Accounting in Spain

There are several good reasons to use Strong Abogados as your accounting firm in Spain:

• 100% digital: Our software engineer makes sure data flows efficiently from your company to ours.
• Transparency: All tax forms filed for your company are uploaded in real-time to our online platform (Tempo), as well as quarterly balance sheets and profit & loss statements.
• Service in English: Our in-house accountants speak English, so you will receive personal service in your language. We are experts in performing accounting for companies with foreign clients and providers.

You have two options going forward:

Software Solutions

At Strong Law, we enhance our clients' experience with our proprietary software, Tempo ®, a versatile platform designed to simplify business management. Tempo provides everything you need to manage your business—anytime, anywhere. It includes powerful features such as invoicing, accounting, and project management tools that can work on its own or seamlessly integrate with platforms like Holded, Xero or QuickBooks.

Xero and Quickbook are not currently adjusted to the Spanish General Accounting platform, meaning it's not possible to present your tax forms through these platforms. This is when Tempo can do its magic.It acts as an intermediary between them to adjust all information from one platform to another, adjusting the information the Spanish Accouting Plan.

Tempo ® is our client area, and business management software tailored for international clients, to ensure your business runs smoothly and you are informed 24/7.

Summary of your accounting and tax compliance in Spain

FAQs:

Links:

• If I use Xero for my accounting, can you file the tax forms?

• Can you do the accounting according to UK GAAP?

• What is the VAT tax rate in Spain?

• Case study in EU sales via Amazon

• 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?

New co tax and accounting compliance in Spain

Operating a business in Spain includes following certain tax and accounting obligations to meet legal requirements. To fulfill tax and accounting obligations in Spain, a New Co must start by registering with the Tax Agency and obtaining a tax identification number (NIF/CIF). Next, keep detailed records of all income, expenses, and transactions, and maintain separate accounting books for any VAT obligations. Additionally, make sure to file regular tax returns and pay the corresponding taxes on time to avoid penalties and legal issues. The compulsory compliance standards aim to guarantee transparency, accountability, and sound financial control. Each obligation, from corporate taxes to local levies, has distinct filing deadlines and procedural details that necessitate precise adherence. Moreover, businesses must uphold strict accounting practices per the Spanish General Accounting Plan and abide by diverse employment and social security laws. This proposal offers a comprehensive outline of the key tax and accounting compliance needs for businesses in Spain, emphasizing crucial deadlines and procedures to ensure adherence to Spanish laws.

Here is a general list of the key tax and accounting new-co mandatory compliance requirements in Spain:

• Corporate income tax (IS impuesto de sociedades)
• Value Added Tax (VAT-IVA)
• Personal Income Tax Withholding (IRPF)
• Non resident quarterly or yearly (216-296, 290)
• Special Taxes, such online, telecom, alcohol, tobacco, and energy
• Business Activity Tax (IAE)
• Annual Accounts and Official Ledger Books (filed at the company house: Registro mercantil)
• Bookkeeping based on PGC. General Accounting Plan (Plan General de Contabilidad)
• Invoicing and correlative invoicing (E-factura)

1.-Tax Compliance

1.1 Corporate Income Tax

Regulation: Impuesto de sociedades

• Annual filing: Must be filed within 25 days after the six months following the end of the fiscal year. In Spain the fiscal year is the same as the natural year from January 1st to December 31st.
• Quarterly payments: Advance payments must be made three times a year (April, October, and December). Since the second year of having a profit.

1.2 Value Added Tax (VAT, IVA)

Regulation: IVA

In Spain, Value Added Tax (VAT), known as Impuesto sobre el Valor Añadido (IVA), is a consumption tax applied to most goods and services. It's collected by businesses on behalf of the Spanish government. Each business adds VAT to the price of their products or services when selling them. However, businesses can also deduct the VAT they've paid on their purchases. This means that VAT is ultimately paid by the end consumer, as it's included in the final price they pay.

• Monthly or quarterly filing: Depending on the turnover, VAT returns (Modelo 303) must be filed monthly or quarterly in April, July, October and January.
• Annual summary (Modelo 390): Must be filed by January 30th of the following year.

Other forms such 349 and 347 also may be filed, even the forms are just for information purposes. Please notice form 347 due date is February 28th, regulation for informative purposes.

1.3 Personal Income Tax & Withholding (IRPF)

Regulation: 130 professional and pymes: General rates are: 20% direct, or 4% with more than one employee or 3% one employee or 2% no employees.

• Monthly or quarterly filing: Withholding tax returns (Modelos 111 and 115) must be filed either monthly or quarterly. Depending on the size and number of employees, the rate is based on the salaries, family depends, and time fo the year, it goes from 19% to 34. To estimate the rate there are a free service from the tax office.
• Annual summary (Modelo 190): Must be filed by January 31st of the following year.

The withholding tax is based:

1. Family situation:

   1.1- Single, widowed, divorced, or legally separated with single children under 18 years old or legally incapacitated children who live exclusively with the recipient, without also living with the other parent

   1.2.- Married and not legally separated, whose spouse does not earn more than 1,500 euros annually, excluding exempt income (in this case, the spouse's NIF will also be included).

   1.3- Family situation different from the two above (single without children, married whose spouse earns more than 1,500 euros annually, etc.)

   1.4- If the employee does not wish to communicate your family situation.

2. Disability (recognized degree of disability).
3. Geographical mobility.
4. Extension of work activity.
5. Children and other descendants under 25 years old, or over 25 if they are disabled, who live with the recipient.
6. Ascendants over 65 years old, or under 65 if they are disabled, who live with the recipient.
7. Compensatory pensions in favor of the spouse and alimony payments in favor of the children, both set by judicial decision.
8. Payments for the acquisition or rehabilitation of the main residence using external financing, with the right to deduction in the IRPF (only for taxpayers who have acquired their main residence, or have paid amounts for its rehabilitation, before January 1, 2013).

1.4 Non-Resident Income Tax (IRNR)

Regulation and forms: NO resident

• Quarterly filing: Tax returns (Modelo 210, 216 and others) for non-residents who obtain income in Spain.
• Annual summary (Modelo 296): Must be filed by January 31st of the following year.

1.5 Special Taxes (Impuestos Especiales)

• Applicable to certain goods such as alcohol, tobacco, TV, phone and telecommunications and energy products, are the most common.
• Monthly or quarterly filing: Depending on the tax type.

1.6 The Economic Activities Tax (IAE)

Regulation and forms Impuesto Actividades Economicas

The IAE applies to individuals (self-employed), legal entities (companies), and entities without legal personality (e.g., joint ownership) that carry out business, professional, or artistic activities within the national territory, except for agricultural, dependent livestock, forestry, and fishing activities.

An activity is considered to be carried out in a business, professional, or artistic manner when it involves the organization on one's own behalf of production means and human resources, or one of these, with the aim of participating in the production or distribution of goods or services.

There are three types of rates: national, provincial, and municipal.

• Municipal rates: defined in each of the activities include the surface area of the premises where the taxed activities are carried out, as well as any others that are not expressly classified as provincial or national rates in the aforementioned Rates. The payment of the municipal minimum rates authorizes the exercise of the corresponding activities within the municipality where the payment takes place.
• Provincial rates: defined in each of the activities, their payment authorizes the exercise of the corresponding activities within the territorial scope of the relevant Province, without the need to pay any municipal minimum rate.
• National rates: defined in each of the activities, the payment of the national rates authorizes the exercise of the corresponding activities throughout the national territory, without the need to pay any municipal or provincial minimum rate.
• IAE it’s an annual tax, generally exempt for the first two years of business activity and for businesses with turnover below €1 million.

1.7 Census

Regulation and form 036

The AEAT (Spanish Tax Agency) requires all companies, individuals or entrepreneurs to register and keep their information updated in the Census of Entrepreneurs, Professionals, and Withholders in order to register and monitor the tax obligations of each taxpayer.

The following must be included in this census:

• Individuals or entities engaged in business or professional activities.
• All corporations

1.8 Intrastat

Regulation and forms: Intrastat estadist EU

The obligation to provide the information required by the Intrastat system falls on every taxable entity of the Value Added Tax:

1. who dispatches goods from the Spanish statistical territory to that of another Member State of the European Union (dispatch flow), or
2. who introduces goods into the Spanish statistical territory from that of another Member State (introduction flow).

All goods circulating between the statistical territory of Spain and the statistical territory of any other Member State of the European Community will be subject to intra-community statistics, including:

• Community and non-Community goods.
• Goods subject to a commercial transaction and those that are not.

The obligation to submit statistical declarations intrastat is determined by two factors considered jointly:

1. The nature of the operator: It is the natural or legal person subject to VAT in the Member State of introduction and/or dispatch.
2. The volume of intra-community trade. Operators who, in the previous year, have carried out intra-community transactions of introduction and/or dispatch for a total invoiced amount equal to or exceeding the established threshold (from January 1, 2015, the invoiced amount becomes equal to or exceeding 400,000 euros) are obliged.

The Intrastat declaration is submitted on a monthly basis within the deadline of the first twelve calendar days of the month following the month in which the operations subject to declaration were carried out.

1.9 Real Estate Tax (IBI)

Annual property tax.

2.- Accounting Compliance

2.1. Annual Accounts

Filing every year. Annual accounts must be approved by the shareholders and filed with the Mercantile Registry within one month after approval, which must occur within six months following the end of the fiscal year.

If the company prepares its accounts according to the PGC, the documents included in the annual accounts are:

1. Inventory book and the balance sheet.
2. Profit and loss account,
3. Statement of changes in equity
4. Cash flow statement
5. The minutes of the company will be prepared according to RD 1514/2007.

2.2. General Accounting Plan (Plan General de Contabilidad).

Regulation: Plan General Contable (PGC). Businesses must maintain accounting records according to the Spanish General Accounting Plan. Bookkeeping includes:

• Daily bookkeeping: Maintain accurate and up-to-date records of all business transactions, based on the bank movements, or expenses and income.
• Mandatory books: Maintain and legalize books such as the Journal (Libro Diario), Inventory and Annual Accounts Book (Libro de Inventarios y Cuentas Anuales), and Minutes Book (Libro de Actas).

2.3. Official Ledger Books

• Legalization: Books must be legalized by the Mercantile Registry annually, within four months after the end of the fiscal year.

2.4. Audit Requirements

• Statutory audit: Required for companies meeting certain criteria (e.g., turnover, assets, number of employees).
• Submission: Audit report must be submitted along with the annual accounts to the Mercantile Registry.

2.5. Invoices

Business owners and professionals operating in Spain must provide an invoice for the goods they sell and services they provide as part of their business activities, and they are required to retain a copy of these invoices for four years.

An invoice should include the following:

• Number and, where applicable, series.
• Expedition date.
• Full name and surname, or complete social or corporate name of the issuer and the recipient.
• Tax ID number (NIF) of the issuer and, in certain cases, of the recipient.
• Address of the issuer and the recipient.
• Description of the operations and necessary data to determine the taxable base and its amount (unit price without VAT, discounts or rebates).
• Tax rate(s).
• Tax amount stated separately.
• Date of the transaction, if different from the invoice issuance date.

3.-Regulatory Compliance

3.1.- Data Protection (GDPR)

Ensure compliance with the General Data Protection Regulation (GDPR) as enforced in Spain.

3.2- Environmental Compliance Reporting:

Certain industries may have additional reporting requirements related to environmental regulations.

3.3- Tax Office Notification Reception: DEH

The electronic access of citizens to public services has established a new way of notifying through the Internet via an Enabled Electronic Address (DEH) The enabled electronic address is used for receiving administrative notifications that public bodies may issue. Individuals or legal entities that register with the Electronic Notifications Service will have a unique DEH and can subscribe to the administrative procedures from which they wish to receive notifications via this method. If a public body has informed you that notifications will be sent mandatorily through this service, subscription will not be necessary. More information DEH

3.4- National Institute of Statistics: INE

The National Institute of Statistics creates surveys which are mandatory when your company is selected, and a fine will be in place if there is no response to the survey request. Official statistics are one of the main sources of information about our society. They are essential for public administrations, businesses, and other social agents to make better decisions. Additionally, they provide society with information for the analysis and evaluation of government policies. Some statistics have legal effects, for example, for updating incomes. An example of the use of statistical information is the calculation of the Gross Domestic Product (GDP). For the calculation of the GDP, data from various surveys are used (Labor Force Survey, Household Budget Survey, Industrial Enterprise Survey, Annual Services Survey, Structural Survey of the Construction Industry, etc.). Its value determines, among other things, what our country's contribution to the community budget should be. It also serves for the calculation of the participation of the Autonomous Communities in the Interterritorial Compensation Fund, as well as for determining which can be recipients of certain structural funds.

In surveys directed at businesses, the phases of obtaining the sample are:

• Grouping businesses or local units that have similar characteristics. The groups are called strata. Geographic location, economic activity, and a measure of economic size, usually the number of employees, are typically considered.
• Determining the businesses or local units required in the sample within each stratum.
• Selecting the sample units within each stratum. In this final phase, if the sample is a portion of the total group, the selection is made randomly. There are circumstances that require all units in the stratum to be part of the sample. This occurs with larger units or if there are few businesses in the stratum.

In case your entity receives a requirement to file the INE survey this must be filed, either yearly, quarterly or monthly in some cases, as the INE requests.

3.5.- For Europe, export import

Operador Economico Autorizado An Authorized Economic Operator (AEO) can be defined as a trusted economic operator for customs operations and, consequently, can enjoy advantages throughout the European Union.

The AEO acquires a series of benefits and must meet a series of requirements.

Advantages:

• Fewer physical and documentary controls.
• Priority in controls.
• Possibility to choose the place of inspection (including national centralized clearance).
• Easier access to simplified customs procedures. Summary declarations for entry or exit with reduced data.
• Advance notice of physical recognition decision.

Other series of benefits:

• easier access to customs
• indirect improvements or international recognition of the figure in commercial relations
• reductions in guarantees
• national centralized clearance, etc.

The advantages derived from holding an Authorized Economic Operator certificate are not transferable, so only the holder themselves can benefit from them.

Maximum security is achieved when all participants in the logistics chain are secure operators. In the absence of this circumstance, the risk increases and the advantages logically decrease.

Operator requirements:

Among the criteria for granting the status of Authorized Economic Operator, Regulation (EEC) No. 2913/92 indicates the following:

• a satisfactory track record of compliance with customs requirements
• an appropriate system for managing commercial records and, where applicable, transport records, allowing for appropriate customs control, where applicable, demonstrated financial solvency, and if applicable, appropriate security levels.

Types of certificates:

There are three types, depending on the requirements and benefits derived from them:

• Authorized Economic Operator Certificate - Customs Simplifications.
• Authorized Economic Operator Certificate - Security and Protection.
• Authorized Economic Operator Certificate - Simplifications and Security.

3.6. Roi/vies

Regulation an forms related to are found here: Vies/Roi

Intracomunitari European deliveries of goods and services are exempt from VAT. The regime is characterized by providing an exemption in the country of origin, conditioned on the condition that the receipt of the goods is taxed in the destination country. The necessary conditions for the Europear delivery in Spain to be exempt of VAT are two:

1. The goods are dispatched or transported to the territory of another Member State on behalf of the seller, the buyer, or by a third party on behalf of any of them.
2. The recipient of the goods is identified for VAT purposes in another Member State and is subject to VAT.

The parties involved in these operations must be specifically identified with the Intra European Operator number (EU VAT ID) and be registered in the VIES census.

EU VAT ID is also required for entrepreneurs or professionals who provide services, which, according to the rules of localization, are deemed to be provided in another Member State other than Spain, when the taxable person is the recipient of such services.

Invoices issued in intracommunity transactions must contain the EU VAT identification number of both the seller and the buyer.

It is the seller's responsibility to ensure that the recipient is registered as an intracommunity operator.

What is the composition of the EU VAT ID number?

For VAT purposes, for individuals or entities carrying out intracommunity operations, the EU VAT ID will be defined in accordance with the general rules, preceded by the prefix ES, according to the international standard ISO-3166 alpha 2 code.

Spanish VAT ID = ES + VAT ID number.

The Vies VAT ID will be assigned, with some exceptions, when applied to the following individuals or entities:

• Entrepreneurs or professionals established or not in the territory covered by Spanish VAT, who carry out deliveries of goods or intracommunity acquisitions of goods subject to the tax, even if the goods subject to such intracommunity acquisitions are used in carrying out business or professional activities abroad (non resident entities).
• Entrepreneurs or professionals who are recipients of services provided by entrepreneurs or professionals not established in the Spanish mainland territory and the Balearic Islands, regarding which they are VAT taxable persons (reverse charge mechanism).
• Entrepreneurs or professionals who provide services, which, according to the rules of localization, are deemed to be provided in another Member State other than Spain, when the taxable person is the recipient of such services.
• Legal entities that do not act as entrepreneurs or professionals, when they make intracommunity acquisitions of goods subject to VAT.

3.7.-EORI

Regulation and forms can be found on the Agencia Tributaria's website.

The Economic Operator Registration and Identification Number (EORI number) is a tax number, unique throughout the European Union, that must be used as a common reference in dealings with the customs authorities of the entire EU.

The composition of the EORI number for operators registered in Spain and who also have a NIF assigned by the AEAT is as follows:

• 2-digit ISO code corresponding to Spain (ES) + NIF.

The EORI should not be confused with other identification numbers assigned by the tax authorities, such as the NIF-IVA number (this implies registration as EU VAT in the Registry of Intra-Community Operators) or the Authorized Economic Operator. An Economic Operator is a person who, in the course of their professional activities, conducts activities regulated by customs legislation, while Authorized Economic Operators are trusted operators in customs operations and, consequently, will enjoy advantages throughout the European Union.

That is, all economic operators must have an EORI number, while only those who wish to do so will apply for an AEO certificate to benefit from the corresponding advantages.

Legislation restricts the assignment of an EORI to operators with their own and independent legal personality. In Spain, both branches and permanent entities of non-resident entities can perform legal acts, so they will obtain their own EORI upon request.

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.
• An invoice date and an 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").

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.

When creating invoice numbers, there may not be gaps in the numbers. You also cannot have a later invoice number with an earlier invoice date.

Does my Spanish company always need to include VAT tax when billing our clients?

In general, you must charge VAT tax to clients within Spain and to clients outside the EU, but it depends on the nature of the operation. In case of EU clients, VAT tax must be charged unless:

• The transaction is between two 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.

Receipts vs. invoices: what is the difference in Spain?

A receipt is called a ticket in Spanish. A proper receipt is called a factura simplificada (simplified invoice). To be a factura simplificada, the receipt must contain:

• The invoice date and invoice number
• The vendor company's NIF
• A description of the goods or service
• The VAT tax applied

In other words, the only difference between a factura simplificada and a full invoice is that the person or company paying the invoice is not listed (name, tax ID, and address).

The receipt is deductible as an expense (if you can justify that the cost is related to the business), but the VAT is NOT deductible. Therefore, when you buy something in a store, you should always ask for an invoice. To avoid problems, we recommend that you don't include receipts higher than 50€ in your accounting.

When there is an audit, the Spanish tax office pays special attention to these expenses:

• Restaurant expenses where the company has offices
• Bars, restaurants, and hotels (especially when the date is a weekend)
• Food
• Cell phones
• Clothes

In these cases, you must prove without any doubts that these expenses were necessary and related to the business.

Can I deduct travel expenses in Spain?

In order to deduct travel expenses -- transportation, food, and lodging -- you must be able to show that these expenses are necessary to obtain earnings, clearly linked to the economic activity of the company, as opposed to personal expenses. You should retain emails exchanged with the client to reflect the meeting or work meal. You must show a full invoice, not just a train ticket, and the transportation ticket should never be paid in cash. In the case of food, it should be a restaurant, not a food stand.

Can I deduct expenses related to the sales department of my company (gastos de representación)?

Yes, in Spain you can deduct these expenses, but only up to 1% of your company turnover. Anything over 1% is not deductible. These expenses may include:

• Hotel stays.
• A free meal at a restaurants, or tickets to a sporting or leisure events.
• A workshop or conference.

These expenses must be justified by a full invoice and electronic payment. The cost must be market price.

Does my company need to report our invoices electronically to the tax office?

Countries have been implementing the EU directive to electronically report VAT on all invoices created. Spain and other countries have been granted extensions in implementing this directive. Spain finally passed the regulation called SII (Sistema Inmediato de Información) which declares that starting July 1, 2017, any company that has over 6MM€ in annual invoicing must send their invoices to the Spanish tax office within 4 days of the creation of the invoices.

What does your service include?

Our service includes the following:

• Get a tax ID number for your business, if you don't already have one.
• Register the company for the business activities tax.
• Register the company for VAT purposes.
• Register the company for social security.
• Perform the accounting for the company, in accordance with Spanish and EU accounting regulations (Twelfth Directive), based on the information received from the client.
• File all required tax forms.
• Legalize the official books of accountancy at the Mercantile Registry, as well as the notarised year-end annual accounts. This includes the libro de actas, libro de socios, memoria anual, cuentas anuales, balance de situación, cuenta de perdidas y ganancias, and libro diario, as well as the certificate of the annual meeting of shareholders to approve the accounting.
• We provide information to the client regarding the Spanish rules on invoice creation, as well as general information on tracking expenses and charges.
• Fiscal representation (we receive and process all notifications from the tax authorities on behalf of the company).

We offer many additional services, such as the following:

• As part of our payroll service, we can register the company director with the social security office, and create monthly payslips.
• We can register any changes regarding the company -- e.g. partners, increase/decrease of backing capital -- with the Mercantile Registry.
• We can deliver reports on a monthly, quarterly, or yearly basis, adapting the information to your head office's international accounting department.
• Reinstatement: We resolve outstanding compliance issues and submit the necessary forms and fees to the tax office in order to bring your company back to good standing.
• Representation before an inspection from the Tax Office.

You simply mail us or email us your invoices and bank statements every month, and we handle the rest.

Why choose Strong Abogados to do my accounting in Spain?

• By having accountants, a corporate/tax lawyer, and a payroll specialist in the same firm, your business needs are covered, and information passes between them without requiring your intervention.
• Our accountants all have Spanish degrees in accounting and years of work experience.
• We are certified by the tax authorities and by the social security office to send all documents electronically, cutting down on time, costs, and the chances of papers getting lost.
• It's more efficient to have both the establishment of the company and accounting for the company done by the same firm. You won't get caught with two providers telling you some task is the responsibility of the other.
• We are members of the Bar Association of Barcelona (Ilustre Colegio de Abogados de Barcelona) and the Association of Accounting and Tax Experts of Spain (AECE). You as a client can ask for referrals and complaints about us in both institutions.

Call us at 932 155 393 or fill out the form below.

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