Spanish Tax Agency launches DIVA, the new electronic system for VAT reimbursement to travellers

The Spanish Tax Agency has launched a new electronic system to facilitate the reimbursement of VAT to travellers ('tax free') who are not residents of the European Union. The new procedure, entitled DIVA, will enable travellers to expedite the process for stamping the documents they need for reimbursement of this tax as they leave the VAT application territory. Furthermore, those businesses that use this system will increase security and traceability given that the documentation will be incorporated into the database of the Spanish Tax Office directly. Between January and September 2016, over 10.7 million non-EU tourists visited Spain.

The DIVA project stems from the National Shopping Tourism Plan that was approved by the Government of Spain in November 2014. Under this plan and in line with the systems already in place or under study by other European countries, the Spanish Tax Agency is proposing an improvement in the VAT reimbursement procedure for purchases made by travellers.

Following an initial pilot project undertaken at Barajas Airport (Madrid) that concluded successfully in August, 14 Spanish airports will now have automatic machines or reading devices by the end of November for the electronic validation of the online form (DIVA Form) that will enable reimbursement of this tax without the need to complete the traditional process of manually stamping purchase receipts at Customs.

These devices will be available at the airports in Madrid (already in place), Barcelona, Valencia, Seville, Palma de Mallorca, Bilbao, Malaga, Alicante, Ibiza, Mahon, Castellon, Girona, Asturias and Santander. Also by the end of November, these devices are scheduled to be installed at other key points used by travellers, such as the ports of Algeciras, Malaga, Alicante and Tarifa, and the custom points on land in La Línea de la Concepción and La Farga de Moles (Lleida).

Gradual implementation

DIVA will be implemented gradually as those businesses and other 'tax free' operators authorised by the Spanish Tax Agency to manage VAT reimbursements join the system. In order to communicate the new tax reimbursement system and its advantages, the Spanish Tax Agency organised an informative conference in collaboration with the State Secretariat of Trade of the Ministry of Economic Affairs, Industry and Competitiveness on 8 November, which was attended by over 40 companies and various representatives from the public sector.

During the course of the event, the Director of the Department of Customs and Special Taxes of the Spanish Tax Agency, Pilar Jurado, encouraged the business sector to sign up to the new system as quickly as possible. In turn, the State Secretary for Trade, Jaime García-Legaz, believes this to be an "absolutely essential" initiative that has been launched "at the right time and highly successfully".

How does the DIVA system work?

Non-resident travellers within the VAT application territory are entitled to a reimbursement of the tax paid when purchasing goods, provided they meet a series of requirements. Until now, this reimbursement system in Spain - internationally known as 'tax free' - required a manual stamp on the purchase receipt by Customs when travellers declared goods they purchased before leaving the European Union VAT territory. This enabled travellers to accredit effective departure from the VAT application territory for the purpose of enabling a subsequent reimbursement request from the business where the goods had been purchased or from the partner entities that offer to manage these reimbursements.

The new DIVA system, which will operate alongside the traditional manual stamping of purchase receipts, is an electronic procedure that businesses can sign up to voluntarily. By using this system, travellers will be able to request an online form (DIVA Form) at the store and validate it electronically for tax reimbursement purposes at stamping points at each Customs location. Travellers will then be able to claim a reimbursement from the store where they made the purchase or from the 'tax free' management entity located in the corresponding boarding area.