Just how does that work in Spain?

Example 1. I buy and have delivered a load of building materials. The merchant makes out two receipts. One for concrete beams "because he has to pay IVA on them" and the other for everything else including sacks of cement. Are there cement works churning out millions of IVA free sacks of cement?

Example 2 . I have my car serviced and the bill comes to 400 for parts and includes 70 euros worth of labour. Do you want to pay IVA or not sir? Why choose to pay an extra 84 euros? Did he pay IVA on the parts?

On a national scale how does it work? Surely government know that there is widespread avoidance right through the chain

PS they are just hypothetical examples and I always pay IVA and point out the omission as appropriate.

I know someone here in Madrid who got caught out and had to pay back "lost" IVA. It's a very dangerous game to play but obviously some people do it.

Not sure how example 1 works but I can see that, in example 2, there is a double loss to the government; the IVA is lost and also the cash paid to the mechanic goes straight into his pocket and income tax is lost too.

It's how it works here, ask any accountant.

Suzi

Generally speaking, if he supplies goods that attract IVA he will have to pay that and pass it on.

If it is labour or other services it is easy for him to hide that.

A good example is professional services such as an architect - he will be able to lose all the IVA and pass the saving to you at 100%. His problem will be that if he does it too much Hacienda will eventually wonder how a successful architect can survive without declaring any income or IVA returns.

I think HMRC is a lot better at tracking this than Hacienda. There is a lot Hacienda could do to stop this but they don't seem to be trying to hard. Look at all the tax they could raise by pulling in all these UK plated cars and charging them the matriculation tax and fining them for not re-matriculating the vehicle in Spain.

Only been here a few days noticed iva issues already, the moving company for one, they say you pay cash then it is price quoted but if by card / bacs or whatever it will be £xxxx + IVA,

went to a chinese for dinner, same you pay cash its menu price, if you pay card etc then its +iva as written on the menu.

we asked in the Wok too if they would do the same deal and they did too, its down to them to do what they want, if they get caught its their problem not ours.

Not necessarily true.

You won't have a problem with a tiny restaurant bill but if you have a lot of work done such as building a house etc. if the builder/architect gets caught out you will be guilty of aiding and abetting and could run into some serious problems!

Italy has survived on optional IVA ever since it was first introduced in 1972.
Still going strong.

Of course - because electronic payments are logged, you have to pay IVA because there is a high risk that you would get caught

People are just trying to survive. Why pay IVA when the money will be stolen by some entitled thied of an MP and put into a Swiss acount with the rest of their millions while they sign papers that close schools, hospitals and keep unemployment high

Morally the IVA dodgers are correct.

I have to agree, to be honest my business when in the UK the VAT was very hard to compete with some sellers for lower value (under £20/£30) items but because I was legal, many of our competitors were not so they did not be VAT registered, or had 2 or 3 companies.

Then we had to pay VAT on postage too, and they did not or had some dodgy way round it, I remember one month we had a 25k vat bill, when you tell someone that they think your doing a blinding business, but I assure you we were not and we did get into a bit of a mess with the VAT.

You live and learn every day. I know Spain is a truly vast country with different autonomous regions and I only know a tiny part of it, but I've never heard of optional IVA.

Where I am, you either pay it, or you don't - and most of the time you don't and the choice isn't yours. The ordinary tradesman or trader doesn't deal with credit cards, the transactions are cash only.

If materials are required you pay cash up front for their purchase.

That's one way of looking at it. But whilst it continues, nobody can expect that high taxes on buying and selling property, inheritance, etc. will ever change. You pays your money (or you don't pay it, rather) and you takes your choice.

Yes of course. The trouble is that people do not trust the system

Spaniards are a charitable community focussed lot, if they really thought their taxes were helping people then most people would not think of dodging IVA

But, when you struggle to put food on the table, or pay for the books so your child to go to school, or fill your childrens stomachs - and you see in the news about the millions that politicians steal and the hundreds of thousands of euros that they earn just through their state paid salaries (some as much as 350,000 euros), then what would you do?

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