What is the equivalence surcharge and how does it work on invoices?

Equivalence surcharge

If you have an online store, you will know that you have to make invoices for each product you sell. However, Have you ever come across an invoice that they ask you to make with an equivalence surcharge? Do you know exactly what it is?

This is one of the procedures you have to do if you have an eCommerce. But, what is it about? And what is there to do? Below we explain everything so that it is as clear as possible. Shall we start?

What is the equivalence surcharge

Invoices and accounting review

The first thing you should know is that the equivalence surcharge is related to VAT. In fact, it is a special regime of this and all retail merchants are required to fit into this activity.

Of course, only for individual entrepreneurs and only retail sellers. However, this has some nuances because if the majority of your eCommerce sales are for companies, and not for individuals, then you would fall under the wholesale VAT regime.

We give you an example so that you understand it. Imagine that your eCommerce is for t-shirts. You have a supplier from whom you buy 20 models of one color, 20 of another, 20 of another... And different sizes. When these shirts arrive, as they arrived, you sell them. That is, you are only an intermediary between the manufacturer (supplier) and the end customer.

Well, that product itself, when they invoice you, would be included in the equivalence surcharge. In other words, in addition to VAT, you must pay another percentage that would be the surcharge.

However, it doesn't just happen from supplier to seller, but as a seller, you yourself become a supplier and that makes many freelancers, other retailers, etc. may be accredited for the surcharge to be applied. And you have to reflect that on the invoice.

Why the equivalence surcharge?

Invoice review

With what we have explained, you will most likely see the fact that you have to pay more (VAT plus surcharge) as unfair. And is not for less. But he actually has a reason.

You see, as we have said, the equivalence surcharge belongs to VAT and only retailers can request it on their invoices.

When a supplier has to give that merchant an invoice with an equivalence surcharge, two things happen:

  • On the one hand, the supplier is going to declare the VAT on that sale, and for that reason he will pay the Treasury. But it will also do it for the surcharge (and it will also do it for the Treasury).
  • On the other hand, the merchant pays VAT plus that surcharge. But, in exchange, he does not have to include that invoice in the VAT return.

You should know that the supplier (in this case you because you are the one who sells to the end customer and you do not make alterations to the products) does not benefit or harm him from including the equivalence surcharge on the invoices. The only thing is that, instead of paying the Treasury 21%, you pay 21% plus that surcharge.

In the case of the merchant (or rather, client) it does not benefit him in itself either, except for the fact of not having to present that invoice in his declaration. But that is at the cost of paying more for the product.

When does the equivalence surcharge apply?

According to the legislation that regulates the special equivalence surcharge regime, there are two situations in which it applies:

  • In the delivery of personal property or Semoventes from entrepreneurs to retailers.
  • When the retailer makes intra-community acquisitions, imports and acquisitions of goods, this subject is liable for investment.

What is the equivalence surcharge

Invoices

When making an invoice with an equivalence surcharge, the format it uses is exactly the same as the ones you often make. However, just below where you put the 21% VAT, you have to put another "tax", which would be the equivalence surcharge.

How much would it be?

Well, it depends on the VAT paid. If your products are part of the general VAT, then you will add a 5,2% surcharge.

If the VAT is reduced (which, as you know, is 10%), the surcharge is also reduced, in this case to 1,4%.

And finally, if you sell products at the super-reduced rate (4%) your surcharge will be 0,5%.

Furthermore, in the event that the product being sold is tobacco, you should know that the type of equivalence surcharge does not fall within the previous ones, but is 1,75%.

Once you calculate it, you must reflect it on the invoice, which will be added together with the VAT and the purchase base to obtain the final total that the end customer must pay.

Now that you have a better idea of ​​the equivalence surcharge, the next time you are asked for an invoice with it you will surely be able to present it much better. Have you found yourself in this situation?


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