Advances in intra-Community supplies of goods do not trigger VAT accrual

In the context of commercial operations between European Union Member States, the management of advance payments often raises doubts regarding the moment when Value Added Tax (VAT) must be taxed. A recent resolution from the Dirección General de Tributos (DGT) has delimited the tax treatment of these payments in specific operations.

What the DGT has resolved

The inquiry focuses on the supply of goods that are exempt from VAT pursuant to Article 25 of Law 37/1992. The DGT has determined that the collection of advances in this type of operation does not produce the accrual of the tax.

Likewise, the administration establishes that there is no legal obligation to issue an invoice upon receipt of said advances. However, it is noted that if the company decides to voluntarily issue the invoice at the time of collection, such action will accelerate the accrual of the tax. The obligation to issue the final invoice remains subject to the deadlines established in the Invoicing Regulations (RD 1619/2012), once the actual accrual of the operation occurs.

What it means for you

If your company makes sales of goods to other EU Member States and receives advance payments in exempt operations, the collection of these amounts does not trigger the obligation to declare VAT at that moment. This avoids the need to manage the settlement of a tax that, due to the nature of the operation, should not accrue merely because funds were received.

It is fundamental to distinguish between cash flow and the taxable event. The receipt of money does not automatically equate to the obligation to invoice, unless one opts for voluntary issuance that alters the tax calendar of the operation.

What should be done

Companies must ensure that their invoicing and accounting systems correctly distinguish between advances received and the moment of actual accrual of the supply of goods. It is necessary to verify that the exemption applied to intra-Community supplies is maintained in accordance with current regulations to avoid errors in determining the timing of the invoice. It is recommended to evaluate the management of these collections to avoid the issuance of premature invoices that could complicate the company's tax management.