Tax pass-on requirements for e-cigarette liquids

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the application of the tax on liquids for e-cigarettes within the distribution chain. The inquiry focused on determining whether, after the initial acquisition, the tax is already included in the price or if it must continue to be subject to pass-on and settlement in subsequent stages.

What the DGT has ruled

The body has ruled that the distributor is obliged to pass on the tax amounts to its purchaser. This criterion is based on the fact that, in the analyzed case, it was not proven that the purchaser is a holder of a tax warehouse. Since they do not hold this status, the distributor must comply with current regulations regarding excise taxes.

The resolution establishes that the purchaser, by bearing the legal pass-on of the tax, has the possibility of transferring said amount to its own customers through the sales price. However, this purchaser is not obliged to perform the pass-on under the technical terms established in Article 14 of the Excise Tax Law (LIE) and Article 18 of the Excise Tax Regulations, unless they meet the requirements of a tax warehouse holder.

What it means for you

This ruling has a direct impact on companies acting as distributors of products introduced from the European Union. If your activity consists of the importation or distribution of these liquids, you must ensure that the excise tax is correctly passed on in the invoice to the purchaser and that its self-assessment is carried out.

For companies purchasing these products, it is fundamental to distinguish between bearing the cost of the tax (which can be integrated into the sales price to the final consumer) and the obligation to settle the tax as a taxable person according to excise tax regulations.

What should be done

It is necessary to verify the tax status of your business partners. If your customers are not holders of a tax warehouse, the pass-on of the tax is a mandatory requirement in invoicing. It is recommended to analyze the cost structure and the composition of sales prices to ensure compliance with Law 38/1992 and the Excise Tax Regulations. Each operational situation must be assessed individually to determine the corresponding settlement obligations.