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Everything You Need to Know About Spanish VAT

Spanish VAT

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

1. General concept

Deliveries of goods and services provided in the territory of application of the tax (i.e., peninsula and Balearic Islands) by business people 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. However, we consider taxable individuals, legal entities (companies) and entities without legal personality (NGOs, for example) when they carry out operations subject to the tax.

1.1 VAT exempt activities

However, some operations 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.

Related articles: VAT Exempt Activities in Spain

1.2 Types of regimes

There are a general regime and several special regimes. Here 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 the person has 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: you have to submit it 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 collected invoices, issued invoices, investment goods and community operations.

Related articles: Deductible VAT Before Registering as a Freelancer in SpainNon-deductible VAT


3. Simplified Special Regime

First, you can only tax in the special regime if you tax in the personal income tax in objective estimation. 

Both regimes are perfectly coordinated, so the rejection of the special VAT regime implies a rejection 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 the objective estimation, in VAT you can only pay by the special regime.

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

> To whom does it apply:

– Those that do not exceed the following limits:

            The 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 rejected their application.

– Those who have not rejected the objective estimate in personal income tax.

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

> Payment calculation: You have to determine VAT through modules, as in the objective estimate of personal income tax. You can 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 applied modules.

– You have to save the collected invoices, including imports and intra-community acquisitions.

– You need to keep the issued invoices.

– and 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 explain 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 a 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%: you have to add the surcharge of 5.2%.

– for 10% VAT, you have to add a surcharge of 1.4%.

– if VAT is 4%, you have to add the 0.5% surcharge.

– Tobacco: 0.75% surcharge.

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

> Form: 309. You have to submit it 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 you carry out activities 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 sold products. On the other hand, you can recover the VAT supported in the acquisitions through the agricultural compensation mechanism.

> If you deliver products to entrepreneurs with another VAT regime, you can obtain compensation, 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: if you carry out operations (deliveries of goods or services) with other member states of the European Union.

> It is necessary to obtain a VAT number: You can obtain it by requesting the registration in the Registry of intra-community operators through the form 036. It consists of the NIF or NIE preceded by the letters “ES”.

> Form to be submitted: 349.

> Submission of the declaration:

– Monthly period: is the general period. You must submit it from 1-20 of the following month. It has no annual summary.

– Quarterly period: You can submit it quarterly 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. 

Suppose you usually submit it quarterly, but in the second month of the quarter (February, May, August or November) the amount is greater than € 50.000. In that case, you have to make the bimonthly declaration. 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.


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