It shall be deemed as effectively performed in Spain all restoration and catering services provided in territory of Spanish VAT (The territory of the peninsula and the Balearic Islands). However, when comes to recover restoration and catering VAT, there is a crucial difference depending of whether the recipient of the services is an entrepreneur or an individual professional:
What happens when the person liable for VAT is an individual professional?
In this case, he could not recover restoration or catering VAT by any means; as we are aware, it is very usual that foreigners whose residence is not within the European Union and that visit and go shopping in Spain, right before doing luggage check-in at the airport, they show their goods purchased in Spain along with their corresponding “tax free” invoices, before the relevant tax deduction offices, in order to recover the VAT applied to their purchases.
However, as mentioned above, this does not work in the same way when comes to recover restoration or catering VAT, which individual professionals cannot recover by any means. Therefore, if a foreigner went for lunch in a restaurant, he could not deduct the VAT appearing on his bill. On the contrary, if the foreigner bought a food product in order to take it with him to his residence country without the EU, he could recover VAT at the airport, by just showing the item along with its complete invoice.
On the other side, if the person liable for VAT was an entrepreneur, he could recover restoration and catering VAT, provided that some conditions are met; in this sense, a distinction must be made between EU resident and non-EU resident entrepreneurs:
Concerning EU resident entrepreneurs, can they deduct VAT?
The answer is yes, they can, being the sole condition to present the invoice so issued by the relevant restaurant, and making application for recovering VAT at the foreigner’s residence country.
What happens with entrepreneurs whose residence is not within the EU?
General rule is that VAT could be recovered only by those entrepreneurs who are resident in a country where there is a reciprocity treatment policy in favor of entrepreneurs or professionals who are established in Spain (currently only Canada, Israel, Japan, Monaco, Norway and Switzerland).
However, and as an exception to this, entrepreneurs that do not have their residence within the EU but have it in any other country in the world, could recover VAT levied on restoration, transportation and access services, provided that these services are in relation to the entrepreneurs’ assistance to trade fairs, congresses and expositions of a commercial or professional nature that have taken place in Spain.
In all cases, non EU resident entrepreneurs must apply for VAT recovering in Spain, throughout tax model 361, meeting the following conditions:
- Appointment of a representative having his residence in Spain and that complies with all formal and material obligations, who shall be jointly and severally liable in cases of inappropriate return of taxes and that shall make the application for return via internet.
- Delivery to the tax management office of a tax certification of the country where the foreigner is established, which must prove that the foreigner was a person liable for VAT or similar applicable tax in his residence country, in the period where the quotas have been accrued and whose recovering is being requested.
Therefore, and as a summary of the above, the point is that, for tax purposes, restoration and catering services present a clear benefit for an entrepreneur, which is not such for a individual professional, being the former the only one who can deduct VAT levied on those services (provided that he meets a few conditions) and in any and all cases, VAT shall be deductible when the services have been used due to a commercial or professional reason.