VAT in Spain (Impuesto sobre el Valor Añadido – IVA) is an indirect tax that is levied on goods and services sold/provided within the country (with the exception of the Canaries, Ceuta and Melilla, where special local taxes are applied, which are analogous to VAT), as well as imports from EU member states and from outside the EU.
About 25% of the budget is formed from VAT alone. That is why tax authorities carefully monitor the fulfillment of obligations to declare and pay this tax.
In the Canary Islands there is a tax IGIC (General Indirect Tax of the Canary Islands), and in Ceuta and Melilla there is an IPSI (Tax on Production, Services and Imports in Ceuta and Melilla).
Currently, VAT in Spain is charged at rates of 0%, 4%, 10% and 21%. The general tax rate (21%) is considered the average for the European Union.
In any check or invoice, VAT must be highlighted on a separate line (if the list simultaneously includes goods/services with different rates, then each of them is highlighted on a separate line).
Products/services and current rates:
- 0%. A zero VAT rate applies to public health services, hospitalization, dental services, public social services, educational services, insurance, and banking transactions.
- 4%. The preferential rate applies to essential goods/services, which include: bread, milk, fruits, vegetables, eggs, cheeses, cereals, books, newspapers, medicines, cars for the disabled and some other goods.
- 10%. The preferential rate applies to other food products, accommodation, hotel services, glasses and contact lenses, passenger transportation and luggage transportation.
- 21%. The general rate applies to all other goods and services.
VAT in Spain for entrepreneurs and legal entities
Entrepreneurs and legal entities report VAT on a quarterly accrual basis. The declaration reflects the amount calculated as the difference between VAT payable to the budget and VAT refunded from the budget. The first VAT is calculated on invoices issued to clients and paid by them, the second – on invoices paid by a legal entity or entrepreneur for purchased goods/services.
If at the end of the year the result is negative, the company or entrepreneur has the right to request a VAT refund. The refund itself is made between March and June in the next reporting period. Those. a refund for VAT overpaid in 2025 will be made in the spring of 2026.
If expenses are large (and this often happens at the initial stage of business development), monthly filing of declarations is possible. Any such case attracts the attention of the tax authorities, so VAT returns must be supplemented by reference returns for all transactions recorded in the books of accounts.
VAT accounting becomes more complicated if a company or entrepreneur combines several types of activities, at least one of which is exempt from VAT (i.e. a 0% rate is applied).
Features of VAT accounting by retail entrepreneurs
Spanish tax laws provides for a special surcharge (Recargo de Equivalencia), which applies exclusively to individual entrepreneurs (Autónomos) engaged in retail trade (provided that the sale of goods is carried out in the form in which it was received from the manufacturer or from the warehouse, without changes). This surcharge does not apply to wholesale trade, services and production.
The surcharge is applied in the amount of 0.5 to 5.2%, is allocated as a separate line in all invoices issued to the entrepreneur, and relieves the latter of the obligation to report VAT to the tax authorities. Those. in this case, accounting, declaration and payment will be handled by suppliers, which greatly simplifies tax accounting for the entrepreneur, but he also loses the right to a VAT refund in the event of a negative result.
It is impossible to refuse to apply the surcharge, therefore, before registering as an individual entrepreneur and opening a retail outlet, you must obtain competent tax advice.
Alegria company provides assistance in registering a legal entity in Spain and preparing all necessary documents. More details about the service are here:
Import-export operations and VAT accounting
In order to import and export goods within the EU, companies and entrepreneurs must first obtain a special VAT number (NIF-IVA). It looks like a regular Taxpayer Identification Number (NIF) with an ES prefix.
Subject to a number of conditions, invoices involved in transactions will be issued without VAT, namely:
- The cargo must be delivered from one European country to another (excluding the Canaries, Ceuta and Melilla).
- Both parties to the transaction must be legal entities or entrepreneurs.
- Both parties to the transaction must be registered in the Censo VIES system and the ROI registry.
If the conditions are met, the supplier issues an invoice without VAT, and the importer charges tax at the rates in force in his country at the time of customs clearance. Taxation of services within the EU follows a similar scheme. All international transactions must be declared.
Goods sent from Spain outside the EU also undergo customs clearance: the amounts in invoices are indicated without VAT.
VAT refund in Spain to individuals
Persons who are permanent residents of countries outside the EU (regardless of citizenship) are entitled to a VAT refund when leaving Spain.
Receipts or invoices received in Spanish stores must meet the following requirements:
- Purchases can be made in any region of Spain, with the exception of the Canaries, Ceuta and Melilla, during the three months preceding the departure date.
- Purchases must not be of a commercial nature, must be for personal use outside the EU, must be new and in unopened packaging.
Let us immediately note that the restriction on the minimum purchase amount for each individual invoice or receipt has now been lifted.
The fact of purchase is recorded, firstly, in the invoice, and secondly, in a special electronic document DER, sent to the tax authorities. Registration of a refund at the airport can be done either electronically through the DIVA system or manually.
Customs officers will need to present the following documents:
- Applicant’s passport.
- Invoices for purchased goods that meet all registration requirements.
- The goods themselves, indicated in the invoices.
- Airline ticket or boarding pass.
Refunds (with the deduction of the commission of the intermediary service) are made in cash or bank account in Spain – it depends on the amount, as well as the time and form of contacting the relevant services, the most popular of which is Global Blue.
