REDEME: how to claim Spanish VAT refunds every month

Under the general system in Spain, if a quarter shows VAT in your favour, the usual thing is to carry it forward to the following quarters. A cash refund can only be claimed in the last return of the year. If it happens quarter after quarter, that money sits with the tax agency for months.

REDEME changes that: once registered, every monthly return with a balance in your favour can claim a refund. It's voluntary and is regulated by article 116 of the Spanish VAT Law and article 30 of its Regulation.

Businesses that pay more VAT on purchases than they charge on sales as a rule, not because of one odd month. In e-commerce this happens mainly in three situations:

• You sell at a reduced rate (10% or 4%) and almost all your costs (advertising, logistics, marketplace fees, services) carry 21%.
• You sell a lot outside Spain: exports and supplies to businesses in other EU countries are exempt, but you still pay VAT on your purchases.
• You make a large investment in stock or equipment in a given period.

The sum to decide is simple: how much VAT in your favour you build up over the year, and what it costs you to file every month and run the SII.

According to the AEAT, you must:

1. Apply on time, with the census declaration, online.
2. Be up to date with your tax obligations.
3. Not be in any of the cases of provisional deregistration or revocation of your tax ID.
4. Not have activities under the simplified VAT scheme (módulos).
5. Not have been excluded from the register in the previous three years.

In a group of companies, the parent company applies and the application covers the whole group.

You apply with form 036:

• In November, effective from the following 1 January.
• During the year, within the filing deadline of a VAT return. It takes effect from the day after the end of that tax period.
• Before you start selling, if you have already bought goods or services for the business.

If the tax agency doesn't reply within three months, the application is deemed rejected. An application filed out of time is archived.

Joining REDEME has two consequences you need to accept beforehand:

• Form 303 becomes monthly, filed online, from the 1st to the 30th of the following month. January's is due by the last day of February.
• The SII becomes mandatory: you send every invoice issued and received to the AEAT within 4 days. I explain it in the SII guide.

The second point is what weighs most day to day. If your invoicing isn't automated, sort it out before you apply.

• If you register in November: at least the whole following year.
• If you register during the year, or before starting the business: the year you apply and the next one.
• Voluntary withdrawal: with form 036 in November, effective from 1 January. You can't reapply in the same year you leave.
• Mandatory withdrawal: if you start having activities under the simplified scheme.
• Exclusion: if you stop meeting a requirement or your census information turns out to be inaccurate. You can't come back for three years, and you also leave the SII unless you are still required to use it for another reason.

The AEAT has six months from the end of the filing deadline to make the refund. If it goes beyond that for reasons that aren't yours, it must pay late-payment interest on its own initiative, without you asking.

The advantage of REDEME isn't that the tax agency has less time: it's that you claim the refund every month instead of once a year.