Spanish IVA (VAT) question

mikemcgregor

mikemcgregor

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I've just had some work done on my boat and have received an invoice for the work done. The invoice shows costs for labour and parts supplied to repair faults.
I can see from the invoice that parts he purchased has incurred IVA (VAT) costs. My question is should he then add a further IVA (VAT) charge on the parts supplied?
 
http://www.pistonheads.com/gassing/topic.asp?t=766661

This has been raised in car forums from time to time

You are strictly speaking correct but at the end of the day they are the seller and can charge what they want. This gives them a hidden profit of the tax as they will claim the input tax back.

You can try and haggle but I suspect they will either claim ignorance and claim not to understand or just say no. Ask you never know !
 
I suspect he claims the VAT back on the parts he buys, so then would have to charge VAT when he sells them to you.
Unless he isn't adding a mark up to the parts they should be the same price. I suspect his markup is equivwnt to the VAT, likely for ease of accounting.

However, if he is a VAT/IVA registered business he does have to charge VAT/IVA on the parts supplied
 
Whitelighter said:
However, if he is a VAT/IVA registered business he does have to charge VAT/IVA on the parts supplied
Click to expand...
LOL, 'course he does, but once, not twice (or even more)! :D

Let's take a typical/normal transaction for a boat yard:
1. They buy from Volvo (or whoever) a spare part whose list price is 100 (ex-VAT).
2. Since they get a 40% discount (if not more), they pay 60+VAT. VAT is 12, but it ain't a cost for them, because they recover it.
3. They sell the part to their esteemed client (Mr.X) with a 10% discount, 'cause they are good guys.
4. Mr.X pays 108, of which 90 goes to the yard and 18 VAT (eventually) to Her Mayesty.
Bottom line, the yard has a very decent 50% recharge of 30 (90-60).

Now, what happens when they do what the OP is saying?
1, 2 and 3 are still the same.
But Mr.X eventually pays 129.6, and the yard has a profit of 48! :eek:
In fact, first of all they surely expose the VAT on the final price of 90, rather than on the 60 which they actually paid.
Mind, that number becomes just a sort of theorical VAT, because it has nothing to see anymore with VAT accounting, but that's irrelevant in this context.
What is relevant is that they include in their invoice the cost of that part at 108 (90+18).
And on the final invoice, they apply (correctly) the VAT. But this way, Mr.X pays 129.6 (108+21.6).
Of which, again, 21.6 isn't a profit for the yard, but the net result in their books is 108-60, i.e. an 80% recharge.
And if 50% was not bad, 80% is even better...! :cool:
 
spot on and probably 50% of car garages ( being charitable) do the same. Boats, cars all the same in this context.

I suspect that some of them do it out of genuine ignorance of what they are doing as VAT is a necessary evil and they will pass a hunk of paper to their accountant. Some however will be well aware of what they are upto.

There is not illegal about it - they can sell for whatever they want.



MapisM said:
LOL, 'course he does, but once, not twice (or even more)! :D

Let's take a typical/normal transaction for a boat yard:
1. They buy from Volvo (or whoever) a spare part whose list price is 100 (ex-VAT).
2. Since they get a 40% discount (if not more), they pay 60+VAT. VAT is 12, but it ain't a cost for them, because they recover it.
3. They sell the part to their esteemed client (Mr.X) with a 10% discount, 'cause they are good guys.
4. Mr.X pays 108, of which 90 goes to the yard and 18 VAT (eventually) to Her Mayesty.
Bottom line, the yard has a very decent 50% recharge of 30 (90-60).

Now, what happens when they do what the OP is saying?
1, 2 and 3 are still the same.
But Mr.X eventually pays 129.6, and the yard has a profit of 48! :eek:
In fact, first of all they surely expose the VAT on the final price of 90, rather than on the 60 which they actually paid.
Mind, that number becomes just a sort of theorical VAT, because it has nothing to see anymore with VAT accounting, but that's irrelevant in this context.
What is relevant is that they include in their invoice the cost of that part at 108 (90+18).
And on the final invoice, they apply (correctly) the VAT. But this way, Mr.X pays 129.6 (108+21.6).
Of which, again, 21.6 isn't a profit for the yard, but the net result in their books is 108-60, i.e. an 80% recharge.
And if 50% was not bad, 80% is even better...! :cool:
Click to expand...
 
Yup, sounds almost certain you're being taken for a ride, if he is adding VAT to his invoice to you. JR says it is not illegal, but it might be. I don't know enough detail on Spanish law. Your mention that you are tsking all the papers to the Spanish tax office to get their opinion might prompt him to correct his error. Anyway, it is not illegal for you to pay him a bit less by subtracting the VAT on the parts and the VAT he is charging on that VAT. Of course if you do that you have to think about his reaction and whether he is a bandit

( Reading your post precisely and literally, you were asking whether he should charge VAT, not saying that he did. But I think that is over-reading your post, and I'm guessing he has already charged you full VAT on the total invoice price)
 
Last edited:
petem said:
Mike, I know you have been trying to sell your boat for some time but I don't see it on Yachtmarket or Yachtworld. That can't help.

Pete
Click to expand...

Thanks Pete

I did try advertising it on Ebay in January. Got 1 enquiry from a Broker in Southampton offering to buy it and also to put it on their web site. Turns out their offer was very low as it included the cost of shipping back to the UK.

The Pelican is really more suitable for the Med.

Anyway I am sprucing it up and putting it in the Easter boat show here in Empuriabrava.
Will consider your suggestions if not sold.

Cheers
 
If they buy parts in they probably expect to put a markup on it and the IVA conveniently does this for them.
If they had agreed to supply at cost then they should not be recharging the purchase IVA because the true cost to a IVA registered company is the ex IVA price.
Markup or mistake.
 
Update:-

All resolved. It transpired that the parts supplied listed on the invoice were net price and did not include IVA (VAT).

Lesson learnt: Must try and learn to read and speak Catalan!!!!

Why are my "senior moments" becoming more frequent?
 
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