Accounting in Spain

Any business based in Spain must follow the Spanish rules for accounting. One of the accounting regulations states that companies must present their annual accounts (libros y cuentas anuales) at the provincial mercantile registry within six months after the close of the year. These annual accounts are public information.

The General Accounting changes instituted for Spain in 2008 had the following motives:

• to better control tax fraud by requesting more details about all company expenses.
• to make the system more uniform with the other accounting systems in the EU.

The European Act of 2007 to prevent fiscal fraud ensures that the taxes that are filed match the numbers in the registered accounting books. It is therefore crucial to keep detailed and organized accounting books in Spain.

FAQs:
Can you do the accounting according to UK GAAP?
What are the rules about how an invoice needs to look?
Do I always need to include VAT tax when billing my clients?
What tax forms need to be filed for a Spanish company?
With an SL, when do I get a refund of the VAT tax I've paid?

While the accounting in Spain must be done according to Spanish GAAP (Plan General Contable), we can enter the accounting data you provide into both the Spanish software and UK software, such as Quickbooks, so that we can provide results that conform both to Spanish GAAP for reporting to the Spanish tax office, and to UK GAAP for other purposes, such as reporting to your English investor or to combine with the results of the English branch of the business.

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What are the rules about how an invoice needs to look?

An invoice (factura) in Spain must contain the following:

• Your company name, CIF, and address.
• The customer's full name, CIF (or NIF or NIE), and address.
• A unique invoice number.
• The invoice must have a line for the amount before IVA is added("base imponible"), as well as a line for the IVA itself.

In Spain, payments are typically made via bank transfer. In this case, since the client will pay some time after receiving the invoice, it's a good idea to include the following disclaimer: "El pago de esta factura se acredita por su abono bancario" ("Your bank receipt is your proof of payment of this amount").

Legally, the invoice needs to be given or mailed to the customer, rather than sent as an email attachment.

If the invoice does not include IVA (see the next question), then the invoice needs to list the reference to the legal code under which this exemption applies.

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Do I always need to include VAT tax when billing my clients?

You must always charge VAT tax to clients within Spain and to clients outside the EU. You must also charge VAT tax to EU clients, unless:

• the transaction forms a valid intracommunitary supply between two censo VIES VAT-registered entities in separate EU member states, or
• if a service is delivered to another member state that qualifies under the Reverse Charge rule, in which case the VAT registered recipient would have to self account for VAT tax.

It is the nature of the transaction that dictates whether or not VAT should be charged. In the above exceptions, certain administrative details need to be complied with in order to qualify for the VAT exemption. When in doubt, charge VAT.

If you have a client located in another EU country, in some cases you may have to register in that country then charge VAT from that local entity.

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