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Everything You Need to Know About Spanish VAT

We are all used to buying things and paying VAT for them since childhood. In today’s post, we are going to talk about everything you need to know about this tax: what VAT is levied on, the tax-exempt activities and the different tax regimes.

1. General concept

Deliveries of goods and services rendered in the territory of application of the tax (ie, peninsula and Balearic Islands) by businessmen and professionals in the development of their economic activities are subject to the tax. 

As a general rule, the taxpayer of these operations is the entrepreneur or professional, although individuals, legal entities (companies) and entities without legal personality (NGOs for example) are also considered taxable when they carry out operations subject to the tax.

1.1 VAT exempt activities

However, there are operations that are exempt from the tax. It is the case of the following activities:

 

  • teaching in authorized public or private centres,

  • the private lessons included in the education plans of the State,

  • assistance to individuals by medical and healthcare professionals for the diagnosis, prevention and treatment of diseases,

  • insurance operations,

  • mediation and intervention services by public notaries in financial operations,

  • housing lease.

1.2 Types of regimes

There is a general regime and several special regimes, but we will focus on the most common ones: simplified, equivalence surcharge and agriculture, livestock and fishing.

2. General VAT Regime

– Tax form to be submitted: form 303

– To whom it applies: Taxable VAT subjects when none of the special regimes applies or have renounced them.

– How it is calculated: by the difference between the VAT charged to customers and the deductible VAT, that is, VAT on income minus VAT on expenses.

– Periodicity: quarterly as a general rule, or monthly in the case of large companies and those registered in the REDEME (Monthly Return Record).

– Date to be submitted:

 

  • Quarterly: 1-20 April, July and October and 1-30 January.

  • Monthly: 1-20 of the following month.

– Formal obligations:

 

  • Issue invoice to customers.

  • Ask for an invoice from suppliers.

  • Keep books of invoices received, invoices issued, investment goods and community operations.

3. Simplified Special Regime

First, it can only be taxed in the special regime if it is taxed in the personal income tax in objective estimation. Both regimes are perfectly coordinated, so the waiver of the special VAT regime implies a waiver of the objective estimation method in the personal income tax (IRPF) and vice versa. 

Therefore, keep in mind that if in IRPF you pay taxes in objective estimation, in VAT you can only pay by the special regime, whether in equivalence surcharge, of agriculture or the simplified regime.

And now we will see the keys to the simplified regime:

– To whom does it apply:

  • Those that do not exceed the following limits:

            Income of all activities < € 450,000 per year.

            Agricultural income < € 300,000 per year.

            Amount of acquisitions < € 300,000 per year.

  • Those who have not given up their application.

  • Those who have not given up the objective estimate in personal income tax.

  • Those whose activities are included in the Order that develops this regime.

– Payment calculation: VAT is determined through modules, as in the objective estimate of personal income tax. It will be possible to deduct the VAT supported in the purchases of current goods and activities.

– Declarations and forms:

  • Quarterly statements:

           Form: 303

          Date to be submitted: 1-20 April, July and October, 1-30 January.

– Formal obligations:

 

  • Keep the supporting documents of the modules applied.

  • Keep the invoices received, including imports and intra-community acquisitions.

  • Keep the invoices issued.

  • Keep a record book of received invoices.

4. Other special regimes

There are other special regimes that, although less important, are necessary to make them known. We will develop them briefly:

4.1 Special regime of equivalence surcharge

– To whom does it apply: retail merchants, individuals, and also to civil societies, lying estates or communities of property when all partners are individuals and are engaged in retail trade.

– How it works: In addition to the corresponding VAT, suppliers also incur the equivalence surcharge:

 

  • VAT 21%: the surcharge of 5.2% is added.

  • VAT 10%: the surcharge of 1.4% is added.

  • VAT 4%: the 0.5% surcharge is added.

  • Tobacco: 0.75% surcharge.

For this reason, they do not have to make VAT returns, as they are paying the equivalence surcharge.

– Form: 309. It is submitted only if you make intra-community acquisitions or with an investment of the taxpayer or transfer of real estate related to the activity.

– Formal obligations:

 

  • Prove that you are at an equivalence surcharge.

  • Issue an invoice in real estate deliveries, when the recipient is an entrepreneur, professional, Public Administration or legal entity, and in deliveries to another state.

  • Keep received invoices books if activities are carried out in different regimes.

4.2 Special regime for agriculture, livestock and fisheries (REAG and P)

– To whom it applies: holders of agricultural, livestock, forestry or fishing farms that have not renounced it.

– This regime is “full exemption“, not having to impact, liquidate or enter VAT for products sold. On the other hand, it is possible to recover the VAT supported in the acquisitions through the agricultural compensation mechanism.

– If products are delivered to entrepreneurs with another VAT regime, compensation may be collected, as in intra-community deliveries. The compensation is:

 

  • 12% of the sale price in agricultural or forestry products.

  • 10.5% of the sale price in livestock or fishery products.

4.3 Intra-community operations

– To whom does it apply: those who carry out operations (deliveries of goods or services) with other member states of the European Union.

– It is necessary to obtain a VAT number: It is obtained by requesting the registration in the Registry of intra-community operators through the form 036. It consists of the NIFor NIE preceded by the letters “ES”.

– Form: 349.

– Submission of the declaration:

  • Monthly period: is the general period. It is submitted from 1-20 of the following month. It has no annual summary.

  • Quarterly period: when neither during the reference quarter nor in each of the previous 4 quarters the total amount of deliveries (goods and service provision) to be recorded in the summary statement exceeds € 50,000, excluding VAT. It will be submitted from 1 to 20 of the month following the corresponding quarter, except for the 4th which will be from January 1 to 31. It has no annual summary.

  • If it is usually presented quarterly, but at the second month of the quarter (February, May, August or November) the amount to be consigned is greater than the € 50,000 named above, the bimonthly declaration will be made. In this case, the declarations will be submitted until the 20th of the following month, (March, June, September or December) for those two months and will continue to be submitted monthly.

  • Annual period: the Ministry of Economy and Finance may authorize the summary statement to refer to the previous calendar year if the volume of operations of the said previous year were less than € 35,000, excluding VAT, and also, that intra-community deliveries of exempt goods art. 25 NF VAT (excluding new means of transport) do not exceed € 15,000. In this case, the declaration must be submitted between January 1 and 30.


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