As of September 1, 2012, the general VAT regime in Spain has the standard rate of 21%, with reduced rates of 4% and 10%.
The 10% rate applies to certain goods and services, such as purchase of a newly built properties, hotels and restaurants, health products, and entertainment and sports activities.
The 4% rate applies to goods considered as basic necessities, such as certain food and reading material (newspapers, magazines, books).
For further details about the reduced rates, see this table.
In addition to the general regime, there are special regimes with other VAT rules, such as for travel agencies, antiques, and agricultural and livestock production.
Some professional activities are exempt from VAT, such as financial and insurance institutions and agent commissions, as well as doctor and dentist fees.
In the Canary Islands, a special regime called IGIC is applied, with a standard rate of 7%. A special duty on imports and certain goods in the Canary Islands is also applied. The recent reform introduced a special VAT consolidation regime applicable to corporate groups.
Read our pages for information about registering your foreign company in Spain or about registering your Spanish company in the EU VAT Registry (VIES).
Does my Spanish company always need to include VAT tax when billing our clients?
What is VIES?
With an SL, when do I get a refund of the VAT tax I've paid?
What is a VAT reverse charge?
My German company is buying in Spain. Can we recover VAT tax paid?
My French company is selling in Spain. Can we avoid having our Spanish clients pay VAT tax?
I operate a shoe company in the USA. We are starting to manufacture our shoes in Spain. Will the VAT automatically be deducted by the Spanish shoe factory, since we are not located in a country that uses the VAT system?
We are a UK company that provides onsite computer server support. We have been asked to undertake this role in Spain. Since we are required to charge VAT locally, we will require an VAT number, right?
We are a Swiss company and we are going to open a call center in Barcelona to serve our European (non-Spanish) clients. Do we need to register for VAT in Spain?
I plan to sell online in Spain. Do I charge Spanish 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.With an SL, when do I get a refund of the VAT tax I've paid? Your accountant will file VAT forms quarterly. If the VAT tax you've paid is less than the VAT tax you've received, you will be charged immediately for this difference. If it is more, this refund carries over to the next quarter. At the year end, the final balance is made. If the VAT tax you've paid is more than the VAT tax received and you decide not to carry it to next year, then you can receive a refund, though it may take a long time to arrive in your bank account. What is a VAT reverse charge? The reverse charge mechanism implies shifting the tax liability from the supplier to the recipient with respect to domestic commercial transactions whose value exceeds a certain threshold.
For more information, please read this EU study.My German company is buying in Spain. Can we recover VAT tax paid? We would first need to evaluate the nature of your business and the category of purchases you are making. Whether or not you have to pay VAT tax will depend on the circumstances surrounding the nature of your business transaction. In some cases, it may have been incorrect for you to have been charged VAT in the first place. My French company is selling in Spain. Can we avoid having our Spanish clients pay VAT tax? This all depends on the nature of the goods or services you are delivering into Spain, and also in some circumstances the nature of the transaction with the recipient. I operate a shoe company in the USA. We are starting to manufacture our shoes in Spain. Will the VAT automatically be deducted by the Spanish shoe factory, since we are not located in a country that uses the VAT system? No. Being outside the EU does not exempt your company from paying VAT tax. As an entity, the Spanish factory must include VAT taxes in its invoices because the manufacturing is taking place within EU territory. In order to receive a refund for the VAT tax that you will pay in Spain, your company needs to have a nonresident VAT number. We are a UK company that provides onsite computer server support. We have been asked to undertake this role in Spain. Since we are required to charge VAT locally, we will require an VAT number, right? Since you are providing a service within Spain, you must have a corporate entity in Spain. You can register your UK company as a branch office (resident entity in Spain), or you can create a new company in Spain. If you plan to have a fully functioning office in Spain, then creating an SL usually offers more tax advantages. If you don't plan to have a fixed office (your employees will work at the client premises), then a Spanish branch office may be less expensive overall. We are a Swiss company and we are going to open a call center in Barcelona to serve our European (non-Spanish) clients. Do we need to register for VAT in Spain? If you have a functioning office in Spain, even though your clients are non-Spanish, you must register in Spain as a resident entity (such as a branch or SL). Also, your Spanish company must obtain an employer social security number in order to hire your employees. Keep in mind that Spanish labour laws apply, even if your employees are non-Spanish.