Here's everything you need to know about IVA, the VAT of Spain. IVA rates, types of products, exceptions, your obligations...
IVA, short for ‘Impuesto sobre el Valor Añadido’, is the UK equivalent of VAT.
The VAT of Spain is applied to pretty much everything you buy, except for those products and services which are exempt.
The general VAT rate in Spain is 21%, and the reduced rates are 18%, 10%, 8% or 4%, depending on the type of products or services. The goods included in these rates have changed in the last years, along with the Spanish tax legislation.
Which services are exempt from VAT in Spain?
A number of activities and services are exempt from the VAT in Spain, the main ones being:
- Education provided by the state or licensed bodies.
- Tutoring on subjects that are included in the curriculum, at all educational levels.
- Sporting services provided by public bodies or associations.
- Cultural services such as museums, libraries, seminars and conferences.
- Artists, writers, composers and translators of artistic and scientific work.
- Postal services.
IVA / Spanish VAT obligations
From a business point of view, if you are selling goods and providing services which are taxable, you are obliged to add the corresponding IVA rate and must register prior to starting your business activity. Not doing so will result in serious penalties.
Once registered for the VAT in Spain, the following formal obligations are applicable:
- Issue and deliver a complete invoice to customers and keep a copy. Nevertheless, in Spain, in certain transactions, for example, retail sales, a simplified invoice can be issued when the amount does not exceed €3,000, including VAT.
- Request an invoice from suppliers and keep it to deduct the VAT paid.
- Keep the following record books:
- Issued invoices.
- Received invoices.
- Capital goods.
- Intra-Community transactions.
- File the corresponding periodical tax returns (monthly or quarterly) with the following forms and timeframes
- Spanish taxpayers registered in the monthly refund register, and entities attached to the special regime for groups of companies, will present Form 303 (Self Assessment) on a monthly basis and must do so digitally. For groups of companies, Forms 322 and 353 must be filed, in the first thirty calendar days of the month, following the end of the corresponding period of monthly settlement, or up to the last day of February with the tax return-settlement for January. These taxpayers will be obliged to keep VAT Record Books through the Tax Agency E-Office, via the immediate disclosure of information, and are exempt from filing Form 390.
- If the settlement period is quarterly, taxpayers will file four quarterly tax returns via Form 303, with the following deadlines: the first three quarters, between 1 and 20 of April, July and October, and the fourth quarter between 1 and 30 of the following January, at the same time as the annual summary statement, Form 390.
- If there is no quantity to pay or refund during a period, a tax return with no activity will be filed, where appropriate.
Self-Assessment Form 303 (filed quarterly) can be filed digitally via direct debit, from 1 to 15 of April, July and October, and from 1 to 25 of January. With monthly returns, Form 303 can be filed from the 1st to the 25th of the month following the corresponding settlement period.
- Public Administrations, Spanish taxpayers registered with the Central Office of High-Income Taxpayers or any of the Large Company Management Departments, taxpayers whose settlement period coincides with the calendar month and companies whose legal structure is a public or private limited liability company, must file the tax return digitally with an advanced electronic signature (electronic signature or DNI-e).
- All other Spanish businesspersons or professionals must file their tax return using Form 303, in a printed format (generated using the printing service found in the E-Office).
Would you like more information on the VAT of Spain, the different rates that apply, or help with the Spanish registration? Contact expert Tax Advisors if you need help with Spanish VAT rates or any other issue related to rates and taxes in Spain.