Value added tax
The Spanish value added tax – VAT (Impuesto sobre el valor añadido – IVA) system is similar to that established in other countries of the EU.
It is suggested that all technical and legal matters pertaining to taxes be referred to a Spanish Lawyer for advice, guidance and execution.
Is VAT tax applicable in the whole Spanish territory?
The VAT (IVA) is not applicable in the Canary islands, Ceuta and Melilla, where another tax, the IGIP, is applicable.
Charging VAT. Taxable operations
Only businesses and individuals working as self-employed persons can legally charge the VAT on their taxable operations. All businesses, except those that carry out exempt activities, are subject to VAT. All of them must enter the amounts charged in the Spanish Treasury (Hacienda).
VAT on imports and exports operations
The imposition of VAT on imports between Member States has ceased. The EU exporter shall quote the recipients VAT number on the sales invoice.
As regards trade with third countries:
- The goods or services supplied from an E.U. member state to a non EU can be zero-rated for VAT purposes as long as the exporter can show evidence to prove that the goods have actually been exported.
- Non-EU companies that export goods and services to the EU are taxed at import and VAT will have to be paid on the goods or services.
- Goods and services exempt from tax application in Spain
- Medical services.
- Cultural and sportive associations.
- Financial and insurance transactions.
- Renting rural or urban properties (except the rental of business premises)
General rate of VAT of 21% for most goods and services.
A Reduced rate of VAT of 10% is applicable for certain goods and services, e.g. if you buy a newly built property from a developer, travelers transport services, etc.
A super-reduced rate of 4% is applicable for goods and services considered as basic necessities; e.g. bread, eggs, cheese (essential food), newspapers and magazines, etc.