VAT in the Kingdom of Spain

Spain is a member of the European Union (EU) and draws up its tax rules according to the laws or directives issued from Brussels by the EU. The current VAT directive applies to all 27 member states of the European Union, and it governs the rules on VAT compliance, and in some part, covers the setting of VAT rates.

As an EU member state, Spain is obliged to implement the VAT directives, which provides guidance on VAT. Where there is a conflict, the European Union’s directive takes precedence. Spain is a member of the European single market economy and uses the Euro (€) as its currency.  In Spain VAT is known as: Impuesto sobre el Valor Añadidio, or IVA.

VAT registration in Spain

Both EU and non-EU businesses may trade in Spain without establishing a local presence. This is known as non-resident VAT trading. There is no VAT threshold in Spain for the registration of non-resident traders, but you will need one to record transactions and your Spanish customers will want proof that you have obtained one.

There are strict rules on the situations where VAT registration is permitted. Common scenarios that require 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;
• Buying goods within Spain that are subsequently re-sold in-country;
• Selling goods from Spain to other EU member states;
• Distance-selling to private individuals in Spain, e.g. internet retailing or trading through an e-commerce platform.

Registering for Spain VAT generally takes between two to four weeks once all documentation has been submitted to the tax authority, but this varies from seller to seller and will depend on the specifics of an individual company.

Spanish VAT compliance

There are detailed rules controlling the recording and processing of Spanish transactions for VAT purposes. This includes guidelines on:

• Spanish invoice requirements;
• When to issue a Spanish tax invoice;
• Foreign currency reporting;
• Credit notes and corrections;
• Correcting entries from prior returns;
• Which accounting records must be maintained.

Spanish VAT rates