If your company is looking to expand its operations into Spain, you may need to familiarise yourself with the Value Added Tax (VAT) regulations in Spain.
This is because Spain, as a member of the European Union, has a VAT system that is crucial for cross-border e-commerce transactions.
You’ll need to ensure compliant operations in the country and avoid potential legal risks.
VAT in Spain
Spain’s VAT is a consumption tax applicable to the sale of goods and services.
It is divided into standard and reduced rates, implemented within the framework of EU regulations.
The standard rate is typically 21%, while reduced rates apply to specific goods and services such as food, books, and healthcare products.
Understanding the variance in tax rates across different product categories is crucial for accurate VAT calculation and collection.
VAT Registration in Spain
Local e-commerce businesses must register for VAT in Spain once they reach a certain sales threshold, usually €35,000.
If a company does not have a physical presence in Spain, it must register for VAT before commencing sales.
Additionally, non-resident companies need to appoint a financial representative within Spain.
If you are a foreign company, our team can act as your fiscal representative and liaise with the local tax authorities.
VAT Rates in Spain
| VAT Rate | Rate (%) | Applicable Items |
|---|---|---|
| Standard Rate | 21 | All taxable goods and services except for specific items |
| Reduced Rate | 10 | Water supply, passenger transport, certain medications, hotel accommodation, catering services, takeaway food, etc. |
| Reduced Rate | 4 | Some food items, certain books, social housing, and social services, etc. |
| Zero-rated | 0 | Gold coins, bars, international air and sea transport services, etc. |
Ensuring Compliance
For e-commerce businesses, compliance with Spain’s VAT regulations is paramount.
Once you’re registered for Spanish VAT, you’ll need to issue invoices that comply with the authorities’ requirements.
Additionally, you’ll need to use specified foreign exchange rates and retain all financial records for at least ten years.
If you have any further VAT inquiries, please don’t hesitate to reach out to our team for assistance.
