According to the Spanish VAT Act, the VAT exemption on intra community supplies is applicable when the transportation of the goods to another Member State can be proved by any means valid in law. The formalistic approach taken by the Spanish Tax Authorities has now been confirmed by the Supreme Court.
In the case at hand, the taxpayer supplied goods from Spain to Portugal without charging Spanish VAT based on the EC supply VAT exemption, but the transaction was not reported in Portugal as an EC acquisition of goods. The customer was responsible for the transportation and the supplier did not have any document justifying the transportation of the goods, other than the freighter's signature and stamp on the invoice. In addition, the customer denied the receipt of goods in Portugal, meaning that the only document proving the actual shipment of the goods was the invoice stating that the goods were shipped to Portugal. The Spanish Tax Authorities challenged the application of the VAT exemption because VAT regulations' requirements to benefit from the exemption had not been met.
The Supreme Court emphasises that when an intra community sale is operated under ex-work conditions and, therefore, the supplier is not responsible for the transportation of the goods, the supplier should always obtain either a transport document stating that the goods arrived to the other Member State or a copy of the invoice duly stamped by the customer confirming that the goods arrived to the other Member State. Otherwise, the exemption will not be applicable and the supplier will not be deemed to have acted under good faith.
This resolution confirms the strict approach of the Spanish Tax Authorities on formal requirements. Therefore, taxpayers must act diligently when dealing with intra community supplies so that it can be proven that, as a supplier, the company has acted in good faith by assuring that the goods arrived to the other Member State.