Equivalence surcharge is a special VAT regime that is mandatory for merchants who meet these two conditions:
They sell to final customers.
They do not transform the products they work with.
Equivalence Surcharge means that the merchant pays a higher VAT on their suppliers’ invoices in exchange for not having to submit VAT returns.
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It only applies to merchandise invoices and it is the supplier who has the obligation to add the Equivalence Surcharge to their invoices.
On the supplier’s invoice, the input VAT and the VAT corresponding to the Equivalence Surcharge must be clearly differentiated.
The supplier must report both in their VAT returns.
Considerations
There are 3:
If you are self-employed or have a community of goods you must apply the Equivalence Surcharge.
You must not apply it if you carry out industrial, service or wholesale trade activities.
If you are self-employed and invoice more than 20% of your sales to professional clients or companies, you can switch to the general VAT regime. Duly informing the tax office and providing the corresponding supporting documents.
Types of equivalence surcharge
According to Royal Decree 20/2012, the types of equivalence surcharge that must be applied from September 1, 2012 are:
- 5.2% for items that have a VAT at the general rate of 21%.
- 1.4% for items that have a VAT at the reduced rate of 10%.
- 0.5% for items that have a VAT at the reduced rate of 4%.
- 0.75% for tobacco.
Self-employed in equivalence surcharge regime do not have to submit VAT returns. Which means one less administrative task to perform.
We hope this information is very useful to you.