In 2012, VAT tax in Spain was raised to 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.
For more information, please read this EU study.