What are electronic services and form 368 in Spain? Globalization in business has made us receive these inquiries more regularly than before. And it is crucial to determine if the service you will provide is an electronic service or not because it will depend on that, for VAT purposes, whether or not the special electronic services regime applies.
Table of Contents
What are electronic services?
We will start by defining what is considered an electronic service:
The services provided electronically cover the services provided through the Internet that, by their nature, are basically automated, require minimal human intervention, and do not have feasibility outside of information technology.
Electronic services examples
Among others, we can relate the following (without considering a closed list):
- Hosting of websites and web pages.
- Remote maintenance of programs and equipment.
- Access or download programs and their update.
- The provision of images, text, information and the provision of databases.
- Access or download of music, movies, games, including those of chance or money, online magazines and newspapers, digitized content of books and other electronic publications.
- Automated distance learning that depends on the Internet to function and does not need human intervention.
- Internet service packages related to information and in which the telecommunications component is a secondary and subordinate part. Service packages that go beyond simple Internet access and include other elements such as content pages with links to news, meteorological or tourist information, playgrounds, site hosting, access to online discussions, etc.
Electronic services won’t include…
The fact that the provider of a service and its recipient communicate by email will not imply that the service is considered a service provided electronically.
In this way, electronic services will not include, among others:
- The goods whose order or the processing is done electronically.
- The services of professionals, such as lawyers and financial consultants, who advise their clients by email.
- Teaching services in which the course content is taught by a teacher online (not by videos recorded previously).
- Telephone help services.
If you are in any of these cases, you do not provide electronic services.
Otherwise, if your service is somehow automated (as described in the examples above), you are providing an electronic service. So you will be included in the special VAT regime for electronic services. And how will it affect you? Let’s see that…
What happens if you provide electronic services?
Your services will be taxed in the Member State of the establishment of the client, whether the client is an entrepreneur or professional or if it is a person who does not have such a condition (final consumer).
Three cases if you provide electronic services
These are the three cases in which you can find yourself:
1. Provide your services to an entrepreneur from another member state.
The operation is taxed in the state where the client is established or resides, and it will be the client who declares and enters the VAT in his tax administration (investment of the taxpayer).
2. Render your services to an end consumer from another member state.
The tax operation is in the state where the customer is established or resides, but in this case, you must declare and enter the VAT through the One-Stop Shop Scheme.
3. When you provide services to an entrepreneur or final consumer from a non-EU country.
That is a non-subject transaction. Therefore, you don’t have to apply VAT.
Example
An individual with habitual residence in France downloads a movie through a website of a Spanish company. The Spanish company must include and enter the French VAT. It can choose to register and submit its VAT declarations for these services in Spain through the Mini One-Stop Shop service.
Form 368 if you provide electronic services
Finally, if you provide electronic services you have to fill out form 368. The Tax Agency has included some of the most frequently asked questions in this link and has included guides in pdf and instructions in any of the cases. That way, entrepreneurs can understand how the system works.
Although there is a lot of information, filling out form 368 is not an easy job and we always recommend contracting a specialist.
In Selfemployed Spain, we don’t provide services to professionals who render electronic services. The reason as you have read is the complex system of VAT that has to be controlled via the special Mini One-Stop Shop services of the Tax Agency.
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