Companies that sell certain products in Spain, and that after acquiring the customer, buy the product from a Chinese supplier which sends directly to the customer, that type of operations in which the delivery of the good is not made by the company directly to the customer in Spain, but it is the Chinese company that makes it, it can be considered non-taxable to VAT on the transaction.

A company that promotes the sale of toys online directly to individuals, at the time that a customer chooses and pays for the product at your disposal, the company makes the purchase of the merchandise in China with charge to your professional card but indicating that it must be sent by the Chinese supplier directly to your Spanish customer who will be the one who appears as the recipient of the import and who is the one who assumes the payment of both the product, transport and customs duties and other import taxes.

On the obligation to pay value added tax on the product when it is sent directly by a Chinese company, even if the request or the initial purchase has been made by the Spanish company; in accordance with the rules laid down in the Value Added Tax (LIVA) Act, Article 4 states that “The supplies of goods and services carried out in the spatial scope of the Tax by entrepreneurs or professionals for consideration, on a regular or occasional basis, in the development of their business or professional activity, even if they are carried out in favor of the partners, associates, members or participants of the entities that carry them out, will be subject to the Tax.“.

Therefore, from a first approximation, the company acts within the scope of application and therefore subject to value added tax, with regard to the supplies of goods that it markets, which have been made in the exercise of its business activity, understanding that it is subject to exercise it within the Spanish territory taxed by the tax.

It seems that in this type of transaction there are two supplies of goods, the one that the company makes by acquiring the good from the supplier in China, and the resale of the same with the subsequent delivery of the aforementioned good at the domicile of the client, who will have paid the amount of the good, transport, taxes and the corresponding commission as an intermediary of the aforementioned company.

Is the transaction subject to VAT if the delivery of the good is made from China?

The particularity, and complexity of this type of operations lies in the fact that although the transaction of sale of the good is carried out in Spanish territory, what is the physical good is not delivered by the company directly to the client in Spain, but a third figure appears, which is the Chinese supplier, which is the one that produces the good and delivers to the final customer.

In this way we will have to analyze the stipulations of article 68 of the LIVA that speaks of the realization of the delivery of the goods to find out if it corresponds to tax for vat in this type of operations “The place of supply of goods shall be determined in accordance with the following rules:

One. The supply of goods that are not the object of dispatch or transport, will be understood to be made in the territory of application of the Tax when the goods are made available to the acquirer in that territory.

Two. They will also be understood to be made in the territory of application of the Tax: 1º. The supply of movable tangible property which must be dispatched or transported for its disposal to the acquirer, when the dispatch or transport begins in that territory, without prejudice to the provisions of paragraph four of this Article“.

In this way, in the case at hand, the company makes the purchases of the products to a company located in China, which then resells to a Spanish customer, and the goods are sent directly from the Chinese factory to the home of the private customer in Spain, with this characteristic it seems that the delivery of the good is not made in Spain, as it could well be if the Chinese factory sent the goods first to the Spanish company, and then it delivered the goods to the final customer.

In such circumstances and taking into account that the requirement of “the dispatch or transport begins in the aforementioned territory”, in accordance with the rule established in the supply of goods of article 68 of the LIVA, the operations carried out would not be subject to Value Added Tax in the territory of application of the Tax.

The supply of goods is understood to have been made from China, and therefore the transaction of delivery of the sale is presumed to have been carried out outside the territory of the Community, and therefore not subject to VAT.

Is it considered an import of goods and should it therefore be subject to VAT?

Another option to delimit to see if the operation described in this article is really subject to VAT, is to see if it is included within what the LIVA understands to be operations of import of goods.

Its article 18.1 any entry into the interior of Spain of goods from a country that is not within the community environment, will be considered that we are facing an import of goods, and therefore will be subject to the tax as indicated in article 17.

In this way, we will analyze if the entry of the merchandise is considered import of goods and therefore subject to VAT, or if because the merchandise is transported directly from the factory in China to the customers of the Spanish company, the tax treatment is different.

Analyzing Article 86 of the LIVA, which details the consideration of taxable person in imports of goods establishes, among others, that VAT is considered to be those entities that carry out imports and that the recipients of the imported goods, are the acquirers, assignees or owners of the same, or consignees who act in their own name in the importation of said goods.

In conclusion, the Spanish company does not import goods in the strict sense defined by the LIVA, but is limited to making a purchase of goods outside the Territory of the Community, also selling it outside it, and for this reason as a consequence none of its operations would be subject to Value Added Tax.

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