## Introduction
As an entrepreneur expanding your operations to Spain, understanding the country’s tax system is crucial. One of the key components of this system is the Value Added Tax (VAT). If your business is VAT-liable, you must submit your VAT return in Spain to the Spanish Tax Agency (AEAT). This article provides a comprehensive guide on how to navigate this process smoothly and efficiently.
Understanding VAT in Spain
What is VAT?
Value Added Tax (VAT), or “Impuesto sobre el Valor Añadido” (IVA) in Spanish, is a consumption tax imposed on goods and services. As a business owner, you’re required to charge VAT on your sales and remit it to the Spanish tax authorities. Conversely, you can reclaim VAT charged on your business purchases.
Who Needs a VAT Number in Spain?
A VAT number identifies traders and non-trading legal entities, enabling them to carry out specific intra-community transactions. This number is the same as the tax identification number (NIF) prefixed with ES, denoting Spain. This VAT number allocation is conditional on the trader being entered in the VIES (the VAT Information Exchange System).
VAT Rates in Spain
Spain, like other EU countries, has several VAT rates. The standard VAT rate is 21%. A reduced rate of 10% applies to certain goods and services, including some foods, water supplies, and pharmaceutical products. A super-reduced rate of 4% applies to essential goods like bread, milk, cheese, eggs, fruits, vegetables, books, and newspapers.
Registering for VAT in Spain
VAT Registration Process
You can apply for a VAT number directly when you apply for entry in the Intra-Community Operators Register (ROI) by completing the register entry or amendment form 036.
Record-Keeping Obligations
Businesses liable to pay VAT in Spain must maintain the following records:
- Sales ledger (record of invoices issued)
- Purchase ledger (record of invoices received)
- Investment goods register (record of capital goods)
- Record of certain intra-community transactions
Invoicing Obligations
Businesses are required to issue an invoice and a copy invoice for goods and services provided. They must also issue an invoice for down payments made, except for intra-community supplies of exempted goods.
VAT Submission in Spain
The Immediate Supply of Information (SII)
The Immediate Supply of Information (SII) is a significant change in the VAT management system in Spain. Companies are required to submit invoices electronically to the AEAT online system. The SII is a requirement for anyone currently filing the VAT return every month or where the business has an annual turnover above 6 million Euros.
Generating VAT Returns
Using the Tax Audit Files SuiteApp, businesses can generate various reports in XML format, which are submitted to the Spanish tax authorities. These include:
- Spain Issued Invoices
- Spain Issued Invoices – Error Correction
- Spain Issued Invoices – Amending Transactions
- Spain Received Invoices
- Spain Received Invoices – Error Correction
- Spain Received Invoices – Amending Transactions
- Spain Cash Collections
- Spain Investment Goods Register
- Specific Intra-Community Transactions
Submitting VAT Returns
Businesses submit their VAT returns via the Spanish tax authority’s website, AEAT. The AEAT online system is designed to make VAT submission as easy as possible, allowing businesses to submit their VAT returns electronically.
VAT Payment
Companies can make VAT payments in Spain through two methods: the NRC code method or by making a bank transfer from a foreign bank account.
Assistance with Submitting Your VAT Return in Spain
Navigating the process of VAT submission in Spain can be challenging. This is where House of Companies comes in. We provide a self-governance portal that allows you to submit your VAT return in Spain at a fixed yearly fee. Our vision of ‘Globalisation as a Service’ involves making legal processes more understandable and actionable. We aim to be an indispensable partner for those expanding overseas, offering services, a supportive community, and educational resources.
Conclusion
Understanding VAT in Spain and how to submit your VAT return is essential for businesses operating in the country. As the process can be complex, having the right support can make all the difference. With House of Companies, you can simplify VAT submission, allowing you to focus on growing your business in Spain.
