VAT in Spain (Impuesto sobre el Valor A\u00f1adido – 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.<\/p>\n
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.<\/p>\n
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).<\/p>\n
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.<\/p><\/blockquote>\n
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).<\/p>\n
Products\/services and current rates:<\/p>\n
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- 0%.<\/strong> A zero VAT rate applies to public health services, hospitalization, dental services, public social services, educational services, insurance, and banking transactions.<\/li>\n
- 4%.<\/strong> 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.<\/li>\n
- 10%.<\/strong> The preferential rate applies to other food products, accommodation, hotel services, glasses and contact lenses, passenger transportation and luggage transportation.<\/li>\n
- 21%.<\/strong> The general rate applies to all other goods and services.<\/li>\n<\/ul>\n
VAT in Spain for entrepreneurs and legal entities<\/h2>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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).<\/span><\/p>\n
Features of VAT accounting by retail entrepreneurs<\/h2>\n