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Spanish VAT Guide for Businesses

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%.

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.

What is the VAT Rate
in the Spain?
21%

Number of returns per year: 4

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.

Type of VAT VAT RateApplicable Goods
General VAT21%Appliances, cars, cinema tickets, smartphones, etc.
Reduced VAT10%Cultural activities, transport and electricity
Super-Reduced VAT4%Necessities like essential foodstuffs and subsidized housing
VAT free 0%Masks and hand sanitizer, financial products and healthcare products

Requirement to Register for VAT

Generally, there is no threshold for VAT registration. Registration is required if the company intends to carry out transactions which are subject to German VAT. In the case of distance selling, the current registration threshold is €100,000 (§ 3c (3) German VAT Act).

Registration can be arranged based on a power of attorney. The official standpoint is that correspondence from the tax authority to outside Germany can only be delivered to the seat of the company.

Generally, the following documents are to be submitted:

  • Articles of association, certificate of incorporation,
  • Power of attorney (PoA) in case of companies established outside of Germany,
  • Certificate of registration
  • Signature specimen and
  • The excerpt from the commercial register.

Description of business activity may also be required depending on the competent tax authority.

VAT Filing Frequency
and Deadlines

Like all EU member states, the German VAT reporting calendar is on an annual basis. Therefore an annual VAT return must always be filed for each calendar year. The company has to report its VAT position by filing preliminary VAT returns on a monthly basis where VAT due in previous calendar year exceeds the amount of €7,500.

Preliminary VAT return has to be filed quarterly if VAT due in previous calendar year is lower than €7,500. If the net VAT due in the previous calendar year did not exceed €1,000, no preliminary VAT returns have to be filed but only the annual VAT return. The exception is newly registered companies, which must submit each month for two years.

VAT Filing Frequency
and Deadlines

Like all EU member states, the German VAT reporting calendar is on an annual basis. Therefore an annual VAT return must always be filed for each calendar year. The company has to report its VAT position by filing preliminary VAT returns on a monthly basis where VAT due in previous calendar year exceeds the amount of €7,500.

Preliminary VAT return has to be filed quarterly if VAT due in previous calendar year is lower than €7,500. If the net VAT due in the previous calendar year did not exceed €1,000, no preliminary VAT returns have to be filed but only the annual VAT return. The exception is newly registered companies, which must submit each month for two years.

Agents and Fiscal Representatives

For non-EU businesses in accordance with the German law (§ 22/A –22/E German VAT Act) it is not obligatory to announce fiscal representative. For EU businesses the appointment of fiscal representative is also optional.

Fiscal representation is possible for companies located abroad which conduct business in Germany exclusively free of VAT, and for which no input tax amounts can be deducted.

Invoicing Requirements

Whenever the business supplies standard-rated or reduced-rated goods or services it must issue a VAT invoice. However, there is no need to issue a VAT invoice if the customer is not VAT registered, for zero-rated supplies, if the customer operates self-billing arrangements or for gift of goods on which VAT is due.

There are certain requirements regarding the content of an invoice, which includes:

  • a sequential number based on one or more series which uniquely identifies the document
  • the time of the supply (tax point)
  • the date of issue of the document (where different to the time of supply)
  • Supplier name, address and VAT registration number
  • the customer name and address
  • a description sufficient to identify the goods or services supplied
  • for each description, the quantity of the goods or the extent of the services, the rate of VAT, and the amount payable excluding VAT
  • the gross total amount payable, excluding VAT
  • the rate of any cash discount offered
  • the total amount of VAT chargeable
  • the unit price

In case a VAT invoice includes zero-rated or exempt supplies, those items clearly have to show that there’s no VAT payable and a separate total for their values have to be indicated as well. It is also possible to issue simplified VAT invoices if the value of goods is less than £250 and the customer also agrees to have a simplified invoice for the items.

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