Value Added Tax (IVA): This tax is applicable to any taxable supply of goods or services made in Spain by a taxable person as part of their business. It is not restricted to the provision of goods and services by way of sale but also applies to other forms of transaction. For VAT purposes, the Spanish territory is the Peninsula and the Balearic Islands. It does not include the Canary Islands, Ceuta, or Melilla.
Scope and Rates
The standard rate of VAT is 21% (since 1 September 2012).
Are there any reduced rates, zero rates, or exemptions?
Yes. There is a reduced rate of 10% (since 1 September 2012) for certain goods and services, including but not limited to the following:
- Food and drinks.
- Residential renovations and alterations.
- Water supplies.
- Certain buildings used for residential purposes including rentals with an option to buy.
- Passenger transport.
- Hotel and restaurant services.
There is a special reduced rate of 4% for certain acquisitions and importations. This is applied to all items that are considered to be of basic and primary need.
Exemptions with input tax recovery (zero-rate supplies) include but are not limited to:
- Financial transactions outside the European Union (EU) Member States.
Exemptions with no input tax recovery (exempt supplies) include but are not limited to:
- Health and welfare related supplies.
- Cultural services by bodies governed by public law.
- Financial transactions.
- Certain games of chance (gambling).
- Certain supplies by public post offices.
- Real estate transactions (certain transfers of land and second transfers of real estate).
VAT on Property Sales
As of 1 January 2013, all sales of new property are subject to a 10% VAT (IVA) charge and a stamp duty of 1.5% of the sale price. For second-hand property sales, a tax of 8-10% is levied on the sale price. In this case, it is not VAT (IVA) but a transfer tax (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados). It is not synonymous with the UK stamp duty. This transfer tax is determined by the autonomous community where the property is located.
Registration: who is required to register for Spanish VAT?
Autónomo status is the Spanish equivalent of self-employed or freelance. It also covers people operating unincorporated small businesses. Anyone engaged in any type of independent economic activity in Spain, whatever their profession, is obliged to register as autónomo with the tax office, declaring their economic activity and VAT obligations.
Read our article Starting a Business in Spain – Registration of self – employment (autónomo) to find out more about being self-employed in Spain.
If a business makes taxable supplies in Spain it will be required to register and account for Spanish VAT.
Are there any simplifications that could avoid the need for an overseas company to register for VAT?
A business supplying goods or services in Spain is required to register and account for Spanish VAT provided that it is considered to be the Spanish VAT taxpayer of the transactions (that is, the reverse charge rule does not apply). However, it is possible to avoid registering and accounting for Spanish VAT when providing certain supplies. Contact us to arrange a consultation either in person or by phone/email if you require advice on this.
Services Provided by Andalucía Lawyers
- Registration of self–employment (autónomo).
- Obtaining a tax ID number for the business.
- Registering the company for VAT purposes.
- Applications for the refund of VAT.