VAT (IVA) duties for a company, including EU sales

Terms used

• IVA — IVA is Spain's value-added tax, charged on most goods and services.
• ROI — The ROI is the register of businesses that trade VAT-free with other EU countries.
• AEAT — The AEAT is Spain's tax agency.
• NIF — The NIF is the tax identification number of a person or company in Spain.
• Cl@ve — Cl@ve is the government's electronic ID system for signing and filing online.
• VIES — VIES is the EU database for checking whether a business's VAT number is valid.
• Prorrata — The prorrata is the share of input VAT you may deduct when you have both taxable and exempt activity.
• REDEME — REDEME is the register of businesses that file VAT monthly in order to receive refunds sooner.

Key rules

• Standard rate: Charge 21% unless your product qualifies for the 10% or 4% rate.
• Deductions: You can only deduct VAT on invoices in your company's name that are for business use.
• EU sales: You need ROI registration and a valid ES VAT number in VIES before invoicing EU businesses VAT-free.
• Modelo 349: This EU statement cannot be filed annually, only monthly or quarterly.
• Filing period: Turnover above 6,010,121.04 euros in the previous year means monthly returns.

What your company must do

Your company must be registered for VAT (IVA), charge it at the right rate, deduct the VAT it pays on business costs, and file regular returns. If you sell to businesses in other EU countries, you also need an EU registration and an extra statement. The documents, deadlines table, checklist and common questions are in the blocks below.

Which rate to charge

The general rate is 21%. It applies to most goods and services.

The 10% rate covers passenger transport, hotels and restaurants, sales of new homes, and some foods, animal medicines and water.

The 4% rate covers basic foods (bread, milk, eggs, fruit, vegetables), books, newspapers, medicines for humans and protected housing.

These rates are for mainland Spain and the Balearics. The Canary Islands, Ceuta and Melilla have their own separate taxes. Temporary cuts can be introduced by decree, so check the current rate for your product before you invoice.

Selling to businesses in other EU countries

To sell VAT-free to EU businesses, your company must be in the ROI. You join by filing Modelo 036 online with the AEAT, ticking the ROI box and stating that you will trade within the EU. You sign with a digital certificate or Cl@ve.

Your company must already be VAT-registered and have a NIF. The AEAT reviews the application and may ask for more information. This usually takes days to a few weeks. The AEAT can refuse or remove the registration if your activity does not show EU trade.

Once accepted, your NIF works as an EU VAT number with the prefix ES and appears in VIES. Check it with the EU VIES tool or the AEAT census query before you invoice a customer VAT-free.

Deducting the VAT you pay

You can deduct VAT on a cost when all of these are true:

• The invoice (factura) is in your company's name and meets the invoicing rules.
• The goods or services are used in your business.
• The VAT is deductible, meaning it has accrued and is not excluded.

Personal use, gifts and certain entertainment costs are excluded. Vehicles are presumed to be 50% business use.

You can claim a deduction up to four years after the right arises. You report deductions in your VAT return.

If your company has both taxable and exempt activity, you apply the prorrata, either the general or the special version. Sector rules and prorrata details are worth checking with an adviser.

Monthly or quarterly returns

You file monthly if any of these applies:

• Your turnover in the previous calendar year was above 6,010,121.04 euros.
• You are in the monthly refund register (REDEME).
• You are in a VAT group under the special regime.
• You chose monthly filing.

Everyone else files quarterly. Basque Country and Navarre follow different rules.

Returns you file

• Modelo 303 is the VAT return. Quarterly filers file by the 20th of April, July and October, and by 30 January for the fourth quarter. Monthly filers file by the 20th of the following month. July's is due by 30 September and December's by 30 January.
• Modelo 390 is the annual summary, due by 30 January.
• Modelo 349 lists your EU supplies, acquisitions and reverse-charge services by partner VAT number. File it monthly, or quarterly if amounts stay below 50,000 euros for the quarter and the four prior quarters. Quarterly dates are 1 to 20 April, July and October, and 1 to 30 January. Monthly returns are due on the 20th of the next month, with December's by 30 January. You cannot file it once a year.
• Modelo 347 reports annual operations with a single third party above 3,005.06 euros. It is due in February.
• Modelo 111 reports withholdings.

All filing is electronic. Direct debit payments have earlier deadlines. When a deadline falls on a weekend or holiday, it moves to the next working day.

If you are unsure which period suits you, the choice below can help.

Choosing between options

Should your company file VAT returns monthly or quarterly?

• Monthly: Your turnover in the previous calendar year exceeded 6,010,121.04 euros, you are in the monthly refund register, you belong to a VAT group, or you chose monthly filing.

• Quarterly: None of the monthly cases applies to your company.

Check last year's turnover against 6,010,121.04 euros first, then whether any special monthly case applies.

Timeline and deadlines

• File the quarterly VAT return (Modelo 303) for the fourth quarter: by 30 January

• File the annual VAT summary (Modelo 390): by 30 January

• File a monthly EU operations statement (Modelo 349): by the 20th of the following month, with December's by 30 January

Documents you need

• Modelo 036, the census form filed electronically with the AEAT, Spain's tax agency, with the box ticked to register in the ROI, the register of EU operators.

• A tax ID (NIF) for the company, which must already be registered for VAT before you apply to the ROI.

• A digital certificate or Cl@ve, the government's electronic ID, to sign and submit the form online.

Checklist

• Charge 21% on most goods and services, 10% on items such as passenger transport, hotels, restaurants and new homes, and 4% on basic foods, books and medicines for humans.

• Check that every invoice you want to deduct VAT on is in your company's name and meets the invoicing rules.

• Exclude personal use, gifts and certain entertainment costs from your VAT deductions.

• Apply the prorrata, the share of deductible VAT, if you have both taxable and exempt activity.

Frequently asked questions

Can my company file VAT returns quarterly instead of monthly?

Yes, your company files VAT returns quarterly unless its turnover in the previous calendar year exceeded 6,010,121.04 euros.

Can I file Modelo 349 once a year?

No, Modelo 349 cannot be filed annually, because it is filed monthly or, below the threshold, quarterly. The quarterly option needs amounts below 50,000 euros for the quarter and the four prior quarters.

Can I deduct VAT on a company car?

Yes, but only the business share, because vehicles are presumed to be 50% business use. The VAT must also be on a proper invoice in your company's name.

How long do I have to deduct input VAT I did not claim?

You can deduct input VAT up to four years after it accrued. You claim it in your Modelo 303 return.