As a member state within the EU, Spain must broadly follow European Union rules for its Value Added Tax (VAT). It must also participate in schemes like One Stop Shop (OSS) and Import One Stop Shop (IOSS). However, it can establish its own VAT requirements within those confines.
In Spain, VAT is called Impuesto sobre el Valor Añadido (IVA), and it's administered by Agencia Estatal de Administración Tributaria (AEAT). Because it is a value-added tax, it is collected at each stage of the supply chain.
Unfortunately, the rules can be complicated because Spain has multiple rates for different kinds of products, and its standard 21% rate doesn't apply in all Spanish territories (some of which require independent registration).
Businesses outside Spain must understand all these rules, as registering to collect and remit VAT is required from the first sale for non-EU sellers, with no registration threshold. Registration also often necessitates appointing a fiscal representative.
This guide will explain the Spanish VAT rules, how the Impuesto sobre el Valor Añadido (IVA) is charged and at what rates, and other compliance requirements you must fulfill.
What is VAT, and how does it work in Spain?
Unlike in the U.S., where retail sales tax is only charged at the final point of sale to the end consumer, Spain charges a Value Added Tax (VAT). Most countries across the world, and all EU member states, charge VAT at each phase of the supply chain.
Companies pay input VAT on purchases, and charge output VAT on sales. Because they claim credits for input VAT, tax is only paid on the added value. The difference between output and input VAT is remitted to AEAT. The end consumer can't claim input VAT, so they bear the full tax cost.
Here's a simple example:
- A manufacturer purchases materials for €100 and pays 21% VAT, for a total cost of €121. The €21 VAT paid is input VAT, which the manufacturer can later deduct from the VAT it collects on sales.
- The manufacturer sells the finished item to a retail store for €200. It charges 21% VAT (€42), so the retailer pays a total of €242. The manufacturer collected €42 in output VAT and previously paid €21 in input VAT on its materials, so it remits the difference (€21) to the Spanish tax authority, AEAT.
- The retail store sells the item to the final customer for €300 before VAT. It charges 21% VAT (€63), so the customer pays a total of €363. The retailer collected €63 in output VAT but already paid €42 in VAT when purchasing the item from the manufacturer, so it claims a credit for that €42 and remits the remaining €21 to AEAT.
- The final customer cannot recover VAT, so the customer ultimately bears the full €63 VAT burden, which equals 21% of the final pre-tax price of €300.
Because Spain is a member state within the EU, its VAT system is governed by the EU VAT Directive. This directive created uniform rules and processes across all 27 member states, but it allows each individual state to set its own rates and terms within the broader framework.
[blog-post-inline-cta]
Spain VAT rates
Spain has established three different VAT rates. The standard rate is 21%, while there is a reduced rate of 10% applied to some items and a super-reduced rate of 4% applied to others.
The rate is determined not based on who is buying or selling the items, but based on the nature of the item sold. The table below shows the four different ways goods and services may be taxed, along with details on whether input VAT can be reclaimed.
Standard rate: 21%
In Spain, the standard 21% rate applies to most goods and services that are not expressly listed as being subject to a reduced rate. Examples of items taxed at the standard rate include:
- Electronics
- Adult clothing
- Software and digital products
- Professional services
- Alcohol
- Advertising services
- Most home improvement work
- Furniture
- Car repairs
- Tobacco products
- Pet accessories
- Gym memberships
- Office supplies
Reduced rate: 10%
The 10% reduced rate applies to goods that are considered important, but not classified as essential staples that are exempt from tax or taxed at the super-reduced rate. Examples include:
- Prepared foods, non-alcoholic drinks, and most foods that are not covered by the super-reduced rate.
- Most hospitality and restaurant services
- Passenger transportation
- Cultural and entertainment events, such as tickets to cinemas, concerts, and sporting events
- Some agricultural inputs
- Most hotel accommodations
Super-reduced rate: 4%
Finally, Spain charges tax on basic necessities at a super-reduced rate of 4%. Examples include:
- Basic food staples, like bread, flour, milk, eggs, cheese, fruit, vegetables, cereal, and legumes
- Books and newspapers, including digital books if they aren't mainly advertising or video or music content
- Prescription medications
- Vehicles that have been adapted for people with disabilities
- Some social housing
Exempt supplies
There are also certain items that are considered exempt supplies in Spain. This means no VAT is charged, and input VAT generally cannot be recovered on expenses related to those activities. Examples include:
- Most healthcare services provided by licensed professionals
- Most educational services
- Financial and insurance services
- Most long-term residential property rentals
- Postal service from Correos
In Spain, the resale of existing homes is generally exempt from VAT and instead subject to Property Transfer Tax (ITP). By contrast, the sale of new residential property by a developer is typically subject to VAT, and usually also Stamp Duty (AJD).
Special territories: the Canary Islands, Ceuta, and Melilla
While most of Spain follows the standard VAT rules, this is not the case for the Canary Islands, Ceuta, and Melilla, each of which is an integral sovereign territory of Spain. Unfortunately, many companies don't realize that these territories have separate VAT rules to comply with.
When ecommerce sellers provide goods or services to customers in Spain or in Spanish territories, the customer's location determines which system of tax applies. This means your company must understand what rules apply to each customer's location to fulfill tax obligations.
Ceuta and Melilla
Ceuta and Melilla also have historically had special tax regimes as a result of free-port traditions, strategic trade policy, autonomous-city status built into the constitution, and geographic separation from Spain due to their location in North Africa.
Instead of VAT in these areas, there is a local consumption tax called Impuesto sobre la Producción, los Servicios y la Importación. IPSI is imposed on three main categories of items, including production (the manufacture or creation of goods), services, and imports.
IPSI is similar in many ways to VAT, in that companies charge tax on taxable transactions and deduct IPSI paid on inputs. Registration and periodic filing are also required. However, each city sets its own rates, and rates are usually much lower, often totaling 0.5%–10%.
The Canary Islands
The Canary Islands (Canarias) include Tenerife, Fuerteventura, Gran Canaria, Lanzarote, La Palma, La Gomera, and El Hierro. Within these Islands, companies are expected to collect and remit IGIC (Impuesto General Indirecto Canario) instead of VAT.
IGIC also works similarly to VAT, including the fact that companies can charge output tax and deduct input tax, and they must register, file periodic returns, and remit taxes to Agencia Tributaria Canaria (the Canary Islands taxing authority). However, the rates differ substantially.
While the standard VAT rate in Spain is 21%, the standard rate in the Canary Islands is 7%. And while Spain has reduced rates of 10% or 4%, the Canary Islands have reduced rates of 3% or 0%.
However, the Canary Islands do have special rates of 9.5%, 13.5%, 15%, 20%, which apply to certain imports and special sectors, luxury goods, alcohol, and some tobacco products.
You typically must register for IGIC if you have a physical presence in the Canary Islands (such as operating a local business or holding stock there), or if you import goods, make taxable local supplies, or provide taxable local services.
Traditionally, you had to register and remit taxes from the first euro of sales, but effective July 1, 2026, there are limited exceptions for self-employed workers and small business owners with annual turnover up to EUR 50,000.
[blog-post-inline-cta]
Registering for VAT in Spain
Registering for VAT in Spain is the first step to complying with the country's tax laws. Here's what you need to know about the process.
EU businesses
EU businesses making cross-border sales can charge VAT at their home country's rate when selling in any EU member state until total cross-border B2C EU sales exceed the €10,000 EU-wide threshold. Then, the company must charge VAT based on the customer's country.
So, once the €10,000 threshold is reached, the EU business must begin charging customers in Spain VAT based on the rates and rules that apply in Spain.
The company can either register for the One Stop Shop (OSS) Scheme through its home country or register for VAT in each destination country. EU-based businesses that want to register in Spain can register directly with the AEAT online.
There is no requirement for a fiscal representative when an EU company registers in Spain or for OSS.
Non-EU businesses: no threshold and a fiscal representative requirement
Companies that are based outside of the EU, but that sell to customers in EU countries, do not have a registration threshold. From the first taxable supply into Spain, the company must register with AEAT.
When registering, non-EU companies typically must appoint a fiscal representative. This is a company or individual based in Spain who is jointly and severally liable for the company's VAT obligations. If your company does not pay, AEAT can collect from the fiscal representative.
Some non-EU companies may also need to post a bank guarantee, depending on their country of establishment and applicable mutual assistance agreements. Businesses should prepare for this financial commitment and obligation when registering.
How to register
There are specific forms you must complete to register for VAT in Spain.
Previously, Model 037 (a simplified registration form) could be used by at least some businesses (including most Spanish companies) for registering, modifying, or deregistering in the Census of Entrepreneurs. However, Modelo 036 (full version) is now the Universal Form.
Modelo 036 registers you in the Censo de Empresarios, Profesionales y Retenedores (Census of Entrepreneurs, Professionals, and Withholders). This activates your tax obligations, including VAT.
First-time individuals (emprendedores) can use the assisted Censos WEB service, which includes guided questions that auto-fill VAT/IRPF regimes.
When you register, you will receive your NIF (Número de Identificación Fiscal), which serves as the VAT identification number (prefixed with ES for intra-EU operations). For example, the number could look like ESX1234567A for an individual, or ESA12345678 for a company.
Registration typically takes two to four weeks, but VAT obligations generally apply from the effective registration date, so you should begin collecting VAT right away.
When to charge VAT in Spain
The specifics of when you must charge VAT in Spain can vary depending on who is buying from you.
B2C sales
Spanish companies selling to Spanish customers will charge VAT on virtually all domestic sales involving taxable goods and services. The Spanish VAT should be included on the invoice or receipt.
For EU-established companies making intra-EU distance sales to Spanish customers, the VAT of the destination country applies once the €10,000 EU-wide threshold is exceeded in the current or prior year. At this point, the company must charge Spanish IVA to Spanish customers.
Companies can use the One Stop Shop (OSS / Ventanilla Única – Régimen de la Unión) to declare and pay all relevant EU B2C VAT in a single return (Modelo 369) instead of registering in each country.
For non-EU sellers selling in Spain, you can, and often should, charge and account for Spanish IVA at the point of sale for imports less than or equal to €150 per consignment using the Import One Stop Shop (IOSS). This allows declaration and payment in a single return.
For consignments over €150, IOSS cannot be used. VAT (and duties) are usually collected by the carrier at import/delivery.
For digital or electronic goods sold to Spain, companies must charge Spanish IVA from the first sale, and should consider using OSS (the Non-Union regime) to declare and pay VAT.
B2B sales and the reverse charge
When a Spanish-registered business is engaged in domestic B2B sales, the supplier charges VAT, and buyers reclaim VAT they paid on qualified business expenses by claiming an input VAT credit.
However, there are limited circumstances when a domestic reverse charge mechanism applies. This means the buyer must report and pay VAT. Examples include construction services, some precious metals, greenhouse gas emissions allowances, and some electronic goods.
When a business from outside Spain sells to a VAT-registered business within Spain, then the reverse charge mechanism typically applies for these cross-border sales. The Spanish buyer self-accounts for the VAT on their return, and the foreign supplier does not charge VAT.
Digital services and the One-Stop Shop (OSS)
The 2021 EU e-commerce VAT package established rules for charging VAT on digital or electronically supplied services to EU consumers, including ebooks, music, videos, software downloads, streaming apps, and SaaS.
Under these rules, most companies selling digital goods to EU consumers typically charge VAT at the rate of the country where the customer is located (the place of supply).
However, EU-based sellers charge their home VAT rate until the €10,000 EU-wide threshold is met (this is a combined threshold for digital goods and physical goods). Once the threshold is met, then EU companies charge VAT at the customer's country's VAT rate.
EU-based sellers can use the Union OSS scheme, registering once and using a single quarterly return to report and remit VAT payments. If you register in Spain, you will use Form 035 in Spain and file Modelo 369 quarterly.
For non-EU sellers, place of supply rules apply from the first sale, and you must charge the local VAT rate of the customer's country. You can use non-union OSS, registering in a single EU country and filing quarterly returns in that country's portal for all EU B2C digital service sales.
However, OSS does not apply to the Canary Islands, which are outside of EU VAT territory, nor does it apply to sales in Ceuta and Melilla, which have their own tax systems.
Marketplace facilitator rules
Under EU VAT law, some online marketplaces are classified as electronic interfaces (EIs) and treated as deemed suppliers of items sold on the platform. This is similar to U.S. marketplace facilitator laws applied to sales platforms like Amazon that play an instrumental role in sales.
Deemed suppliers in the EU are responsible for charging, collecting, and remitting VAT to taxing authorities. In the EU, a digital marketplace is typically considered to be a deemed seller if it does any one of the following:
- Sets (directly or indirectly) the general terms and conditions of the sale
- Authorizes the payment/charge to the customer
- Is involved in ordering or delivery of the goods.
The rule typically doesn't apply to purely domestic sales within one EU country where the seller is established in that same country. It primarily applies to cross-border and import scenarios, as the rule was created with the goal of closing VAT gaps from non-EU sellers.
For electronically supplied services, however, the standard destination rules and OSS apply, so marketplaces aren't automatically deemed suppliers as they are when goods are sold. They may still have reporting or liability obligations if they meet the involvement criteria.
When it is a deemed seller, the marketplace must charge the correct destination VAT rate (based on the customer’s location), and can use the Union OSS scheme for intra-EU distance sales and IOSS (Import One Stop Shop) for low-value imports less than or equal to €150.
If you are selling on these platforms, it's important to confirm whether the marketplace is collecting and remitting Spanish VAT. If it is, you shouldn't separately charge VAT on any marketplace transactions.
[blog-post-inline-cta]
Staying compliant with Spain's VAT
Invoicing requirements
VAT-registered companies in Spain must issue a compliant invoice for all taxable supplies. To be VAT-compliant, the invoice must include:
- A sequential invoice number
- The issuance date
- The full name and business name of the party required to issue the invoice, and the recipient of the transactions
- The Tax Identification Number (NIF) issued by the Spanish Tax Administration, or another member state of the European Union, where the transaction was performed
- Registered addresses for the party obligated to issue the invoice and the transaction recipient
- A description of the transactions, including all information necessary to determine the gross tax base and its amount
- The tax rate applied to the transaction
- The date when the transaction took place, or when payment was received
- In the case of deliveries of new means of transport, the date of their first commissioning and the distances travelled or hours of navigation or flight completed until their delivery.
- A description of goods and services
Simplified invoices are allowed for B2C sales below €400 and require much more limited information, including the number and serial number, the date of issue, the transaction date, the issuer's tax ID number, an identification of goods/services supplied, the tax rate, and total cost.
Some B2C sectors, like retail shops, restaurants, hospitality, and passenger transport, can issue simplified invoices up to €3,000.
In Spain, certain companies are required to submit invoices using an electronic invoicing system, Suministro Inmediato de Información, and beginning January 1, 2027, more companies will be required to use certified digital invoicing software.
SII: real-time invoice reporting
Large companies with an annual turnover above €6 million, VAT groups, and businesses enrolled in the REDEME monthly VAT refund scheme are required to use Spain's Suministro Inmediato de Información (SII).
SII is an electronic system where VAT-registered businesses send detailed records of issued and received invoices (Libros Registro de Facturas Expedidas y Recibidas) directly to the AEAT electronically using web services like SOAP or the AEAT online portal.
SII replaces traditional VAT books with near real-time reporting. Companies must submit invoice records electronically within four days from the issuance date (for issued invoices) or recorded date (for received invoices). Almost all invoices with specific codes (like F1 or R1) are covered.
In exchange for submitting digital invoice data, companies get monthly VAT refunds, instead of quarterly refunds, and their annual VAT summary filing requirement is waived.
Companies that are subject to SII aren't required to comply with VERI*FACTU, which is a new certified invoicing software regulation that will take effect January 1, 2027 (or July 1, 2027 for some taxpayers).
Non-compliance with either SII or VERI*FACTU can result in significant fines (up to €50,000 or more per infringement for using non-compliant software).
VERI*FACTU: Spain's new e-invoicing requirement for 2027
Starting January 1, 2027, companies in Spain that aren't subject to SII rules but are subject to corporate income tax must follow VERI*FACTU, which is part of the broader Sistemas Informáticos de Facturación. Requirements take effect July 1, 2027, for other taxpayers.
VERI*FACTU requires businesses to use invoicing software that guarantees the integrity, traceability, and non-manipulability of their invoices. Certain key requirements must be met. Specifically:
- The software must create tamper-proof records with cryptographic hash chains and unique identifiers
- Invoices must contain a QR code and the legend “VERI*FACTU” or “Factura verificable en la Sede Electrónica de la AEAT.”
- In VERI*FACTU mode, the software must have the ability to send records to the AEAT
VERI*FACTU-compliant software makes it technically difficult to alter or delete invoice records after they are created, so the new requirement is aimed at fighting fraud.
Filing returns and deadlines
In Spain, companies enrolled in SII or REDEME must submit monthly VAT returns. All other companies must file quarterly.
There are standard filing deadlines for each quarterly filing, but if the last day of the deadline falls on a non-working day (such as a weekend or holiday), it is extended to the next business day. The table below shows filing deadlines.
Companies are also required to file an annual summary return on Form 390 by January 30 of the following year. However, companies subject to SII are not required to submit this annual form.
Record-keeping
Spanish VAT record-keeping obligations are regulated by the Ley 37/1992 del Impuesto sobre el Valor Añadido (LIVA), the Reglamento de Obligaciones de Facturación (Real Decreto 1619/2012), and the Ley General Tributaria (LGT 58/2003).
Under these regulations, companies are required to keep records that allow the AEAT to verify all taxable transactions, deductions, and liabilities. VAT-specific records should be kept for a minimum of four years, while general accounting records should be kept for six.
Required records you must keep include:
- Invoices received
- Copies of issued invoices
- Supporting accounting documents, especially for reverse charge transactions
- Receipts for agricultural compensation
- Other supporting documents related to VAT obligations
- Import and export documents
- Customs declarations
- Filed VAT returns.
While using SII creates a digital record of your invoices, you should always keep your own copies.
Penalties
If you do not comply with all of your VAT obligations in Spain, you will face penalties. Here are some of the potential consequences, depending on the specific violations:
- Late registration for Spanish VAT: Fines range from €200 to €400 for failing to file census declarations on time, plus unpaid VAT and interest. This can be reduced by up to 25% for voluntary repayment.
- Voluntary late filing: You'll owe a fixed 1% on the amount due, plus 1% additional per full month of delay. After 12-months, a fixed 15% fee and late-payment interest apply. If you have a €0 or negative return, the penalty is fixed at €100–€200.
- Forced late filing (filing after AEAT notice). Penalties are between 50% to 150% of the unpaid tax.
- Errors in returns: Penalties range from 50% of the unpaid tax for minor infringements, and up to 150% for the most serious cases, including when fraud or concealment is involved.
When you are late in remitting VAT for any reason, interest accrues at the current legal interest rate, updated annually.
How Numeral handles Spain VAT
As you can see, Spanish VAT rules are complicated. Ecommerce and SaaS businesses selling to Spanish customers face significant challenges, including applying the correct rates for each product and location, meeting fiscal representative requirements, and adopting e-invoicing.
Numeral can make VAT compliance effortless in Spain by taking all of these tasks off your plate. Numeral will:
- Apply the correct VAT rate (21%, 10%, 4%, or exempt within Spain, different in the territories) to every transaction in real time, based on product type and customer location. This includes applying the correct rate in the Canary Islands, Ceuta, and Melilla
- Prepare and file VAT returns. Numeral will prepare and file monthly and quarterly submissions and year-end summary report requirements. A Numeral tax professional reviews every return before submission.
- Back our work with The Numeral Guarantee: if a filing error on Numeral's part results in AEAT penalties or interest, Numeral covers the cost
Get started or book a demo with Numeral to learn more about how we can help you with Spain VAT compliance.
Spain VAT FAQs
If you still need to know more, here are some answers to frequently asked questions about VAT in Spain.
What is the VAT rate in Spain?
VAT in Spain is referred to locally as IVA. The standard rate is 21%. There's also a 10% reduced rate for some groceries, hospitality costs, and passenger transport, and a super-reduced rate of 4% for basic staples like bread, milk, and books.
These rates apply to Mainland Spain and the Balearic Islands, while different rates and rules apply in territories including the Canary Islands.
Does Spain's VAT apply to the Canary Islands?
The Canary Islands are outside Spain's standard VAT system, so Spain's rate doesn't apply. You will instead charge Impuesto General Indirecto Canario at a standard rate of 7% or at a reduced rate for certain supplies.
You must register separately and apply different rates when selling to customers in the Islands.
Do I need to register for VAT in Spain if my business is based outside Spain?
If you are based outside of Spain but make taxable supplies to customers in Spain, you must register for Spanish VAT.
- EU-based businesses must register (or use the OSS) once cross-border B2C sales across all EU countries exceed €10,000 annually.
- Non-EU businesses have no threshold and must register from the first taxable sale.
Non-EU businesses are also required to appoint a Spanish fiscal representative who is jointly liable for VAT obligations.
What is VERI*FACTU, and does it apply to my business?
VERI*FACTU is Spain’s new invoicing software compliance system. It is expected to become mandatory starting in January 2027 for businesses subject to Corporate Income Tax (Impuesto sobre Sociedades) and July 2027 for taxpayers subject to Personal Income Tax (IRPF).
It requires all VAT-registered businesses that aren't subject to SII's real-time reporting requirements to use invoicing software that creates tamper-proof hash-chained records.
How often do I need to file a Spanish VAT return?
Most companies must file Spanish VAT returns quarterly, with deadlines on the 20th of the month after each quarter from Q1 to Q3 ends, and January 30th for Q4. Some companies, including those enrolled in SII must file monthly. All businesses except those on SII must also file annual summary reports by January 30 of the following year.
What are the penalties for not registering for VAT in Spain when required?
If you don't register for Spanish VAT when required, you face fines for the failure to file census forms. You'll also have to pay all VAT that should have been collected from the required registration date, with interest.
Penalties for errors or deliberate non-filing also range from 50% to 150% of the unpaid tax. Liability accumulates quickly, especially for non-EU businesses that must register for VAT from their first sale.
[blog-post-inline-cta]
