Spain faces a fine, potentially exceeding €19.2 million by 17 August 2026, for delaying the implementation of European VAT rules for small businesses and self-employed professionals – autónomos.
This is not about an already imposed sanction, but about the European Commission’s demand to the EU Court of Justice to impose a monetary penalty for Spain’s failure to fulfill its obligations to transpose European directives.
Why did the European Commission file a lawsuit against Spain?
The European Commission has decided to refer Spain to the Court of Justice of the European Union due to the country’s failure to transpose two VAT-related directives into national legislation.
One of them, Directive (EU) 2020/285, changed VAT rules for small businesses and aims to simplify tax obligations, reduce administrative burdens and facilitate cross-border activities within the EU.
Spain, like the rest of the EU member states, had to implement the necessary regulations no later than December 31, 2024.
However, the transposition was not completed by the deadline. As a result, Spain became the only EU country that, according to the European Commission, did not notify the transfer of these norms into national law.
More information about the current tax rules can be found in the material about VAT in Spain.
What exactly does the EU require?
The main clarification is that the European directive does not oblige Spain to automatically exempt all self-employed people with small turnover from domestic VAT.
The internal exemption for small businesses with an annual turnover of up to €85,000 is an option that EU states can take advantage of, but is not an obligation.
However, Spain is obliged to implement a mechanism that will allow small businesses and autonomos registered in Spain to benefit from VAT exemption when operating in other EU countries if they meet the established conditions.
For cross-border application of the regime, there is also a pan-European limit: the total turnover of a company or specialist in the EU must not exceed 100,000 euros per year.
Potential fines continue to grow
The European Commission demands that Spain be fined for failure to fulfill obligations in the amount of 32,430 euros for each day of delay.
If we count from January 1, 2025, then by August 17, 2026 the potential amount already exceeds 19.2 million euros.
This amount will increase until Spain fulfills its obligations, if the EU Court of Justice supports the position of the European Commission and imposes a sanction.
In practice, this means that the longer the transposition is delayed, the higher the possible financial liability of the state becomes.
Why is this important for the self-employed and small businesses?
For autonomos and small businesses, the VAT exemption regime could mean a noticeable reduction in bureaucratic burden.
When using it, the entrepreneur does not charge VAT in invoices and does not transfer this tax to the tax authorities for the relevant transactions.
It is important to take into account the reverse side of the regime: if a specialist is exempt from VAT, he, as a rule, cannot deduct the VAT paid on his expenses and investments.
Therefore, this regime may not be beneficial for everyone. Its attractiveness depends on the type of activity, cost structure, type of clients and volume of transactions within and outside Spain.
Those who run or plan to open a business in Spain may find this service useful registration of a legal entity in Spain.
Spain is not obliged to introduce a full exemption within the country
One of the reasons for the controversy surrounding this topic is that the concepts of internal and cross-border liberation are often confused.
Spain may abandon its domestic VAT exemption regime for small businesses and the self-employed, as a European directive allows for this possibility.
But the country cannot fail to implement regulations that allow Spanish small businesses to enjoy a similar regime when operating in other EU states where such a system is in place.
This, according to the position of the European Commission, became the basis for appealing to the EU Court of Justice.
The second claim concerns other VAT rules
In parallel, the EU also filed a claim against Spain for delaying the transposition of another directive, Directive (EC) 2022/542.
It concerns, in particular, the rules for determining the place of supply of certain virtual and digital services, as well as a special VAT regime for second-hand goods, works of art, collectibles and antiques.
The European Commission warns that the lack of uniform rules may create a risk of double taxation or, conversely, non-taxation in cross-border transactions.
What’s happening now
As of August 2026, Spain has not yet completed the implementation of the controversial regulations in full.
At the same time, the Parliament continues to work on individual tax changes related to VAT and the adaptation of Spanish legislation to European requirements.
For entrepreneurs and autonomos, this means that current tax obligations in Spain remain until the relevant changes are finalized and published.
Those who work in Spain or are just planning to work may also find the material about work in Spain.
What is important to consider autonomos
Self-employed professionals should not assume that the VAT exemption is already automatic.
Until the new regulations come into force, autónomos must continue to fulfill existing invoicing, filing and tax obligations in Spain.
If the activity involves clients or customers in other EU countries, it is especially important to check VAT rules, registration for intra-European transactions and the possible consequences of applying or not applying the exemption in advance.
In some cases, online procedures with tax and administrative authorities may require electronic certificate in Spain.
Photo: SPORT PRESS MEDIA / Shutterstock.com
