Spanish VAT registrations and VAT returns are based on legislation which is derived from the EU, which sets the common VAT compliance rules across the whole EU.
The Spanish VAT rate is set by the Spanish government, and is currently 21%. There are also reduced rates of 10% for medical, pharmaceuticals, transport of passengers, and admission to cultural, sporting and entertainment events; and 4% for foodstuffs and newspapers.
The European VAT Directives lay out the rules for VAT invoices, computations and most of the details for the implementation of VAT across EU member states. Spain is obliged to incorporate the VAT Directive into its tax code.
Spanish VAT law
The Spanish VAT law is contained within the General Tax Code. It is administered by the Agencia de Administración Tributaria (the Spanish Revenue or AEAT).
Spanish VAT registration
Foreign companies may register in Spain for VAT without the need to form a local company; this is known as non-resident VAT trading. There is no VAT threshold in Spain for the registration of non-resident traders; a VAT number must be in place before the commencement of taxable supplies.
There are strict rules on the situations where a registration is permitted. Common scenarios which require a Spanish VAT registration include:
- Importing goods into Spain,
- Organising live events, conferences, etc, in Spain,
- Holding goods in a warehouse in Spain as stock for resale,
- ‘Supply and install’ services over 12 months,
- Selling goods from Spain to other EU countries,
- Distance-selling to private individuals in Spain, e.g. internet retailing,
- Registering for Spanish VAT generally takes one to two weeks, although this can vary.
Spanish VAT compliance
There are detailed rules controlling the recording and processing of Spanish transactions. These include guidelines on:
- Spanish invoice requirements,
- Foreign currency reporting and translation,
- Correcting errors from prior returns,
- Credit notes and corrections,
- What accounting records must be maintained.
Spanish VAT rates
The standard VAT rate in Spain is 21%; this rose from 18% in September 2012. There is a reduced rate of 10% for passenger transport, hotel and restaurant services, and other goods and services. There is also a 4% VAT rate for food and drink, goods from chemists, construction work and some newspapers. There are many variations to the rates above, including exempt taxable supplies.
Spanish VAT returns
Companies with a Spanish VAT number must submit periodic returns detailing all taxable supplies (sales) and inputs (costs). Returns are generally submitted quarterly in Spain, and are due by the 20th of the month following the reporting period.
There is also a requirement to submit an annual return in Spain by the end of January the following year.
Spain Intrastat and EC sales lists
In addition to VAT returns in Spain, companies may be required to submit additional statistical information.
The Spanish Intrastat, which lists sales (dispatches) and purchases (acquisitions) within the EU region, must be filed monthly once the annual threshold (EUR 250,000 for arrivals and dispatches respectively) is exceeded. Spanish EC sales lists, or recapitulative statement, details customers and the values of sales made to them. It should be submitted on a quarterly basis, and there is no threshold for reporting.
Spain VAT refunds
If a foreign company is providing taxable supplies in Spain but is unable to obtain a Spanish VAT number, or is incurring Spanish VAT on local goods or services, then Spanish VAT may be recovered through a VAT reclaim.
VAT refund applications are made through the tax authorities of the applicant’s home.