Spain VAT (IVA) – Rates, Registration, and Tax Guide

Spain VAT (IVA) System

Spain, a key member of the European Union, operates under the EU-wide Value Added Tax (VAT) framework. In Spain, VAT is known as IVA (Impuesto sobre el Valor Añadido). If you're a business operating in or trading with Spain, understanding how IVA works is crucial to staying compliant and competitive.

✅ What is IVA in Spain?

IVA is an indirect tax applied to the consumption of goods and services. It is collected by businesses at each stage of production and distribution and then paid to the Spanish tax authority, the Agencia Tributaria.

Spain follows the destination principle which means VAT is charged where goods or services are consumed, not where they are produced.

📊 Spain VAT Rates

Spain applies multiple VAT rates depending on the product or service:

21% - Standard Rate

Applies to most goods and services including electronics, clothing, consultancy, etc.

10% - Reduced Rate

Applies to transport, hotel accommodation, restaurant services, some food items, and health-related products.

4% - Super Reduced Rate

Applied to essential items like bread, milk, books, newspapers, and some pharmaceuticals.

0% - Exemptions

Applies to services like education, healthcare, certain financial and insurance services.

🏢 Who Needs to Register for IVA in Spain?

You are required to register for IVA in Spain if you:

• Sell goods or services within Spain
• Import or export to/from Spain
• Operate an online store targeting Spanish consumers
• Offer digital services, SaaS, or streaming to individuals in Spain

Non-EU businesses must appoint a fiscal representative in Spain to handle VAT compliance.

🧾 How to Get a Spanish VAT Number (NIF-IVA)

To operate legally under Spanish VAT law, you need a VAT ID (called NIF-IVA). Here's how to get one:

• Apply to the Agencia Tributaria (AEAT)
• Provide documentation (passport/company certificate, proof of activity, etc.)
• Non-resident companies may require a Spanish tax representative
• Once approved, you will get a NIF starting with ES followed by 9 characters (e.g., ESX1234567T)

📝 Filing IVA Returns in Spain

VAT returns in Spain are typically filed:

• Monthly for businesses with turnover above €6,010,121.04
• Quarterly for others (default option)

Returns must include:

• IVA collected on sales (output VAT)
• IVA paid on purchases (input VAT)
• Net VAT due (difference between output and input)

Deadlines:

• Quarterly Returns: 20th day of the month following the quarter
• Monthly Returns: 20th of the following month

All filings must be done electronically via the AEAT portal.

🧮 Example of IVA Calculation

Suppose a software company in Madrid sells services worth €2,000:

• Output VAT (21%) = €420
• Purchases: €500 + €105 IVA
• Input VAT = €105
• Net VAT to Pay = €420 - €105 = €315

📦 VAT on Cross-Border Trade

Spain follows EU VAT rules for intra-community and international trade:

• Intra-EU B2B Sales: VAT is not charged if both businesses have valid VAT numbers (reverse charge applies).
• Intra-EU Purchases: The buyer self-accounts VAT using the reverse charge mechanism.
• Exports (outside EU): VAT exempt (0%)
• Imports: Subject to Spanish VAT and customs duties

Online sellers must comply with the One Stop Shop (OSS) scheme for easier EU-wide VAT management.

🚫 IVA-Exempt Goods and Services

Some categories are fully exempt from VAT in Spain:

• Public health services and education
• Cultural and sporting services under certain conditions
• Insurance and financial transactions
• Rental of residential property
• Specific postal services

These exemptions mean no VAT is charged, and input tax cannot be reclaimed on related expenses.

📃 Invoicing & Record Keeping Rules

Spanish VAT law requires invoices to include:

• Supplier and customer details
• NIF (VAT ID) of both parties
• Description of goods/services
• Breakdown of tax rates applied
• Total VAT amount charged

Businesses must maintain records for at least 4 years, and issue invoices within one month of supply.

🛒 eCommerce & Digital Services in Spain

If you're selling:

• E-books, software, streaming, or gaming
• Online subscriptions or SaaS

To Spanish consumers, you must charge Spanish VAT (IVA), even if you're based outside the EU. Registration under EU OSS or Non-Union OSS is recommended for simplified compliance.

🧠 Key Takeaways

✅ Spain’s VAT system is known as IVA (Impuesto sobre el Valor Añadido)

✅ Standard VAT rate is 21%, with reduced rates of 10% and 4%

✅ VAT returns are filed quarterly or monthly based on revenue

✅ Both domestic and cross-border rules are aligned with the EU system

✅ Businesses must comply with strict invoicing and digital filing rules