The equivalence surcharge is a special VAT system that is mandatory for retailers who market products without making any form of modification to them. Although it is normally applied to companies, it can also affect civil societies, inheritance and community of goods, as long as all its members are individuals. Some activities are exempt from this surcharge, such as jewelry, art objects and antiques and natural fur garments, for example.
In relation to this, self-employed workers who invoice more than 20% of their sales to customers who are professionals or entrepreneurs will also have the possibility of avoiding the equivalence surcharge, provided that they inform the tax authorities and submit the appropriate documentation, opting to apply the general regime in the next tax year.
How is applied?
Opting for this special regime means that retailers must pay the general VAT together with a small surcharge on purchase invoices, in exchange for being exempt from submitting VAT returns to the tax authority (form 303). In situations where the retailer makes international purchases, he/she must self-assess the VAT and file form 309 with the Tax Agency.
The equivalence surcharge corresponding to the 21% VAT rate is 5.2%. For the 10% VAT rate, the equivalence surcharge is 1.4%. For the 5% VAT rate, an equivalence surcharge of 0.625% is applied. For the 4% VAT rate, the equivalence surcharge is 0.5%. In addition, tobacco has an equivalence surcharge of 1.75%.
What does imply?
If the trader’s turnover does not exceed 600,000 euros, he is not obliged to file a VAT return or keep accounting records. This simplifies the administrative and accounting responsibilities of the business.
However, it is important to note that the VAT assumed, including the equivalence surcharge, is not deductible, which means that it cannot be recovered. In addition, it is required to communicate to suppliers that they are under the simplified regime of equivalence surcharge, so that they issue invoices according to this modality. This is considered another of the disadvantages associated with this regime.
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