The VAT rate in Spain is 21%. VAT stands for “Value added tax” and it’s a tax in Spain that has to be paid when selling goods and services. In Spain VAT is called the IVA, which stands for (Impuesto sobre el valor añadido).
In this article, you can find more information about the Spanish VAT. This is beneficial for people that are moving to Spain, or are starting a company in Spain. Topics that will be discussed are the meaning of the VAT, the different kinds of VAT rates, where and when to file the VAT taxes, the VAT number, VAT returns, VAT exemption, and more.
Types of Spanish VAT Rates
There are four different Spanish VAT rates. The regular VAT (21%), the reduced VAT (10%), the super-reduced VAT (4%), and the Zero VAT (0%).
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The regular VAT rate in Spain (21% IVA)
The standard Spain VAT rate is 21%, this is applied on regular supplies of goods and services. It is the most common type of rate. The regular Spanish VAT rate applies to products such as:
- Clothing and footwear
- Petroleum products and vehicles
- Alcoholic beverages and soft drinks
- and many others
The reduced VAT rate in Spain (10% IVA)
The Reduced VAT rate in Spain is 10%. It is put on products and services which are deemed necessities or cultural beneficiaries. For example, the reduced rate applies to:
- Agricultural supplies
- Agricultural products such as cut flowers and plants for food production
- Cultural or sporting services
- Mineral water, lemonade, and fruit juice
- Medical products for veterinary uses
- Tampons and panty liners
- Condoms and other non-medical contraception
- Passenger transport
- Hotel and restaurant services
- Certain printed books, newspapers and magazines.
- Normal Construction work
- Cultural events or touristic services are offered by hotels, restaurants or cafes.
- Entry tickets to museums, parks, monuments, shows
- Works of art
The super-reduced VAT rate in Spain (4% IVA)
The super-reduced VAT rate in Spain is 4%. It is applied to even more basic necessities such as:
- Bread-making flours
- Milk, cheese, and eggs
- Fruits, vegetables
- Pharmaceutical products and medicinal products for human use
- Social services, such as construction work on social housing
- Books, newspapers and magazines not containing advertising
- Domestic care services
Zero VAT rate in Spain (0% IVA)
Some products are not charged with VAT at all in Spain. However, there are not many. Products with zero vat rate are in the category:
- Gold coins, ingots and bars
- Intracommunity and international transport
VAT exceptions for regions
Some regions in Spain have different VAT rules as the ones stated before. These regions are:
- The Canary Islands
- Ceuta and Melilla
The Balearic Islands are seen as Spanish territory, they follow the normal IVA rate.
The VAT rate in the Canary Island
The Canary Islands are a Spanish territory in the Atlantic ocean. The VAT in the canary island is called the Canary Island General Indirect Tax (IGIC). The regular IGIC rate is 7%, and the other IGIC rates are 0%, 3%, 9.5%, 15%, and 20%.
This means that in general, you have to pay less VAT when importing goods from other countries to the canary islands. Next to this, when you buy something there, you have to pay less tax than if you bought them anywhere else in Spain.
VAT in Ceuta and Melilla
In Ceuta and Melilla, sales tax is applied instead of VAT. The sales tax is called IPSI (Impuesto sobre la Producción, los Servicios y la Importación or Tax on Production, Services and Imports). The standard rate is between 0.5% and 10%. For example, the fee for importing yachts is 10%.
Due dates to pay VAT in Spain
Companies with a Spanish VAT number are required to make periodic reports on the supplies they have sold and the supplies they have purchased. The VAT return is done on a monthly or quarterly basis. In general, the reporting period in Spain is quarterly. You will have to send the Spanish tax office the information by the 20th of the month following the end of the quarter.
Next to the quarterly VAT return, you also have to do an annual IVA return by the end of January every year in Spain. You can find the calendar with due dates on the website of the Spanish tax authorities:
Exceptions when to file VAT return
While the VAT return dates will be set by the local tax authority where you have registered your vat number, there are some general national guidelines. These are:
- If the total amount of goods or services is more than 6 million € annually, you will have to file VAT monthly.
- If the total amount of domestic sales in the year is below 35.000€ and the total amount of intra-community supplies of goods and services in the year is below 15.000€, you can file your VAT yearly
VAT registration for businesses
When you are starting a new business in Spain, it is required by law to register your business for VAT. Your Spanish company VAT number will be the same as your NIF number.
You will need to contact a Spanish tax office to get this number. Getting a Spanish VAT registration can be complicated, so it is advised to have a corporate lawyer to help you set up your business properly.
When you register for the VAT number, you will be put in the VIES system (VAT Information Exchange System).
The VAT number
Spanish VAT registered numbers (IVA numbers or NIF-VAT numbers) are built as ES + NIF number. An example of the NIF-VAT number is ESB73475571.
The first digit of the NIF-VAT number is always an ES, which stands for Espanol. This third letter is the type of business entity. The following 7 numbers are the ID of your Spanish VAT registered company, and a final character is a control number.
Requesting the Spanish NIF number is necessary to get a NIF-VAT number.
When do you need a VAT number as a business?
There are some rules about when you need a Spanish VAT registration. For example, if you buy and sell cars often, then you will need it. Other scenarios when you need a VAT registration are:
- When you regularly sell products and services to people in Spain
- When you perform work for more than one client
- When you are selling goods to other EU countries from Spain
- Importing products from other countries
- Organizing live events, conferences, and other activities in Spain
- When you are selling products over the internet to Spain
- When you are holding goods in a warehouse in Spain as stock for resale
- When you have a commercial interest and try to make a profit
- When you invest in your business, for instance, personnel or stock
- When you request more than a symbolical fee
Collecting VAT invoices
To be able to do your vat returns properly. It is essential that you know how much VAT was paid. Make sure you collect the following when you are doing your administration
- Request an invoice from suppliers and keep it to deduct the VAT paid.
- Keep a receipt for every purchase made.
- Keep the invoices you sent to your customers.
- Keep a copy of all invoices and receipts in case the tax office needs more information or want to audit you.
- Keep the Spanish VAT number that your suppliers provide.
Keeping track of your invoices is important because you will need to deduct the VAT that you pay on your purchases and add the VAT of your sales. It is a requirement under the Spanish VAT law. Spanish authorities will sometimes audit businesses. If you are not keeping track of your VAT invoices properly, you might get fined or charged more tax than you should.
Frequently asked questions
Below you can find some frequently asked questions on VAT in Spain.
How much do I have to charge for VAT?
You have to include the VAT on your prices, based on your regional vat rate. You can not ask customers to pay more than the official price with included tax. Is my business VAT exempt?
If you are new in business and are starting out as a micro
When do you charge VAT in Spain?
Spanish law requires you to charge VAT when products are sold or services are carried out. On the invoice that you send your customers, you will need to state the VAT rates that apply to the goods or services.
What is the VAT threshold in Spain?
There is no VAT threshold for traders to be registered in Spain; before the start of taxable transactions, a VAT number is required. Resident and non-resident businesses must register for a VAT number before doing any business. You can register your company easily with our services for company formation in Spain.
Where do you pay VAT in Spain?
You will pay your VAT at the Spanish tax office called Agencia Tributaria (Agencia del impuesto de sociedades). You can log in online and pay the VAT of your company on their website. You can also pay using a bank transfer or at a Spanish bank counter.
How do I pay VAT in Spain?
You will have to pay VAT through a Spanish bank account. This is because Spanish authorities do not accept foreign bank accounts. If you are an individual, only a Spanish bank account will be allowed to make any transaction with the tax office or government agencies in Spain. The name on your bank account must match the name of the company that you are paying for.
If you are looking to open a business bank account in Spain, it is smart to go with a popular bank for foreign companies in Spain.
What VAT penalties are there in Spain?
Penalties are multiplied by a percentage of the VAT owed (so-called “recharges”). The recharges can be a percentage of the tax owed or a multiple thereof.
The six recharges in Spain are:
- 5% of the VAT is due between 3 months after the due date.
- 10% if paid between 3 and 6 months after the due date.
- 15% if paid between 6 and 12 months after the due date.
- 20% if paid after 12 months after the due date.
If you pay the amounts within the deadline stipulated in the letter with penalties stated, you can reduce them by 25%.
Penalties such as fines and jail time may be imposed by the authorities, especially when the corrections are triggered by an investigation or a Value Added Tax audit.
Is there a VAT refund for travellers in Spain?
When you are travelling in Spain as a non-EU resident, you can request to fill in a Tax-Free form in the shops where you buy your purchases. Then, within three months of purchasing get the form validated by the Spanish Customs.
The digital VAT refund process (DIVA) reduces the time it takes to validate your return. Simply ask the businesses who provide this service for a DIVA form, and submit it yourself at one of Spain’s major ports or airports’ automated terminals.
What other types of sales tax exist in Spain?
Besides VAT, there are several types of sales tax imposed on businesses in Spain. These include:
Impuesto sobre las Transmisiones Patrimoniales Onerosas (ITPO): The ITPO sales tax is applied when selling real estate and means of transport for between €2,000 and €50,000.
Impuesto sobre las Sucesiones y Donaciones (ISD): The ISD sales tax is applied if you inherit or give away property and applies to all estates above €10,000.
Impuesto por la Actividad Económica (IAE): The IAE sales tax is the equivalent of business tax in Spain and must be paid by all businesses registered in the Commercial Registry (Registro Mercantil)
Impuesto sobre el Juego (IJU): The IJU sales tax is applied on any purchase of products related to gambling.
Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (IIVTNU): The IIVTNU sales tax is a land value tax applied if the property value goes up.
Impuesto sobre Bienes Inmuebles (IBI): The IBI is the equivalent of property tax and is payable by the owners of buildings, although it can also be paid by renters.
Impuesto Sobre Vehículos de Tracción Mecánica (ITV): The ITV is applied when registering a car or motorcycle.
Tasas y otros Ingresos (TIO): A TIO sales tax is applied when applying for business, vehicle or health certificates.
There is also other sales tax you may have to deal with in Spain. If you would like more support for your situation, please contact us at email@example.com.
Where can I find VAT numbers of Spanish VAT registered companies?
Companies must apply for a VAT number to do business in Spain. This is stated by the Spanish “Agencia Tributaria”. You can find these VAT numbers in the official mercantile directive (RMC). If you would like to find a company, you can also have a look at the Spain company register guide, where we explain everything about the vat directive.
What is VAT called in Spain?
VAT is called IVA in Spain, short for “impuesto sobre el valor añadido”. Spanish VAT is also sometimes called “impuesto al valor agregado”, “impuesto sobre el valor menorado y el valor añadido”, and “impuesto sobre el valor añadido”.
Help with your VAT declaration in Spain
Next to taking care of the company formation in Spain, our tax advisors can help you with your VAT declaration. We pride ourselves of being a one-stop solution for your legal and tax challenges in Spain. Let us take care of your (IVA) forms, VAT refund forms and other tax issues in Spain. Feel free to contact us by emailing firstname.lastname@example.org.
Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.
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