunds under Article 119 bis if they are not taxable persons in respect of resales

A UK company with a branch in Spain that does not make sales has enquired about the refund of input VAT and the nature of the security required from its representative. The DGT clarifies that reciprocity applies to refunds even in cases of resale if the entity is not a taxable person, and defines the security as a guarantee for the payment of tax liabilities.

The question raised

Determination of the amount and nature of the security provided for in Article 119 bis of the Value Added Tax Act.

The DGT's ruling

United Kingdom entrepreneurs may request the refund of input VAT under Article 119 bis if reciprocity requirements are met, including in acquisitions for resale provided they are not taxable persons by virtue of the reverse charge mechanism. The security required from the representative to ensure the recovery of improper refunds shall have the nature of a guarantee for the payment of the tax debt. This shall be formalized through a joint and several guarantee from a credit institution, a mutual guarantee society, or a surety insurance certificate.

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