Tag Archive for: Business Taxes

Opening a Bank Account in Spain

When you are thinking about relocating, starting a business or buying property in Spain, one of the things you will think about is a Spanish bank account, and how this will work. In this article, we will explain all you need to know about Spanish banks and how to open a bank account in Spain.

Why open a bank account in Spain?

There are many reasons why you might need a bank account in Spain. Even if you are not planning on living in the country, having a Spanish bank account can be useful if you are planning on buying property or investing in a business. A bank account will also allow you to easily transfer money between Spain and your home country.

If you are planning on living in Spain, then a bank account is almost essential. You will need a place to store your money and to receive your salary. A bank account will also allow you to easily pay your bills and make other purchases.

Opening a bank account in Spain

Is having a bank account a requirement in Spain?

No, having a bank account in Spain is not a legal requirement. However, it is generally advisable to have one, especially if you are planning on living in the country.

What do I need to open a bank account in Spain?

To open a bank account in Spain, you will need the following documents:

  • Identity documents (such as a passport) should be shown.
  • Address: A copy of a bill with your current address must be included.
  • Employment documents: A document that establishes your work status (for example, a student card, employment contract, or unemployment documentation)
  • NIE number (Spanish foreigner identification number) – If you are a Non-Resident.

Some banks may require additional documents, so it is always best to check with the bank in advance.

How to open a bank account in Spain?

The process of opening a bank account in Spain is relatively straightforward. However, it is important to remember that each bank has its own requirements and procedures. It is always best to contact the bank in advance to find out what is required.

In most cases, you will need to make an appointment with the bank and then go into a branch to open the account. During the meeting, you will be asked to provide the documents listed above. The bank will then run a credit check and, if everything is in order, will open the account for you.

Some banks may require that you open an account with a certain amount of money. Others may offer special deals or bonuses if you open an account with them. It is always best to shop around and compare different banks before making a decision.

Types of bank accounts in Spain

There are several different types of bank accounts that you can open in Spain. The most common are:

  • Current account: This is the most basic type of account and is used for everyday transactions.
  • Salary account: This account is specifically for people who receive their salary in Spain.
  • Savings account: This account is used for savings and typically offers a higher interest rate than a current account.
  • Fixed-term deposit account: This account is used for savings and offers a higher interest rate than a current or savings account. The money deposited in this account cannot be withdrawn for a set period of time.
  • Pension account: This account is used to receive pension payments.
  • Youth account: This account is designed for young people aged 18-25 and typically offers special deals and bonuses.
  • Non-Resident account: This account is for people who do not live in Spain.
  • Digital account: This account is an online-only account with no physical branches.

What are the bank fees associated with bank accounts in Spain?

The fees charged by banks in Spain can vary depending on the type of account and the bank itself. However, there are some general fees that are common across most banks. These include:

  • Account opening fee: This is a one-time fee charged when you open a new bank account.
  • Yearly fee: You’ll pay around €12–15 for a debit card and potentially more than €30 a year for a credit card with many Spanish bank accounts.
  • Banks charge a fee to send money to other countries. In Spain, this fee can range from €3-15 if you’re sending less than €50,000.

How long does it take to open a Spanish bank account?

It usually takes between one and two weeks to open a bank account in Spain. The process can be started online, but you will need to go into a branch to complete it and provide the required documents. You may also be asked to provide additional information, such as your reason for opening an account in Spain. When you have opened your bank account you may need to wait a few days for your debit card and credit card to arrive in the post.

Types of banking services in Spain

Spanish banks offer a wide range of services, from savings and checking accounts to loans and investment products. In addition, many banks offer special services for businesses, including business accounts, merchant services, and loans. Most banks also offer ATM and debit card services, as well as online and mobile banking.

However, some services, such as credit cards and international money transfers, may be offered by only a few banks. To find the right bank for your needs, it is important to compare products and services to find the best fit. With so many options available, Spanish banks offer something for everyone.

Overview of Banking in Spain

  • The Banco de España, Spain’s national bank, also serves as the financial regulator.
  • The top four banks in Spain by assets under management are Santander, CaixaBank Banco, BBVA, and Sabadell. These five banks account for around 70% of the sector’s assets.
  • Santander is such a big bank it is under re-capitalization pressure from the ECB.
  • A number of these banks also have a strong international presence, with branches or subsidiaries in several countries. For example, Santander has branches in the UK, Brazil, and the US, while BBVA has a presence in Mexico, Colombia, and Uruguay.
  • There are currently 141 private banks (including around 80 foreign-owned banks), as well as several cooperative and savings banks, in the country.
  • The banks in Spain hold a lot of real estate assets as a result of the 2008 financial crisis.

Currency in Spain

The currency in Spain is the Euro (€). Euros are divided into 100 cents. There are eight different coins: 1, 2, 5, 10, 20 and 50 cent coins, as well as 1 and 2 Euro coins. There are also seven different banknotes: 5, 10, 20, 50, 100, 200 and 500 Euros.

Opening a bank account in Spain

Opening a bank account in Spain

ATM in Spain

In Spain, you can find ATMs (cajeros automáticos) in almost every town and city. They are very convenient when you need to withdraw cash, and most of them accept foreign cards. However, there are a few things to keep in mind when using an ATM in Spain. First, make sure that the ATM is affiliated with your bank. Second, be aware of your surroundings, as ATM thefts are not uncommon. Finally, remember that Spanish ATMs dispense euros, so if you are withdrawing cash from a foreign account, you may incur fees. With these things in mind, using an ATM in Spain can be a quick and easy way to get the cash you need.

A word from SublimeSpain

In conclusion, opening a bank account in Spain is a crucial step to take if you are considering relocating, starting a business, or purchasing property in the country. With the right information and documentation, the process can be straightforward and efficient. By understanding the various types of accounts and services offered by Spanish banks, you can choose the one that best suits your needs and preferences. Whether you are a resident or a non-resident, opening a bank account in Spain is essential for managing your finances and making the most of your time in this beautiful country.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal or financial advice. We highly recommend seeking guidance from a legal or financial expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

What is a Gestoria?

In Spain, the word “Gestoria” or “Gestor” is someone who you go to for difficulties with Spanish bookkeeping, accounting or taxes. Whenever you have any problem or are stuck in financial or administrative difficulties, people advise you to go to Gestor, but what is a Gestor?

On one hand, a Gestoria helps companies, mainly, because it is an administrative link between the public administration and society. On the other hand, a Gestoria can provide functions for a private person. In short, the gestor performed actions in the interests of another person.

What is its primary role?

The role of Gestoria is to interface between the administration and the public. Generally, you don’t need an interface in most countries, but having a Gestor is quite necessary if you are living in Spain. Here is a primary function performed by a Gestor in Spain:

  1. Promotion of administrative procedures carried out on behalf of a third party. It would encompass the filing of tax returns.
  2. It offers administrative support in various areas such as tax management, accounting management, or labor management. The agency serves as a support and guidance for a person or a company to adapt its accounting to a particular territory.
  3. Ability to issue individual certificates or public deeds that is valid for future general procedures. Often these companies have the public authority or permission to create documents or certificates of general validity.
  4. The collaboration of an external administrative manager is often essential for the efficient management of a company, as is the case with SMEs or Startups.

Get taxes done more quickly and efficiently with our tax services in Spain, contact SublimeSpain.

Learn more
Gestoria In Spain

What differentiates a Gestoria from a consultancy?

One way to know the functions of a Gestor is by comparing it with a consultancy. It is common to confuse as both concepts have some common factor. A Gestoria deals with broad aspects of the administrative management of a company. On the other hand, consultancies have their role limited to tax, accounting, and labor advice. However, Gestoria offers a broader service of procedures:

  • Tax procedures such as filing taxes in the Public Tax Administration
  • Management of accounting and billing of a business
  • Management for the constitution of a company
  • Processing of grants and subsidies, both public and private
  • Legal and official representation between the company or self-employed and the public administration
  • Management and processing of self-employed registrations and cancellations
  • Help and processing for the acquisition of a billing program and even its subsequent management
  • Labor procedures such as the registration and termination of workers, hiring, firing and payroll management, and other practices with Social Security

What can a SublimeSpain do for my company?

SublimeSpain will help you with the processing of public deeds, all kinds of certificates, property transfer taxes and documented legal acts, import and export of vehicles, registrations, transport cards, and registry reports, among many others. Considered in a grouped manner, the agency provides the following services to companies:

  1. Tax procedures: The agency keeps the company’s accounting in terms of policies as relevant as the withholdings to be applied.
  2. Study processing: the processing of subsidies and studies requires considerable paperwork to entrust to the gestoria.
  3. Labor procedures: The preparation of payroll is the most common service; it includes registration processing, forecasting expenses, and workers’ cancellation.
  4. Business management: The agency can offer management solutions adapted to the company’s needs, which will cover different services.
  5. Certificates: The processing of very various certificates is another of the tasks carried out by agencies.
  6. Creation of companies: The consultancy can facilitate the procedures to create anonymous and limited companies by delegating all the paperwork.

SublimeSpain can also perform other services such as procedures related to inheritances, licenses, or various administration certificates, immigration, and even traffic fines.

Why SublimeSpain?

The SublimeSpain administrative managers are professionals who graduated in Law, Economics, Business, Politics and Management, and Business Administration. At SublimeSpain, you will connect with a professional team of business lawyers. Here you will get advice on the creation of a company, as well as on business management.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Get taxes done more quickly and efficiently with our tax services in Spain, contact SublimeSpain.

Learn more

Invoices in Spain: Types, Formats, Regulations, and More

Invoices in Spain are an important part for Spanish tax authorities to keep control of companies’ taxes payments. They document the income and expenses of a business and play a key role in tax filings. Invoices are also a valuable source of information for businesses. They can help track spending patterns, identify areas where costs can be reduced, and assess the profitability of individual products or services.

Invoices are an essential part of doing business and should be handled with care to ensure that all required information is included. In this article, you will find information about invoice processing in Spain.

What is an invoice?

An invoice is a seller’s record of goods or services sold, the money owed for them, and any additional fees or taxes that must be paid. The Spanish word for the invoice is “factura”.

What should be on the Spanish invoice

If you operate a business in Spain, you must include certain basic information on your invoice, such as:

  • Company name
  • Contact information (address buyer and seller)
  • Tax identification number
  • Unique invoice number
  • Invoice date
  • Date the payment is due and any other payment terms
  • Acceptable forms of payment
  • Description purchased goods and services provided, including price and quantity
  • VAT Amount
  • Total amount

You must show the VAT identification number of your customers if you export goods or services to an EU Member State.

The Simplified invoice

Invoices may be simplified in certain cases (also known as tickets, credit notes, and receipts). Simplified invoices can be created when you are not invoicing a business or entrepreneur, and in the following situations:

When can you use simplified invoices?

Simplified invoices are only used when you aren’t conducting business deals with firms or entrepreneurs. You can only use them with private individuals, and in the following situations:

Amount less than 400 euros: When the amount of the invoice is less than 400 euros, the invoice can be issued in a format that is considered a receipt.

Corrective invoice: Corrective invoices are created when you need to make changes to an invoice previously sent. This type of invoice must be used when the scope or quantity of goods or services is changed, or if prices are modified, additions are made, discounts are applied, taxes change, etc. These invoices must include information about the original invoice and corrections to it.

Companies with the following specific activities: The sum of the invoice does not exceed 3000 Euro (VAT included) and are one of in the following categories:

  • Retail sales and services
  • Sale or services of an ambulance
  • Sale or services at the home of the consumer
  • Services of transportation of people or luggage
  • Clubs, hotels, and restaurant services
  • Telephone services like telephone booths or card use
  • Hairdressers, beauty schools, dry cleaners, and laundries
  • Toll roads, sports facilities, and parking
  • Services related to photographs film rental and development of photographs.

What should be in a simplified Spanish invoice

The simplified invoice should contain the same information as a normal invoice. The difference is that it doesn’t need to be registered with the Spanish revenue authorities.

  • Invoice number/ series
  • Date of issue
  • Invoice date
  • Your tax identification number
  • Description of the goods dispatched or service provided
  • VAT amount
  • Total amount

Your tax identification number

The tax identification number in Spain is a key element for the tax authorities to monitor business tax payments. It is an important requirement. When you create a business in Spain you are required by Spanish legislation to be VAT Registered.

This tax number is called the Número de Identificação Fiscal or NIF in Spanish. This number aids in the tracking of businesses’ purchases and expenses for tax purposes both domestically and internationally.

Spanish VAT legislation

Under Spanish VAT legislation, taxable persons are allowed to deduct their input VAT from their output VAT. They are also allowed to retain any input VAT paid on purchases of goods or services that relate directly to their taxable output.

VAT refunds and tax declarations

Next to this, you can request vat refunds if you are not required to pay VAT in Spain. For example, VAT refunds can be done when you are not registered as a taxable person in Spain. To deduct VAT or VAT refunds, you require to have the invoices you have produced or received.

Electronic invoices to government bodies

If you work for the Spanish government, you must submit an e-invoice. An electronic invoice is the same as a paper invoice, only it is transferred to the client in electronic format.

Minimum retention period

In Spain, you are required to hold invoices for a minimum of 5 years. After this time they can be destroyed or be recycled. You may be required by the tax authorities to send copies of your Spanish invoices to check whether your tax declarations are correct.

A word from SublimeSpain

Businesses must produce invoices for all transactions, and these invoices must include certain information such as the date, the VAT amount, and the total amount. In addition, businesses must retain copies of all invoices for a minimum of 5 years.

At SublimeSpain, we can help you set up an accounting system that will meet Spanish requirements. We can also help you set up your company in Spain and file your Spanish tax declarations. Contact us today to get started.

VAT Spain: Rates, Types, Meaning, Due dates, and FAQ

The VAT rate in Spain is 21%. VAT stands for “Value added tax” and it’s a tax in Spain that has to be paid when selling goods and services. In Spain VAT is called the IVA, which stands for (Impuesto sobre el valor añadido).

In this article, you can find more information about the Spanish VAT. This is beneficial for people that are moving to Spain, or are starting a company in Spain. Topics that will be discussed are the meaning of the VAT, the different kinds of VAT rates, where and when to file the VAT taxes, the VAT number, VAT returns, VAT exemption, and more.

Types of Spanish VAT Rates

There are four different Spanish VAT rates. The regular VAT (21%), the reduced VAT (10%), the super-reduced VAT (4%), and the Zero VAT (0%).

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

The regular VAT rate in Spain (21% IVA)

The standard Spain VAT rate is 21%, this is applied on regular supplies of goods and services. It is the most common type of rate. The regular Spanish VAT rate applies to products such as:

  • Clothing and footwear
  • Furniture
  • Petroleum products and vehicles
  • Alcoholic beverages and soft drinks
  • Electronics
  • and many others

Vat Rates in Spain

The reduced VAT rate in Spain (10% IVA)

The Reduced VAT rate in Spain is 10%. It is put on products and services which are deemed necessities or cultural beneficiaries. For example, the reduced rate applies to:

  • Agricultural supplies
  • Agricultural products such as cut flowers and plants for food production
  • Cultural or sporting services
  • Mineral water, lemonade, and fruit juice
  • Medical products for veterinary uses
  • Napkins
  • Tampons and panty liners
  • Condoms and other non-medical contraception
  • Passenger transport
  • Hotel and restaurant services
  • Certain printed books, newspapers and magazines.
  • Normal Construction work
  • Cultural events or touristic services are offered by hotels, restaurants or cafes.
  • Entry tickets to museums, parks, monuments, shows
  • Works of art

Spanish Vat Registration

The super-reduced VAT rate in Spain (4% IVA)

The super-reduced VAT rate in Spain is 4%. It is applied to even more basic necessities such as:

  • Bread-making flours
  • Milk, cheese, and eggs
  • Fruits, vegetables
  • Tubers
  • Cereals
  • Pharmaceutical products and medicinal products for human use
  • Social services, such as construction work on social housing
  • Books, newspapers and magazines not containing advertising
  • Domestic care services

Reduced VAT rates

Zero VAT rate in Spain (0% IVA)

Some products are not charged with VAT at all in Spain. However, there are not many. Products with zero vat rate are in the category:

  • Gold coins, ingots and bars
  • Intracommunity and international transport

VAT exceptions for regions

Some regions in Spain have different VAT rules as the ones stated before. These regions are:

  • The Canary Islands
  • Ceuta and Melilla

The Balearic Islands are seen as Spanish territory, they follow the normal IVA rate.

The VAT rate in the Canary Island

The Canary Islands are a Spanish territory in the Atlantic ocean. The VAT in the canary island is called the Canary Island General Indirect Tax (IGIC). The regular IGIC rate is 7%, and the other IGIC rates are 0%, 3%, 9.5%, 15%, and 20%.

This means that in general, you have to pay less VAT when importing goods from other countries to the canary islands. Next to this, when you buy something there, you have to pay less tax than if you bought them anywhere else in Spain.

VAT in Ceuta and Melilla

In Ceuta and Melilla, sales tax is applied instead of VAT. The sales tax is called IPSI (Impuesto sobre la Producción, los Servicios y la Importación or Tax on Production, Services and Imports). The standard rate is between 0.5% and 10%. For example, the fee for importing yachts is 10%.

Spanish VAT number

Due dates to pay VAT in Spain

Companies with a Spanish VAT number are required to make periodic reports on the supplies they have sold and the supplies they have purchased. The VAT return is done on a monthly or quarterly basis. In general, the reporting period in Spain is quarterly. You will have to send the Spanish tax office the information by the 20th of the month following the end of the quarter.

Next to the quarterly VAT return, you also have to do an annual IVA return by the end of January every year in Spain. You can find the calendar with due dates on the website of the Spanish tax authorities:

Exceptions when to file VAT return

While the VAT return dates will be set by the local tax authority where you have registered your vat number, there are some general national guidelines. These are:

  • If the total amount of goods or services is more than 6 million € annually, you will have to file VAT monthly.
  • If the total amount of domestic sales in the year is below 35.000€ and the total amount of intra-community supplies of goods and services in the year is below 15.000€, you can file your VAT yearly

VAT Spain

VAT registration for businesses

When you are starting a new business in Spain, it is required by law to register your business for VAT. Your Spanish company VAT number will be the same as your NIF number.

You will need to contact a Spanish tax office to get this number. Getting a Spanish VAT registration can be complicated, so it is advised to have a corporate lawyer to help you set up your business properly.

When you register for the VAT number, you will be put in the VIES system (VAT Information Exchange System).

The VAT number

Spanish VAT registered numbers (IVA numbers or NIF-VAT numbers) are built as ES + NIF number. An example of the NIF-VAT number is ESB73475571.

The first digit of the NIF-VAT number is always an ES, which stands for Espanol. This third letter is the type of business entity. The following 7 numbers are the ID of your Spanish VAT registered company, and a final character is a control number.

Requesting the Spanish NIF number is necessary to get a NIF-VAT number.

When do you need a VAT number as a business?

There are some rules about when you need a Spanish VAT registration. For example, if you buy and sell cars often, then you will need it. Other scenarios when you need a VAT registration are:

  • When you regularly sell products and services to people in Spain
  • When you perform work for more than one client
  • When you are selling goods to other EU countries from Spain
  • Importing products from other countries
  • Organizing live events, conferences, and other activities in Spain
  • When you are selling products over the internet to Spain
  • When you are holding goods in a warehouse in Spain as stock for resale
  • When you have a commercial interest and try to make a profit
  • When you invest in your business, for instance, personnel or stock
  • When you request more than a symbolical fee

Spanish vat rates

Collecting VAT invoices

To be able to do your vat returns properly. It is essential that you know how much VAT was paid. Make sure you collect the following when you are doing your administration

  • Request an invoice from suppliers and keep it to deduct the VAT paid.
  • Keep a receipt for every purchase made.
  • Keep the invoices you sent to your customers.
  • Keep a copy of all invoices and receipts in case the tax office needs more information or want to audit you.
  • Keep the Spanish VAT number that your suppliers provide.

Keeping track of your invoices is important because you will need to deduct the VAT that you pay on your purchases and add the VAT of your sales. It is a requirement under the Spanish VAT law. Spanish authorities will sometimes audit businesses. If you are not keeping track of your VAT invoices properly, you might get fined or charged more tax than you should.

Spanish VAT rate

Frequently asked questions

Below you can find some frequently asked questions on VAT in Spain.

How much do I have to charge for VAT?

You have to include the VAT on your prices, based on your regional vat rate. You can not ask customers to pay more than the official price with included tax. Is my business VAT exempt?

If you are new in business and are starting out as a micro

When do you charge VAT in Spain?

Spanish law requires you to charge VAT when products are sold or services are carried out. On the invoice that you send your customers, you will need to state the VAT rates that apply to the goods or services.

What is the VAT threshold in Spain?

There is no VAT threshold for traders to be registered in Spain; before the start of taxable transactions, a VAT number is required. Resident and non-resident businesses must register for a VAT number before doing any business. You can register your company easily with our services for company formation in Spain.

Where do you pay VAT in Spain?

You will pay your VAT at the Spanish tax office called Agencia Tributaria (Agencia del impuesto de sociedades). You can log in online and pay the VAT of your company on their website. You can also pay using a bank transfer or at a Spanish bank counter.

How do I pay VAT in Spain?

You will have to pay VAT through a Spanish bank account. This is because Spanish authorities do not accept foreign bank accounts. If you are an individual, only a Spanish bank account will be allowed to make any transaction with the tax office or government agencies in Spain. The name on your bank account must match the name of the company that you are paying for.

If you are looking to open a business bank account in Spain, it is smart to go with a popular bank for foreign companies in Spain.

What VAT penalties are there in Spain?

Penalties are multiplied by a percentage of the VAT owed (so-called “recharges”). The recharges can be a percentage of the tax owed or a multiple thereof.

The six recharges in Spain are:

  • 5% of the VAT is due between 3 months after the due date.
  • 10% if paid between 3 and 6 months after the due date.
  • 15% if paid between 6 and 12 months after the due date.
  • 20% if paid after 12 months after the due date.

If you pay the amounts within the deadline stipulated in the letter with penalties stated, you can reduce them by 25%.

Penalties such as fines and jail time may be imposed by the authorities, especially when the corrections are triggered by an investigation or a Value Added Tax audit.

Is there a VAT refund for travellers in Spain?

When you are travelling in Spain as a non-EU resident, you can request to fill in a Tax-Free form in the shops where you buy your purchases. Then, within three months of purchasing get the form validated by the Spanish Customs.

The digital VAT refund process (DIVA) reduces the time it takes to validate your return. Simply ask the businesses who provide this service for a DIVA form, and submit it yourself at one of Spain’s major ports or airports’ automated terminals.

What other types of sales tax exist in Spain?

Besides VAT, there are several types of sales tax imposed on businesses in Spain. These include:

Impuesto sobre las Transmisiones Patrimoniales Onerosas (ITPO): The ITPO sales tax is applied when selling real estate and means of transport for between €2,000 and €50,000.

Impuesto sobre las Sucesiones y Donaciones (ISD): The ISD sales tax is applied if you inherit or give away property and applies to all estates above €10,000.

Impuesto por la Actividad Económica (IAE): The IAE sales tax is the equivalent of business tax in Spain and must be paid by all businesses registered in the Commercial Registry (Registro Mercantil)

Impuesto sobre el Juego (IJU): The IJU sales tax is applied on any purchase of products related to gambling.

Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (IIVTNU): The IIVTNU sales tax is a land value tax applied if the property value goes up.

Impuesto sobre Bienes Inmuebles (IBI): The IBI is the equivalent of property tax and is payable by the owners of buildings, although it can also be paid by renters.

Impuesto Sobre Vehículos de Tracción Mecánica (ITV): The ITV is applied when registering a car or motorcycle.

Tasas y otros Ingresos (TIO): A TIO sales tax is applied when applying for business, vehicle or health certificates.

There is also other sales tax you may have to deal with in Spain. If you would like more support for your situation, please contact us at info@SublimeSpain.com.

Where can I find VAT numbers of Spanish VAT registered companies?

Companies must apply for a VAT number to do business in Spain. This is stated by the Spanish “Agencia Tributaria”. You can find these VAT numbers in the official mercantile directive (RMC). If you would like to find a company, you can also have a look at the Spain company register guide, where we explain everything about the vat directive.

What is VAT called in Spain?

VAT is called IVA in Spain, short for “impuesto sobre el valor añadido”. Spanish VAT is also sometimes called “impuesto al valor agregado”, “impuesto sobre el valor menorado y el valor añadido”, and “impuesto sobre el valor añadido”.

Help with your VAT declaration in Spain

Next to taking care of the company formation in Spain,  our tax advisors can help you with your VAT declaration. We pride ourselves of being a one-stop solution for your legal and tax challenges in Spain. Let us take care of your (IVA) forms, VAT refund forms and other tax issues in Spain. Feel free to contact us by emailing info@SublimeSpain.com.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Corporate Tax Spain: Rate, Due Dates, and Laws

Spain has its own set of corporate tax laws and owns corporate tax rates, which are different to other countries. Whether you are already running or still need to form a company in Spain, knowing what corporate income tax you will need to pay is essential. In this article, you can read everything you need to know. Keep in mind that this article is not professional advice and can contain outdated information. Always do your due diligence or contact an accountant in Spain for advice on your specific situation.

Corporate Income Tax Rate in Spain

Generally, the corporate tax rate in Spain is 25%. However, the tax rate can vary depending on the type of company and industry. For instance, if you are an entrepreneur, your newly incorporated company will pay the corporate tax rate at 15% during its first two years of operating.

It’s important to know that, unlike personal income tax, the corporation tax is not based on various income thresholds but is a fixed rate to be paid. In addition to a general corporation tax, companies must pay trade tax and municipal business tax, among others.

Corporate Income Tax (CIT) in Spanish is “Impuesto Sobre Sociedades”. It is the direct tax based on the profits made by companies and legal entities residing in Spain and its territories. The worldwide income and accounting profit are the main factors used to determine the tax base and amount paid by the corporation.

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Due dates for corporate income tax in Spain

The corporate income tax filings have to be done after 6 months ending the financial year, within 25 days. So usually between July 1st and July 25th of the following calendar year. There are also two advance payments to be made during the first six months of the company’s tax year and the second before the end of the year.

Types of companies that have to pay corporate tax

Companies that have been required to file corporate income tax and pay corporate tax are:

  • Limited liability entities (such as the SL in  Spain and SA in Spain)
  • Civil companies
  • Foundations
  • Cooperatives
  • Investment funds, pensions, venture capital, etc.
  • Non-resident entities with a permanent establishment
  • Non-resident entities that carry out business activities through a branch or dependent agent in Spain.

Corporate Income Tax Rates exemptions

As it has already been mentioned, while the general corporate tax rate in Spain is 25%, other rates may apply based on the type of company or the sort of business it conducts. Under certain circumstances and requirements, the following entities can be granted a different taxation rate under Spanish law:

  • Listed collective investment institutions inclusive of real estate investment funds (1%)
  • Certain cooperatives fiscally protected (20%)
  • Entities engaging in oil and gas research and activities (30%)
  • Listed corporations for investment in the real estate market (19%)

Spain Corporate Tax Rate

Resident companies pay corporate tax on worldwide income

Companies that reside in Spain are taxed on their worldwide profits. In other words, if a company is resident in Spain, the corporate tax rate will be on all of its income whether that may be from within or outside of the country.

Permanent establishments in Spain

A permanent establishment in Spain is a fixed place through which the business is wholly or partly carried out; an example would be if a company had its own branch in Spain. In other words, it is a workplace from which the company runs its operations.

If a non-resident company has a permanent establishment in Spain, it will pay corporation tax on its income derived from this establishment and profits attributed to the permanent establishment.

However, suppose a permanent establishment in Spain is considered a dependent agent. In that case, the Spanish tax authorities will consider that income as attributed to its parent company and thus not taxable in Spain. In this case, the dependent agent is completely dependent on another company and has complete control. In other words, if the company isn’t legally and economically independent from its principal foreign company, it won’t be taxable in Spain.

Capital gains in other countries

Spanish tax treaties with other countries

If you have business interests in another country, your country has likely signed a double taxation agreement (DTA) or an exchange of information agreement with Spain. These agreements aim to avoid the company being taxed twice on the same income – once by its domestic state and again by another state.

To avoid double taxation on your income or assets, a company must file the taxes correctly. Depending on your specific circumstances, you may be required to submit an income tax return in both countries. But while you may be required to file two tax returns twice, you won’t be charged twice for the same earnings.

Spain has many different tax treaties with other countries. You can find the double taxation agreements signed by Spain (in Spanish) on the website of the Agencia Tributaria.

The tax rate on branch offices in Spain

A branch office is an establishment through which the company performs its activities in Spain. The branch office will be flagged as a corporate entity. With this, the branch office will be treated as a separate legal corporate entity for tax purposes. It needs to be incorporated in Spain and apply for its own taxpayer reference number to declare taxes on the income derived from its activities in Spain.

The branch profits tax is not charged on corporations established in other EE.U.Member States/countries with which Spain has a tax treaty. However, if the branch office carries out activities independently of its parent company, or at least 50% of that income originates in Spain, then it is likely the company needs to pay income tax in Spain. Consult with a professional tax accountant to get more information on your particular situation.

Tax rates for tax havens and tax residents

Resident companies in Spain

Resident companies in Spain must pay capital gains tax in Spain. A resident company must:

  • Be established in compliance with the laws in Spain.
  • Have the company’s headquarters in Spain.
  • Have management and overall control in Spain

Company residence in tax havens

Companies located in tax havens or zero-tax jurisdictions may be deemed Spanish tax residents under the CIT Law. The Spanish tax authorities deem this when

  • Most of their assets are located in Spain.
  • Most of their assets are used in Spain.
  • Most of their activity is undertaken within the Spanish territory.

This may be overcome when the business is incorporated in a tax haven, and the domicile and effective management are there. There are compelling commercial reasons for having the company incorporated in the tax haven.

Corporations owning subsidiaries via intermediary companies

If corporations own subsidiaries or any form of indirect shareholdings in other companies, the tax rule is that they must pay corporate tax on all or part of such profits. The corporate tax rate payable will depend on the percentage held and whether it is a resident or non-resident company.

Corporate tax rates for newly formed companies

Spain corporate tax rate on newly-formed companies

Newly incorporated businesses are taxed at a 15% rate for both the first and following tax periods, regardless of whether they make a profit in either. It’s important to note that there are a few exemptions from this lowered rate, such as:

  • Equity companies: Companies not engaging in business activity
  • National or International groups: Newly created companies that are a part of larger groups or organizations
  • Previous activity: Companies whose business was previously carried out by a related company or individual

What is the taxation period in Spain?

The corporate tax period aligns with the fiscal year of each entity or company and cannot exceed twelve months. The end date of the tax year should be identified in the by-laws of the company in question. If not, the closing date will be considered December 31st of each year. It’s important to note that the corporate income tax is accrued on the final day of the tax period.

In some cases, although the standard fiscal year may not have ended, the tax period is considered to have concluded. Early completion of a tax year will happen in the following situations:

  • In case the entity or company is disbanded.
  • When the legal residence of an entity or company is changed from a Spanish territory to a foreign territory.
  • When the legal classification of an entity or company is changed, it would result in it no longer being subjected to a corporate income tax.
  • If there are modifications or restructuring made to the company or entity that would result in a different corporate income tax rate or the application of a different tax regime.

Companies in Spain: tax rules and tax system

What forms are required?

There are four primary forms used to file corporate tax reports in Spain:

Form 200: This form is used by companies and entities with residence in the Spanish territory subject to standard tax legislation, regardless of the size or activity.

Form 220:  It is very similar to form 220. Only this type of return is mandatory for tax groups. The parent company of the group in question must file this return; however, it’s still required for each entity under this group to file individual returns using form 200.

Form 202: If your corporation had a positive tax result in the previous Form 200 submitted, then you are required to file this additional form. This form is considered an advance payment for your following Form 200 and is made in instalments in the months of April, October, and December. These instalment payments will subsequently be deductible from the amount to be paid of the Corporation Tax.

Form 222: Similar to Form 202, another mandatory payment instalment form for company tax groups.

Regarding forms 202 and 222, please note that if your tax result is negative in July (or the six months following your company’s fiscal year), you’re entitled to a refund of the amounts you prepaid. Additionally, you won’t be required to pay the total amount when your result is positive since you would have already partially paid in advance. All of these forms should be filed electronically.

General CIT rate in Spain

Accounting Requirements

All companies and entities liable for the corporate income tax are also required to maintain all of their accounting books in compliance with the Code of Commerce. Some of the documentation required includes:

  • A journal is used to record all of the operations carried out for activities regarding business development. These must be listed in chronological order.
  • An inventory book and annual account to be opened with a detailed initial balance sheet of the company. This book should be transcribed with all sums and balances and trial balances (the second accounting statement) at a quarterly minimum. The inventory at the end of the year (the third accounting statement) along with the annual accounts (the last accounting statement) is also required to be recorded there annually.
  • Corporate books, including minute books, registered shares in joint-stock companies and limited liability companies, and the registration books of partners involved in limited liability companies.

The last accounting statement contains the annual accounts, including the balance sheet, profit and loss reports, statements of any changes in equity, all cash flow statements, and any notes regarding these financial statements. This last accounting statement is crucial for determining the company or entity’s tax base and all of the subsequent taxes owed.

It’s also imperative that these accounting ledgers are kept for at least six years following the last entry. In situations where the company in question is disbanded, it’s the responsibility of the liquidators to safeguard them for the remainder of the time necessary.

Additional Information: Spanish Tax Groups

There are several advantages to setting up a tax group in Spain. By doing so, multiple companies can apply a special tax consolidation regime for purposes related to the corporate income tax. With the possibility to offset profits and losses throughout the different companies in the group, it’s a beneficial structure that shouldn’t be ignored.

When a group’s parent company holds at least 75% of both the voting rights and the share capital of the subsidiaries it isn’t required to be a resident of the country for tax purposes. Thus, opening the door for multinational groups to utilize this structure.

Frequently asked questions on Corporate income tax in Spain

Frequently asked questions

What are the penalties?

The tax authorities in Spain are rigorous on corporate income tax, and there are severe penalties for late tax filing or undisclosed assets. For example, suppose you neglect to disclose company assets such as accounts, shares, or real estate located overseas. In that case, fines of a minimum of 10.000 euros are subjected to you.

Additionally, assets that are not disclosed within the established time constraints will be considered unreported income. In this case, fines of 150% of the gross tax liability will be enforced.

Which companies and entities are exempt from the Corporate Income Tax?

There are two categories of exemption from the corporate income tax: total exemption and partial exemption.

Entities who can benefit from total CIT exemption include:

  • The State
  • Autonomous communities
  • Local entities and their autonomous bodies
  • Social Security management entities
  • The Bank of Spain

These entities are all granted a total exemption, meaning they are not required to file tax settlement declarations, comply with registration or accounting requirements, and so on.

Some of the entities that are allowed partial exemption are as follows:

  • Non-profit organizations
  • Charitable or public utility entities and institutions
  • Non-governmental organizations (NGOs)
  • Professional or business associations
  • Official chambers
  • Unions
  • Political parties

A partial exemption means that these entities are still obligated to declare the income they obtained in a given financial year.

How are the tax base and corporate income tax calculated?

There are three methods used to determine a company or entity’s taxable income: the direct assessment method, the indirect assessment method, and the objective assessment method.

The direct assessment method applies to most corporations and is determined by evaluating the difference between the revenue and expenses of the entity during a given tax period. Thus, the taxable income is primarily based on the income disclosed in the company’s financial statements. However, in some cases, the income outlined in the accounting books may not be entirely representative of a corporation’s actual contribution capacity. In these situations, various corrections or accounting adjustments will be made by applying the tax principles established outlined in the legislation.

Therefore, the tax base (the amount to which the tax percentage should be applied) is determined through the overall income, expenses, deductions and any adjustments made in a company’s fiscal year.

It’s worth noting that in instances where the resulting tax base is positive, negative tax bases from previous years can be offset.

What other taxes need to be paid by corporations in Spain?

Revenue tax also has to be paid. This VAT tax in Spain will have to be paid quarterly, monthly, and yearly depending on the amount of revenue the company makes.

Is there a tax incentive to incorporate a company in Spain?

While the Canary Islands within Spain are considered a tax haven, Spain is not. However, there are many tax incentives, including the following:

  • There is a lower tax rate for newly formed companies, 15% instead of 25%.
  • Tax credits are available for research and development.
  • There is a tax credit available for technological progress.
  • There is a tax exemption/deduction to protect you from double taxation on both an internal and international level.
  • There is a tax credit for investments in Spanish feature-length film productions.
  • There is a special tax regime for listed real estate companies in Spain that make investments, called SOCIMIs. SOCIMIs enjoy certain tax breaks, including the exemption of both taxes on dividends and CIT.

There are also other tax incentives in Spain. When you work with us, we will make sure you are in compliance with all Spanish laws and regulations and we will reduce your tax rate when possible.

How does the Spain corporate tax rate relate to other countries tax rates?

The corporation tax rate in Spain is 25%. As of writing, above the EU average. The United Kingdom has a corporation tax rate of 19%, while Germany’s corporate income tax rate is 15%. France’s corporate income tax rate is 28.41%, and Ireland’s rate is 12.5%.

Guidance on your corporate income taxes in Spain

The procedures to file corporate income taxes are complex and require a deep understanding of Spanish taxation law. Suppose you’re unsure how to file your company’s taxes or would like advice on the process. We can help. Our team of experienced accountants are ready to assist you through the many challenges of corporation tax.

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Property Tax in Spain: Read Our Overview

Property tax in Spain is the taxation on real estate, and it is a very common Spanish tax. You will have to pay multiple taxes on your property, and in Spain, all property owners are required to pay these taxes.

You must apply for a NIE (Número de Identificación de Extranjero) to pay these taxes, which is your Spanish tax identification number. When purchasing a home in Spain, you must also have this number. This number identifies you with the Spanish authorities and is required to pay taxes.

Property taxes in Spain for non-residents

You are subject to income tax (including capital gains tax), annual property tax, wealth tax, and stamp duty if you reside in Spain as a non-resident.

Spanish income tax

The income tax for non-residents is limited to income from Spain only. A non-resident is always taxed at a flat 19% when you are from Europe and at 24% if from somewhere else.

When renting out a property in Spain, you will have to pay rental income tax. Non-residents only have to pay income tax over the income they get within Spain only.

Next to this, when you sell your property, you will have to pay capital gains tax on it. You do this via the income tax declaration form as well. In this way, the capital gains tax includes your income tax.

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Annual property tax

When you are not renting out your property in Spain and using it for personal uses, you will also have to pay a tax based on the percentage of the value of your property. This is called the IBI tax. Next to the IBI tax, you will have to pay another tax that is the IRNR (Impuestos sobre la Renta de No Residentes).

IBI tax on property in Spain

The “Impuesto sobre Bienes Inmuebles,” or IBI, is the annual property tax in Spanish. The tax rises every year based on inflation. The tax rate for each year is between 0.4 per cent and 1.4 per cent of the property’s cadastral value.

The cadastral value is the Spanish authorities’ value for your property, and your real estate lawyer will be able to provide it. You can object to increases in the cadastral value, so you won’t have to pay more at the Spanish tax office, but you will have to provide good reasons for it.

The municipality’s annual real estate tax is a local property tax, and IBI tax rates increase every year depending on inflation. Remember that the cadastral value for the same size of properties in the same area can vary dramatically.

The IBI also takes into account your cadastral reference number, which identifies your property at the cadastral office, in addition to the assessed value of your home (cadastral value). This may be crucial when purchasing and selling properties because the physical description on the title deed does not match that on paper.

In general, the IBI bill will be sent to you, or you can pay it online. Your local tax office (SUMA) will handle the payments of the IBI.

IRNR tax on property in Spain

This tax is for non-residents that own property in Spain. The government created it under the assumption that non-resident property owners somehow profit from having a holiday home in Spain, even though they don’t rent it out.

Even if the owner does not receive any income or rent from their home, the property is taxed 1.1% or 2% profit on the property’s cadastral value. The amount of taxes varies on whether or not this cadastral value has been updated (1.1%) or not (2%). The tax is reported via the Modelo 210.

Wealth tax

The wealth tax in Spain is an annual tax on the wealth over a certain threshold that you own in Spain. This includes your Spanish property and other assets such as cash, cars, artwork etc.

The tax is levied on the market value of your total assets each year. As this amount increases every year, so will the resulting taxes owed to the Spanish government. You will have to pay wealth tax when your assets in Spain are over 700,000 euros.

Property tax in Spain for non residents

Property taxes for residents

You are subject to income tax, capital gains tax, annual property tax, and wealth tax if you are a resident.

Spanish income tax

When you get a Spanish rental income from your property or properties in Spain. You will of course be obligated to pay tax. Residents of Spain will always have to pay the rental income tax in Spain.

The percentage to pay ranges from 15% for low-income individuals and 30% or 40% for those with high income.

When you rent out your property, you will have to pay taxes on your rental income, and this rental income tax is called notional rental.

Annual property tax

In Spain, there is an annual property tax. The annual property tax is derived from the cadastral value of the property. The tax is called the IBI, “Impuesto sobre Bienes Inmuebles”. The tax increases every year depending on inflation.

The annual tax rate is 0.4 per cent to 1.4 per cent of the property’s cadastral valuation. The yearly tax is set by the municipality and can vary a lot.

Wealth tax

As a resident in Spain, you will have to pay wealth tax on your worldwide assets. The wealth tax is a progressive tax rate.

You will have to pay wealth tax over the value of assets above 700.000 euros, and you don’t have to pay wealth tax on the first 300.000 euros of your home property.

The wealth tax is a tax put by the autonomous regions, and it differs from region to region.

The wealth tax can be complex to pay, especially for foreigners. It is recommended that you hire a Spanish accountant.

property taxes in Spain

Property tax when purchasing new properties

When you purchase a new property in Spain, you will have to pay Stamp tax and VAT.

The Stamp Duty

The stamp duty is a fee that any person or entity that buys a new property needs to pay. The Spanish government sets this fee. The stamp duty is 1.5% of the sale of the property, and they are charged on top of the property price.

VAT

On top of the stamp duty, a 10% value-added tax (IVA in Spanish) is levied on the purchase price. While this seems higher than the tax on resale properties (ITP), this tax can be deducted from other expenses when buying property under a business.

Actos Juridicos Documentados (AJD)

The notorious mortgage tax or AJD (Actos Juridicos Documentados) is one of the taxes you must pay in Spain. This tax is known to vary by region, with a minimum of 1% and a maximum of 1.5%.

The percentage is determined on the basis of the “Responsabilidad Hipotecario,” which means “mortgage responsibility”. The mortgage responsibility is what the bank would owe if the person failed to pay for a period. It is an average of what it costs if they go to court and how much money the bank may need.

This is generally equivalent to between 150 and 200 per cent of the mortgage amount.

property tax in spain

Property tax in Spain when purchasing resale properties

When ​you purchase a resale property in Spain, there are two taxes that you need to pay: the ITP and the AJD

The Impuesto de Transmisiones Patrimoniales (ITP)

The only tax imposed on real estate resale is transfer tax (Impuesto de Transmisiones Patrimoniales/ITP in Spanish). The autonomous regions set ITP. The amount owed is determined on a sliding scale depending on the property’s price. In general, ITP adds between 8% and 11% to the cost of buying a property.

Actos Juridicos Documentados (AJD)

As mentioned before you will have to pay the AJD. which is 1 to 1.5 per cent of the mortgage responsibility.

Property tax Spain

Selling a property in Spain

Because the Spanish Tax Agency (Hacienda) may check your records at the time of property sale, you can’t avoid paying property tax in Spain.

3% deposit for capital gainst tax

The Spanish Tax Authorities will require a 3% deposit within 3 months of the time of sale. The deposit is a guarantee against capital gains tax, income tax, and wealth tax in the previous four years, as well as a guarantee against your tax debt on capital gains. When you have paid your taxes and the 3% was not needed, then you get them back at your next Spanish tax return. At the time of sale, you will have to submit the sales agreement in order to pay this real estate tax.

Capital gains tax

When selling the property, you will have to pay capital gains tax. The capital gains tax for residents is:

  • 19%: for the first 6.000€ obtained as a profit
  • 21%: From 6.000€ to 50.000€
  • 23%: From 50.000€ onwards
  • 26%: From €200.000+

Fee’s

Many of the fee’s associated with the selling of property in Spain, are often paid by the buyer. However, you can expect:

  • Estate agent fee (around 4.5% of the sales price)
  • Bank transfer fee’s
  • Legal and financial fee’s (around 800 euro)

Property tax in Spain

How to pay Spanish property taxes

For a non-resident, the best solution is to pay the tax by direct debit. The bank will provide you with a form authorizing the bank to pay the tax, and a copy of the document will be deposited with the local council. This will ensure that taxes are paid at the right time, just like other utility bills owned by you.

You will receive a letter from the municipality about your local taxes, while your annual income tax should be done on your annual personal income tax return.

The Spanish tax authorities are strict about the late payment of taxes, and any delay will result in penalties or fines, which can be very expensive. Next to this, your property must be adequately registered with the Spanish tax authorities for them not to claim that you are avoiding property taxes as well.

Frequently asked questions

Below you can find some frequently asked questions about Property tax in Spain.ert

Are there any other taxes I might have to deal with when selling or buying a property?

Yes, for example, you might encounter inheritance tax (succession tax), council tax, or other municipal tax. There are many taxes involved with buying and selling property in Spain, and it is advised to hire a tax advisor when dealing with the Spanish tax system.

Can you help me when I want to buy and let properties in Spain?

Yes, we offer a wide range of services for businesses such as company formation, accounting services, and property buying guidance. Get in touch with our team if you need any help or have any questions about buying and letting properties in Spain.

Get help with your property taxes

You need to pay any taxes when owning a property in Spain. If you want to be fully up-to-date with your tax payments, you should hire a Spanish tax advisor. Next to this, it is also recommended to hire a real estate lawyer when buying a property in Spain. If you want our help, you can contact us at contact@SublimeSpain.com.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Common Spanish Modelo’s: Numbers, Meaning, and Uses

If you already have an existing business in Spain, or you already live in Spain, you might be familiar with some the modelo’s. These are forms you have to fill in, and they are mandatory by the Spanish tax authorities. At SublimeSpain, we have professionals specialized in every one of the forms, including the more unique and complicated tax forms.

This article provides more information on the more common forms and information returns. It gives an idea of what you will be dealing with with the Agencia Tributaria. The information is incomplete. Contact us if you would like us to take care of your situation. We offer a variety of services.

Individual and Resident Category

Below you can find some information when you are a non-resident or resident in Spain.

Modelo 30

Form 030. Tax register of parties liable for tax Payments-Declaration of registration, change of address, and variation in personal data in the tax register. Form 030 is provided for parties to register as a fiscal resident with the Tax Office and liable for tax payment, private individuals, or communicate any changes in your data or to indicate an address for notifications if you wish to receive them on another than your fiscal address. Spanish citizens or non-residents can use form 30 to request a tax identification number (NIF).

Modelo 100

Form 100. Personal Income Tax. Annual tax return. The Tax Agency is responsible for issuing form 100 and resident of Spain needs to complete this form as income tax statement within their first year. Also, completing this form means you agree to the Spanish Revenue, and in compliance with HMRC, you are resident in Spain for Spanish tax.

Form 123 (Annual equivalent of M193)

Form 123. Withholdings and payments on account for Personal Income Tax, Corporate Tax, and Non-Resident Income Tax (permanent establishments). Residents of Spain must file form 123 to provide information on certain income from movable capital for tax purposes.

Modelo 145

Form 145 is required by Tax Agency form to record information on personal income tax through which taxpayers inform their payer—including their employer, about their tax and family status. It is also used to define the income tax withholding percentage applied to their wages.

Modelo 151

Form 151. Income Tax Return for individual National Tax Administration Agencies. This form enables online filing, or pre-filing of Income Tax for individuals under the special regime applicable to workers relocated to Spain.

Modelo 210

Form 210. Non-resident imputed income tax and rental tax. Non-residents in Spain are required to pay a percentage of their income and property owned by the state. The current rate for EU members for this tax is 19% and 24% for non-EU members.

Modelo 714

Form 714. Assets or Wealth Tax Declaration of Spain. It includes the necessary information related to the properties owned by the taxpayer and a Statement of Assets by anyone who owns properties that exceed a net value of €700,000. The first seven hundred thousand euros is a nil rate band, and the excess is taxed following a sliding scale. Nationally this scale is 0.2% – 2.5% of net assets.

Modelo 720

Form 720. Declaration of Assets and Rights Held Abroad. All citizens and non-residence of Spain are required to complete form 720 for assets owned in another country. The 720 form is essential, and the information provided is necessary for fraud detection purposes only. Also, it outlines, if any, and what assets are owned and could be subject to significant fines for failure to complete it.

Business Category

Below you can find some Modelo’s you might need when you are dealing with corporations.

Modelo 111

Form 111. Withholding tax (IRPF) due for the company’s employees and any invoices received withholding tax retained. It is a quarterly requirement to complete general invoices from economic activities incomes, notaries, capital gains from forestry development, and self-employed people (autónomos).

Modelo 115

Form 115. Withholdings and payment on account. Income or yields from the leasing or sub-letting of urban buildings. It is completed and submits quarterly by a self-employed person who rents a property with the withholding included in the invoice.

Modelo 165

Form 165. Informative return of individual certificates issued to partners or participants of newly or recently incorporated organizations. As developed in section 1 of article 69 of the Regulation on Personal Income Tax, it sets out how the new informative tax return must be presented.

Modelo 190

Form 190. Information Return. Withholdings and payment on account. Work income and income from economic activities, prizes, and certain capital gains and income allocations. It must be completed annually, including information about the workers and professionals with their names, surnames, ID, perceptions, and withholdings. It is an informative statement and summary form of withholdings for professionals and workers.

Modelo 200 / 202

Form 200. IS. Tax Return for Consolidated Groups. Corporation tax and non-resident income tax. Payment or refund documents. Businesses have to pay taxes simultaneously to (national treasury and regional treasury) and file self-assessment for corporation tax and non-resident income tax (permanent establishments and organizations under the income allocation system incorporated abroad with terms approved by these in the Spanish territory.

Modelo 232

Form 232. Informative return on related-party transactions and transactions and situations relating to countries or territories classified as tax havens. Obligation to expressly report transactions with related persons or entities and information on trades and conditions relating to countries or territories classified as tax havens.

Modelo 303

Form 303. VAT. Self-assessment. Complete filing of the self-assessment for value-added tax, which should be submitted quarterly if you develop any activity subject to VAT. It can be paid or deducted in certain situations.

Modelo 322

Form 322. VAT. Groups of organizations. Individual form. Monthly self-assessment. A complete filing of the monthly self-assessments for value-added tax corresponding to groups of organizations, a personal record.

Modelo 347

Form 347. Information Return. Annual information return on transactions with third parties. Formalities Information and Assistance. It is required to be completed annually with details on the statement of operations with third parties. Deals worth more than € 3005.06 with the reoccurring party will need to submit this form.

Modelo 349

Form 349. Information Return of intracommunity transactions. It is completed with a disclosure statement. Businesses are required to file the capitulatory return of intracommunity transactions during the corresponding period.

Form 353

Form 353. VAT. Group of entities. It is an aggregated and Monthly self-assessment form that is required to be completed by the parent company on Value Added Tax, through which the payment of the tax debt or refund or the request for compensation is made.

Modelo 368

Tax Form 368. Declaration-settlement of the special VAT regimes applicable to telecommunications, broadcast or television, and electronic services. It is completed quarterly and required for companies dedicated to sales of digital services or registered in a one-stop mini-shop for online sales to EU countries.

Modelo 390

Form 390. VAT. Annual summary tax return. It is required to summarize all transactions related to VAT collected, deducted, and paid by your business during the year. Spanish autónomos and small companies are mandatory to file as there is no payment involved.

Self-Employed Category

Below you can find some Modelo’s you might need when being self-employed.

Modelo 36/37

Forms 036 and 037. Tax register of business persons, professionals, and withholders – Tax register declaration of registration, modification, removal, and simplified tax register declaration. The individuals who should be included in the register for business people, experts, and withholders ought to submit declarations using 036 or 037. A record ought to likewise be offered for adjustments or expulsion from the register.

Modelo 130/131

Form 130. IRPF (Personal Income Tax). Companies and professionals are taxed under the direct evaluation system. Installments. It is mandatory to be filed by individuals who carry out economic activities including agricultural, livestock farming, forestry, and fishery under the direct evaluation system, standard or simplified modality in Personal Income Tax.

Modelo 303 (390)

Form 303. VAT. Self-assessment. It is required to be filed as a VAT return form by all self-employed people in Spain. Every quarter, form 303 is completed to declare their earnings and pay tax.

Real Estate Category

Below you can find some information when you are dealing with real estate in Spain.

Modelo 180

Form 180. Information Return. Withholdings and payment on account. Income from urban building leasing. Annual summary. To be completed yearly as an overview of Personal Income Tax, Corporate Income Tax, and Non-residents Income Tax for incomes acquired from leasing or subletting buildings.

Modelo 211

Form 211. IRNR. It is mandatory and completed for Non-residents’ income tax and withholding in property purchases from non-residents without permanent establishment.

Modelo 296

Form 296. Information Return. Withholdings and payment on account for non-resident income tax (without permanent establishment). The tax form 216 is completed annually by Non-Resident Income Tax (IRNR), which must be paid by companies or individuals who receive some income in Spain, but do not reside in the national territory.

Inheritance Category

Below you can find some information when you are dealing with inheritance in Spain.

Modelo 182

Form 182. Information Return. It contains information about donations and contributions received. Further, it is required to file the right to a deduction in income tax, corporation tax, or non-resident income tax.

Modelo 650

Form 650. Inheritance and Gift Tax. Self-assessment inheritance tax return. If you own assets in Spain, you should plan for your demise, requiring you to file form 650 within 30 and pay inheritance tax. Filing and pre-filing can be done online.

Get support with filling in your Modelo’s in Spain

If you would like us to help you fill in your Modelo’s in Spain, then contact us. We have a team of expert and local tax administration experts ready to assist you. We can take care of it for a fixed fee.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommended seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

VAT Number Spain: Everything You Need to Know

The VAT number in Spain is an essential part of doing successful business within the Spanish Market. The Spanish market is the 5th biggest market in the European Union, and this makes for great opportunities for foreigners to get in on the action. This article will talk about the different aspects of the VAT number in Spain, the number you will get when you form a company in Spain. Topics that we will discuss are VAT registration, the Spanish tax system, NIF number, VAT purposes, VAT return, and the purposes of the Spanish VAT.

What is a VAT identification number?

In business, the VAT identification number is a one-of-a-kind identifier for sole proprietors, partnerships, and limited liability companies. If the Tax and Customs Administration considers you an entrepreneur for VAT purposes, they will need you to have this number.

The VAT identification number is a taxpayer reference code, and all kinds of organisations and clients can ask for it. You also use your VAT ID number when interacting with consumers, such as on invoices and websites. In a nutshell, you communicate this to your company’s external communications.

SublimeSpain makes your company formation easy, fast, and worry-free

Learn more

How is VAT registration done in Spain?

The Spanish Tax System assigns each business that is incorporated a NIF number (número de identificación fiscal). This will be your company’s identification number. When you are about to get started with your business in Spain, you must get your NIF number.

To get this number you must register with your (local) branch of the Administración de la Agencia Estatál de Administración Tributaria (AEAT). The Spanish Tax Administration will assign you a NIF number after checking that your business is registered, has an address, deeds of incorporation, bylaws, and a variety of other formalities. It is recommended a Spanish lawyer handles your incorporation so you are compliant with all necessary corporate laws. Don’t hesitate to contact us if you want us to help you with the company incorporation.

Spanish VAT number

What is the Format of the Spanish VAT number?

In Spain, the VAT identification number is known as “Número de Identificación Fiscal” (short form: NIF) and is required for EU commercial exchange. The Spanish VAT number was formerly known as the CIF number (Código de Identificación Fiscal). It is very common (and normalised) to refer to a business number in Spain as a CIF number.

Spanish VAT number is formatted as:

ES + Letter + 8 digits or ES + Letter + 7 digits + Letter

So what does it stand for:

  • ES = country code
  • Letter = type of entity (e.g. B for Sociedad Limitada)
  • First two digits: stand for province company was registered
  • Last five digits: random digits
  • Last character (digit or number): control character
  • Example: ESX12345678

When do you need a VAT number in Spain

In general, all firms and legal entities in Spain must be registered with the Spanish Commercial Registry and carry a Spanish VAT. The main reason for Spanish VAT registrations are:

  • If you store goods in Spain, you must have a Spanish VAT number. This is true even if you are not making any sales and therefore never charging customers or clients for services rendered.
  • If you are a foreign seller that imports more than 35.000 in sales, you must register for a Spanish VAT number.
  • If your company operates within Spain, you must register for a Spanish VAT number even if the turnover does not meet the level of the threshold mentioned.

Is one of these scenarios apply to you? Obtain a VAT ID through the request form on our company formation page, and we will take care of all your Spanish tax registration formalities.

Documents required by the tax authorities to get the VAT

Various papers are needed in order to register the VAT ID. It’s a good idea to get them all at once rather than waiting for them one by one. You will get your VAT number during the incorporation of your company. The general documents you will need for the VAT registration are:

  • The filled-in application form.
  • A copy of a valid ID/Passport
  • Proof of the deed of incorporation

If you would like the Spanish company to be under your home country’s holding company, you will need:

  • VAT certificate
  • Articles of Association and Bylaws
  • Certificate of incorporation

Because every company formation has different aspects, we suggest contacting a company formation agent to get your VAT number to handle all the documentation for your company incorporation.

VAT number Spain

Paying taxes using your VAT number

Like in any other country in the world, your company will have to do certain tax returns. The tax office in Spain is known as the Hacienda, AEAT, and Agencia Tributaria. The tax office will ask you to pay various taxes in Spain, including revenue tax (VAT return) and corporate income tax.

Filing VAT returns

Each quarter, you must file a revenue account for VAT purposes. For the first year, it is recommended that this happens based on three.

Your VAT in Spain is used to report your taxable income and revenue tax. Typically, your VAT return in Spain is due four times a year, quarterly and one time annually. It is also possible that you need to file monthly VAT returns.

The regular value-added tax rate (IVA in Spanish) in Spain is 21%. However, there are also other rates which are 10% (for basic items like food and medical products), and 4% (for even more basic items like bread and books).

Filling corporate income tax

Corporate income tax in Spain is 25%. The corporate income tax filings have to be done after six months ending the financial year, within 25 days. So usually between 1 July and 25 July of the following calendar year.

The tax also has two advance payments during the first six months of the company’s tax year and the second before the end of the year.

Where can you find a company’s VAT number in Spain?

In general, every company with a commercial establishment in Spain must display their VAT number on invoices, letters and commercial documents. In the case of online business, it is necessary to have a national VAT number that anyone can find on your website or invoice. Spain’s tax authorities are strict about companies not displaying their VAT number, so it is important to get your company registered for this purpose.

Verifying VAT numbers

If you can’t find a company’s VAT number, or you want to verify a company’s VAT number. You can look it up at the mercantile registry if it is registered. There are also other websites that index VAT numbers of Spanish companies, so there are various options.

VAT Number in Spain

Frequently asked questions

Below, you can find some frequently asked questions regarding the VAT number Spain.

Are NIF and VAT the same?

No, NIF and VAT are different. The NIF is the Spanish taxpayer’s identification number as established by law. Meanwhile, the VAT number is a commercial identifier that only companies need to have. The NIF is sometimes called NIF-VAT.

How do I get a Spanish VAT number?

To get a Spanish VAT number, you need to register as a company in Spain. Registering as a company includes getting all the necessary documentation and formalities for your business purpose, including obtaining a vat number. We will provide all the information regarding this process after we have received your request.

Do I need a VAT number when I have sales in Spain, but I am in another country?

When you have distance sales of over 35.000 euro, the Spanish government requires you to have a unique identifier. The sale of goods or services to Spanish customers is illegal in excess of this threshold.

Do people in Spain also have a VAT number?

Citizens and residents in Spain have a NIF number, which functions as a VAT number. Non-residents in Spain that need a tax identification number will get an NIE number.

Can I get an NIE Number or NIF number when I am abroad?

Yes, via The Hague Apostille, you can get a power of attorney signed in Spain. Your lawyer, who will be your Spanish representative, can then take care of your Spanish company formation and sign you up in the trade register.

Save time getting your Spanish VAT number

Get help from an expert and save time, money and headache. We offer a range of services from company formation to tax accounting. Fill in the form below, and we will get back to you right away.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

SublimeSpain makes your company formation easy, fast, and worry-free

Learn more

CIF Number and NIF Number in Spain – Spanish Tax Identification Number

The NIF number and CIF number are often used interchangeably when speaking about tax identification numbers for businesses. It can be quiet confusing when you are forming a company in Spain. In this article we discuss why this is the case, and what the codes really stand for.

The CIF number was replaced by the NIF number in 2008

In 2008, the NIF number replaced the CIF number as the Spanish tax ID for businesses. Before 2008, the NIF number was only used for residents. Currently, both businesses and individuals use the NIF number as their tax id number. Below is more information about the differences.

What is the CIF number?

The CIF number stands for Código de Identificación Fiscal. This was the tax ID for all Spanish businesses up until 2008, with the entry into force of the Royal Decree 1065/2007, 27th of July (in Spanish, the Real Decreto 1065/2007). The CIF number was a tax code that all companies needed to have. The code helped keep records of their business and their employees in order to report and pay taxes and social security contributions within the appropriate time frame. It was then replaced by the NIF number, also known as Número de Identificación Fiscal. Currently, you will need a NIF number to start a business, and it serves the same function as the CIF used to do, only now the name has changed.

The CIF number is still mentioned very commonly in Spain for identifying business numbers. When you are searching for a business number, it makes sense to search for a CIF, because then it is clear you are looking for a business right away, and plenty of sites still have the CIF number instead of the NIF one. Google also indicates that two to three times more searches are done on CIF numbers (red) compared to NIF (blue).

Many business websites still refer to business tax numbers as the CIF number. For example, if you want to find SublimeSpain’s CIF number you can see that other websites also refer to our tax number as the CIF number. As we have mentioned, it is not weird to use the CIF number to still refer to businesses. Old habits are sometimes hard to change.

NIF and CIF number

SublimeSpain makes your company formation easy, fast, and worry-free

Learn more

What is the NIF Number?

The NIF number stands for Número de Identificación Fiscal. Translated to English, it means it is a Spanish tax identification number. It is a unique identification number that facilitates the payment of taxes and regulatory compliance. It is a key identifier for the Agencia Tributaria.

There is no separate number VAT number in Spain. So, if you are dealing with a business, you can also find this number on the invoices.

When do you need the NIF number?

If you are participating in any economic activity in Spain, you will need to get a NIF number. The NIF number is used for both people and businesses that need to pay taxes in Spain. So when you are starting a business in Spain, you need to get a NIF. Below we discuss the tax identification numbers related to Spanish citizens, ex-pats, self-employed, and businesses.

Spanish citizen: You will have your own personal NIF number when you are a Spanish citizen. This number is necessary for many formalities, such as opening bank accounts and signing contracts. This number will also be required when paying taxes or applying for a job.

Expats in Spain: When you are an international in Spain, you need a NIE number. This number is necessary for many purposes such as starting a business, opening a bank account, signing contracts, and working in Spain.

Autónomo in Spain: Self-employed people in Spain are called Autónomo. Because self-employed are not separate entities from the owner, the owner will pay Autonomo tax on their personal income tax. Therefore the owner’s NIF number or NIE number is used also as a VAT number for the Autonomo registration.

Businesses in Spain: When a Spanish limited liability company is set up, it needs to get a NIF number for itself (also called a CIF number). While the owners need a Spanish tax identification number to set up the company, the company will get its own VAT number. Foreign companies also need this number to open a branch in Spain.

CIF and NIF Tax ID number in Spain

What do the numbers of the NIF number mean?

The NIF comprises nine characters: a letter followed by seven numbers, followed by a character that is either a letter or a number. The first letter in the code designates the sort of company or institution. Find below the meaning of each letter:

A. Public limited liability companies
B. Limited liability companies
C. Affiliate
D. Commendatory companies 
E. Communities of property
F. Cooperative companies
G. Associations
H. Communities of owners
J. Civil societies
P. Local companies
Q. Public institutions
R. Religious Congregations and Institutions
S. Bodies of the State Administration and the Autonomous Communities
U. Temporary Joint Ventures
V. Other types that are not defined in the other keys
N. Foreign entities
W. Permanent establishments of entities non-resident in Spain.

The two numbers following the first letter identify the province in Spain where the company was originally created. With this, you can learn a lot about the entity by knowing the NIF number.

Find a NIF number in the company registry

If you are looking for a company or business name, you can check that it is not already used by searching the companies registry in Spain.

The company registry is a database of all officially registered companies and other business entities in Spain. The information about each entity’s legal status, place of registration, owners and managers is available to the public.

Important takeaways on the CIF and NIF number

The NIF number is the tax identification number that facilitates the payment of taxes and regulatory compliance. As you can see, the NIF, priorly known as CIF, is vital in getting a business started in Spain, since every time you are dealing with tax, accounting, invoices, the Tax Office or any Spanish institutions, this is what will identify your business.

At SublimeSpain, we can help you in the process of applying for a NIF number and everything that comes with forming a company in Spain. Don’t hesitate to contact us at contact@SublimeSpain.com if that is the case or you want any more information on the matter.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

SublimeSpain makes your company formation easy, fast, and worry-free

Learn more

Autónomo Tax in Spain: Types, Returns, and Deductions

Every person that is self-employed in Spain is required to pay autónomo tax in Spain. The autónomo tax consists of three parts. The income tax, the vat tax, and social security contributions.

Both income tax and vat tax are paid with a quarterly and annual tax return. Social security contributions are paid monthly. In this article, you will learn about the autónomo tax obligation, autónomo returns, and deductibles.

Every autónomo in Spain is responsible for preparing his/her annual income tax return. It is very common to transfer your annual tax return preparation to an accountant, this way you don’t have to worry about the deadlines and calculation of your autónomo tax in Spain. However, if you decide to prepare your autónomo return, it is important that you know and stays up-to-date with taxes in Spain that apply to you.

Autónomo income tax Spain

When you are a freelancer or self-employed in Spain, your income is taxed at the same rate as other individuals in Spain. The rules of the personal income tax, also apply to you when you are self-employed in Spain. The Agencia Tributaria doesn’t have a different income tax rate for freelancers.

In Spain, there is a resident tax and a non-resident tax. You are a tax resident if you spend more than 183 days in Spain during a year. You are a non-resident for tax purposes if you spend less than 183 days in Spain during a year.

The income tax Spanish tax residents are paying is called the IRPF, it stands for Impuesto Sobre la Renta de las Personas Físicas. In Spain, freelancers are subject to a progressive tax rate. As a result, rates vary depending on how much money is earned.

Remember that different regions of Spain charge taxes at varying rates, so the rates differ across the country. For tax residents, income tax in Spain varies between 19 to 47%, according to income earned.

The income tax Spanish non-residents for tax purposes are paying is called the IRNR, it stands for Impuesto Sobre la Renta de no Residentes.

The amount of tax you have to pay as an autónomo in Spain depends on whether you are considered a tax resident or tax non-resident.

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Modelo 130: Quarterly income tax returns

Every quarter, you must submit this form to the Hacienda to declare your gross income and deductible expenses. If positive, small business owners must make a payment on account of their ultimate tax obligation.

Modelo 100: Annual income tax return ‘Renta’

The payments on account taken every three months will be used in calculating the final tax bill on this return. It is due by the 30th of June. Even if you are not required to complete an annual return, it can be useful to do so because then you know your income and expense figures for the full year.

When you have overpaid on your quarterly returns, you can claim a refund by completing this form. When there are additional taxes to be paid, the form is used to declare it.

The tax year in Spain comes to an end on December 31, and all autónomos must submit their Spanish and international earnings by June 30.

VAT taxes in Spain

Autónomo VAT Tax Returns

Just like limited companies when you are an autónomo you also need to pay vat tax. The VAT tax rate in Spain is a fixed tax that you need to pay over the revenue you generate throughout the year. The vat tax is called IVA in Spain.

In Spain, the general VAT rate is 21%. Depending on the type of goods or services, the lower rates are 10%, or 4%, respectively. The VAT applies to all services rendered by freelancers, even if they are performed outside of Spain.

Goods and services that have a lower tax are items such as educational services, artistic endeavours, and some forms of independent writing.

VAT within the European Union

If you engage with business clients outside of Spain but within the EU, you may be eligible for VAT exemption. This is because they pay the VAT at their own country’s rate, not at yours.

If you plan on doing this, you’ll need to register with the Agencia Tributaria to get a tax identification number and submit quarterly reports regarding your intra-community business.

Modelo 303 and 390: Quarterly and Annual VAT returns

Autónomos must submit a quarterly report and pay any outstanding amounts. The quarterly VAT return called Modelo 303 is used for this. When you don’t have anything to declare, you still have to submit it.

It can be carried forward if the quarterly return results in a negative balance. Any refunds that you may receive can be applied to your account at the end of the year.

Autonomo tax in Spain

Social security contributions and benefits for self-employed workers in Spain

If you work as a self-employed individual (Autónomo), you are obligated to pay social security contributions. After you’ve paid into the scheme for 15 years, your contributions will be matched by the government, and you’ll receive a pension as well.

At the same time you register to pay income taxes and VAT, you must also register for social security. To receive your autonomous classification, you must complete a new form indicating your status. This is because several types of employment result in different social security payments, so if your work is considered hazardous, you will have to pay more in contributions. The Spanish Social Security system is comparable to the National Insurance program in the United Kingdom.

Even if you don’t earn anything, you must make payments to avoid being fined 10% of your bill. You will not be eligible to use public health facilities, get a pension or sick pay, or take paid parental leave if you do not make the required payments. Self-employed individuals who take maternity or paternity leave are not required to pay into Social Security, as they are not considered employees. They will however need to have at least 12 monthly payments.

Social security rates for freelancers

In 2021, the starting amount in Spain ranges from €944.40 to €4,070.10. This number is then multiplied by 30.6 per cent, resulting in a monthly payment of at least €288.98 (Autonomous- Employee Contribution). In other words, in 2021 the minimum contribution is 289 euros per month.

The more you pay into the scheme the more you will get. In other words, the amount of social security contributions paid is a factor in determining how much social security benefits are received.

The amount you pay in social security payments each month is calculated using the base salary amount and the multiplier to arrive at it. Social security payments are on a progressive scale, the more you earn, the more you will pay out over time.

Registering for freelancer tax in Spain

To become a freelancer in Spain, you must complete both phases of the procedure. The first step is to register with the tax agency (Agencia Tributaria or Hacienda). To do this, you must fill out Form 030, which is available from the government website.

You’ll need a Spanish national insurance number (An NIE) and a Spanish bank account for the autonomous registration. If you’re not from Europe, you’ll need a work visa or residency permit. You can have an immigration lawyer in Spain help you with this.

Then you must join the autonomous social security system (Regimen Especial de Trabajadores Autonomos or RETA). To enrol in the autonomous social security system (RETA), you must already be a member of the social security system.

You must be a resident of Spain to register for the Agencia Tributaria, so you must complete the Modelo 36 or Modelo 37 forms and submit them to the Hacienda.

The form requires you to state your name, address, and type of business activity. You must indicate where your firm is located and whether you will pay VAT in Spain.

You may want to hire a professional to assist you in becoming an Autónomo or with starting your business. We provide specialized company formation services in Spain, so make sure to get a free quote.

Autonomo in Spain

Costs that are deductible on Spanish Income Tax

Any expense that may be deducted is limited to your economic activity as a freelancer. This implies that you cannot deduct anything from your income taxes that may not be used to generate extra money through your day-to-day activities.

The most important aspect is to properly explain them. If you do not provide sufficient documentation, it will be much more difficult to argue their validity in the future.

You can still use goods and items for personal or family expenses, but they must be marked as such. In this case, these costs should not be deducted from your income tax liabilities.

Freelance tax deductions often apply to business expenses. However, other costs can be deducted from your income if they meet certain guidelines outlined by law.

Utility and supply expenses

If you work as a freelance from home, you may deduct 30% of your utility or supply expenses related to your business. These costs can be deducted from income, but you must be able to prove that these are related to your business.

The costs associated with the work’s location are deductible in the proportion of the m2 impacted and the percentage of ownership.

Food

The expenses of food for the company are deductible for income tax purposes if they are charged to a credit card and paid in a restaurant and catering business. This is the most crucial distinction because if a payment is made in cash, it will not be accepted. In Spain €26,67 per day is deductable, abroad that is €48,08.

Health insurance

The costs of health insurance premiums paid by taxpayers and their spouses or partners, as well as children under the age of 25 who live with them, are deductible to the extent they comply with these limits:

  • € 500 for each individual
  • € 1,500 in the case of disability

Expenses you can deduct entirely

Below you can find some key expenses that can be deducted in full from your income for tax purposes:

  • Your monthly social security payment.
  • Purchases of inventory or stocks made as a result of your company’s activities
  • Supplies (such as pens, toner, and ink cartridges)
  • Costs coming from advisor agencies (accountants, experts, tax advisors, or lawyers).
  • Mail charges
  • Bank charges for business accounts.
  • ICT services (server, website, etc.)
  • Costs for business travelling
  • Any marketing or advertising expense
  • Any expenses associated with retaining personnel, such as wages or educational costs
  • You can also deduct the franchise fee if you have established a franchise.
  • Expenses related to your office (for example rent)

There are more expenses related to your company you can deduct, but it is good to keep in mind that the expenses must be related to your business. You can best check with a tax advisor to see if your expense is deductible from your Autónomo tax in Spain.

It is important to keep the invoices of the expenses, as well as their date and location. You can then adjust these expenses when filing your annual income tax return.

Deductibles on VAT as an autónomo in Spain

The VAT quotas paid in the course of an economic operation are only deductible for supplies, services, or imports that are directly affected by the business activity and justifiable by invoice.

If something is only partially intended for your business, you can deduct a percentage of the VAT. This percentage is determined by your invoice and its related activity.

For example, in case the company buys a car. The company’s VAT obligations are based on the vehicle’s total mileage. If a car is used in your business, you can deduct any repairs, gasoline, tolls/fees, or parking charges at the same rate as your firm’s activities.

These quotas are deductible from VAT on income obtained during the same taxable period. It must be under the name and number of the taxpayer’s registry, as well as having an invoice of payment.

Freelancer tax in Spain

Frequently asked questions

Below you can find some of the most frequently asked questions about deductibles as an autónomo in Spain:

What invoices should I keep?

You must keep any invoice or receipt you receive from your supplier for any purchase. Any expense, such as gas or food, requires a receipt to be deductible.

How long do I have to keep my invoices?

It is required by the Tax Administration’s standards to maintain all invoices and documentation for at least four years. This is the tax statute of limitations, which allows the Treasury to undertake an audit and examine the employer or self-employed individual’s tax records for 4 years after declaration.

What expenses can I deduct?

Taxpayers may only deduct the business expenses they need to carry out their activity, which is exclusively related to it. Expenses that do not benefit your business cannot be deducted.

What is the difference between a Spanish autónomo and a company?

First of all, it is important to understand that there are two different kinds of Spanish companies: the limited liability company (S.L.) and the corporation (S.A.). It may be necessary to consult with a tax advisor in terms of which type of company will best suit your business structure.

Do I need an accountant as an Autonomo?

Yes, it is recommended that you keep your records and use an accountant in Spain to prepare your annual income tax return. It will be more secure and save you time and headaches.

Concluding the autónomo tax Spain

In this article, we have discussed the different taxes, deductions, and documentation in filing your taxes as an autónomo in Spain.

Keep in mind that the deductions must be related to your business, and not for personal use and that you keep your invoices saved securely.

Contact us if you would like help with filing your taxes. Our tax specialists can function as your tax advisor, accountant, bookkeeper, or simply help you file taxes online. We will create a quote tailored to your needs.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Rental Income Tax in Spain: Types, Deductibles, and Rates

In this article, we will discuss the rental income tax in Spain. Among the taxes in Spain, rental income tax is a widespread Spanish income tax. Read this post for an overview about the types of rental income tax and the different rates.

What is the Rental Income Tax

You will have to deal with this tax when renting out your property. The tax can be divided into VAT tax and income tax. Depending on the situation, you will have to pay VAT tax or not. The income you create will be taxed similarly to other income taxes (such as personal income tax and corporate income tax).

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Do I need to pay VAT on rental income?

Whether you need to pay VAT tax or not depends on what type of property you are renting out, and to whom you are renting the property.

When don’t you need to pay VAT tax on your rental income?

When a renter will use your property exclusively for living, you don’t add VAT tax to your invoicing. For example, if you are renting out an apparent or house to be used as a residence for a family, the rental income is not VAT taxed. This applies to lettings with living spaces only, which include apartments, houses, rooms in shared flats or houses, and any separate living quarter.

When do you need to pay VAT tax on rental income?

When you are renting out to a business or self-employed person to execute their economic activity, you need to pay VAT tax and add VAT tax on your invoicing. For example, when you are letting to a bakery, a pub, a hair salon or a restaurant. The same applies to lettings with non-living spaces, such as retail space, business areas and any other premise accessible only from the street.

Next to this, when you are renting out a storage place, you will also have to pay VAT tax on the rental. For example, when you are renting out a parking space or stockroom.

Rental income taxes in Spain

Rental income tax for individuals

Rental income tax for tax residents and non-residents in Spain are different. The difference is in the tax rates, rental property tax deductions, and the frequency of declaring your rental. However, both residents and non-residents must make the tax declaration in Spain over all the income from rent.

Rental income tax in Spain for Non-Residents

Non-residents are subject to the flat non-resident Income Tax (IRNR, Impuesto Sobre la Renta de personas No Residentes), a flat tax rate of 19% if you reside in the EU or EAA countries. If you are not from the EU or EAA countries, the flat tax rate is 24%.

Rental income tax in Spain for Tax Residents

The tax for tax residents on rental income is called IRPF (Impuesto sobre la Renta de Personas Físicas). It is a tax levied on the income obtained during a year from natural persons residing in Spain, no matter if they are Spanish. It is also a progressive and direct tax.

The rental income tax for tax residents is on a progressive rate of 19% to 47%. When you generate more income, you will pay more tax. The property owner pays the rental income tax, not the renter. The rental income tax for tax residents is different than for non-residents.

Tax for landlords Spain

Rental income tax for self-employed and companies

When you rent out business premises to a company or self-employed to carry out economic activities. You are obligated to pay VAT tax, and must register at the government as an Autonomo or company.

Rental income tax in Spain for self-employed

When you want to use a property management service, agent, lawyer or accountant for your property, it is wise to register as a self-employed (Autónomo) in Spain. Because when you are an Autónomo, your venture will pay the Autónomo tax, and being taxed as an Autónomo means you can deduct the VAT tax from renting your property.

Rental income tax in Spain for limited liability companies

When you plan a riskier venture or make more than 65.000 euro’s revenue from your Spanish properties, the Spanish limited company becomes attractive for its protective and cost benefits. For example, when people plan to build or make significant investments in Spain, they often form an SL company in Spain. Of course, with a Spanish limited liability company, you will be able to deduct the same property rental costs as an Autónomo.

Property rental income tax Spain

Personal income tax tranches for tax residents in Spain

Below you can find the personal income rates for tax residents. You will be considered a tax resident when you reside longer than 185 days in Spain.

Income Taxes Trenches 2021 Total
Up to 12.450 euros 19,0 %
From 12.450 euros to 20.200 euros 24,0 %
From 20.200 euros to 35.200 euros 30,0 %
From 35.200 euros to 60.000 euros 37,0 %
From 60.000 euros to 300.000 euros 45,0 %
From 300.000 euros and on 47,0 %

Applying the marginal rate directly, a person who earned 65,000 euros would pay 45% of that income in taxes: 29,250 euros. Fortunately, the 2021 income tax table is progressive, and this is what you would pay:

  • First IRPF tranche: A person pays 19% of 12,450 euros – 2,365.5 euros
  • Second IRPF tranche: The person pays 24% of 7,750 euros (the difference between the first and second bracket) – 1,860 euros.
  • Third IRPF tranche: The person pays 30% of 15,000 euros (the difference between the second and third tranche) – 4,500 euros.
  • Fourth IRPF tranche: The person pays 37% of 24,800 euros (the difference between the third and fourth tranche) – 9,176 euros.
  • Fifth IRPF tranche: The person pays 45% of 5,000 euros (the difference between the fourth and fifth tranche) – 2,250 euros.
  • Sixth IRPF tranche: The person pays 47% of the difference between the fifth and sixth tranche, that is, the amount that exceeds those 300,000 euros (in this case, it would not apply).

Interestingly, the final percentage paid by personal income taxpayers is a division of two tax tranches. The first one is the state tax, which goes to the Government, and the second one is the autonomous tax, which the independent communities receive.

In addition, you must take other aspects such as the family situation into account, which includes: being married or single, having children under 25 years old, children under three years old, living with people over 65 years old, etc.

Situations to consider Number of descendants
0 1 2 or more
Single, widowed, divorced or legally separated taxpayer. – 15.947 € 17.100 €
A taxpayer whose spouse does not obtain income exceeding 1,500 euros per year, excluding exemptions. 15.456 € 16.481 € 17.634 €
Other situations 14.000 € 14.516 € 15.093 €

Getting Rental income tax as a property owner

Deductibles from rental income tax

According to the Spanish tax authorities, EU members and EEA citizens can deduct the following expenses from their rental income tax. You can deduct costs from the rent because they are used for the rental property to create income.

  • Administration and accounting costs: costs enquired to pay Spanish tax and properly follow Spanish tax laws.
  • Notary and Lawyer costs: e.g. for formalizing rental contracts drafting contracts, or tenant eviction.
  • Real estate agent fees or key holder fees
  • Water, electricity, laundry, cleaning, and utility costs
  • Security services: e.g. gated communities
  • Mortgage interests and unpaid rents: Note that rental income is the amount of rent receivable (not received). You can deduct due rents until six months have passed from the first debt collection action or if the tenant is legally insolvent.
  • Depreciation of the property at 3%: You can deduct the depreciation of 3% of buildings or the cadastral value. The cost of buildings is frequently unknown as the purchase deed does not usually separate the two. In this case, the building’s proportion is taken from the cadastral value. Failing this (e.g. non-Spanish property), the tax office will accept that buildings represent a reasonable proportion, perhaps 2/3rds of the total cost.
  • Interest on loans taken out to finance acquisition, improvements, and property maintenance.
  • Maintenance, repairs, and renewals: The property’s expansion or improvements are not deductible.
  • Non-state taxes and surcharges related to the property: This category covers costs like IBI and charges for the trash, and it includes any fines.
  • Insurance policies (e.g. for fire, civil liability, fire etc.)
  • Primary maintenance and reparation costs

Like other Spanish tax deductions, you must justify all deductible costs with relevant documentary evidence. They are valid only if you have the invoice, and quotations are not valid documents. If you have an accountant in Spain, you can send them your invoices, and they will take care of the rest.

Spanish property rental income tax

Double taxation agreements and rental income tax

The Double Taxation Agreement is an agreement that might have been signed by Spain and your country of residence (or state where you need to pay tax). The Spanish tax authorities make these double taxation agreements to check and regulate where residents and non-residents will have to pay tax.

According to what is established in the OECD Convention model, the gross income generated through Spanish property must be taxed in Spain, regardless of the taxpayer’s tax residence.

Personal Income Tax Categories

The income tax consists of different income taxes, and you will need to consider all incomes when making your personal tax declaration.

  • Rental income tax: As the name already says, they are income obtained from tangible elements, such as leases of premises or subleases.
  • Payroll taxes: The most important one for the majority of the inhabitants is the income from salaries. Despite its name, this part does not include all income from work but only those earned as an employee of a company, and it excludes self-earned income.
  • Capital gains taxes: Income generated from selling a property is capital gains income. e.g. the income can be from selling a house, a plot of land, or commercial space.
  • Dividend taxes: Dividends or profits from participating in a business.
  • Business income tax. This last one comes from doing business on your account. Business activity, in turn, is defined as an activity that includes work and capital together and is aimed at making money.

For each part of the tax base, costs related to this activity can be deducted.

Tax specialist for real estate taxes

Examples of personal rental income tax calculations

Below you can find a few examples of rental income tax calculations.

Example 1: rental income tax rate in Spain for residents

In the following example, we consider the case of a resident in Spain with a taxable base net of 30,000 euros and no reductions that the regulations take into consideration as personal and family circumstances (a single). As we see in the table, the following types and sections would be applied:

  • 19% to the first 12,450 euros
  • For the next 7,750 euros (from 12,450 euros to 20,200 euros) we would apply a 24%
  • And to the next 9,800 euros, until reaching 30,000 euros of the salary in the example, we would apply a 30%

In this case, the landlord with a gross of 30,000 euros per year would end up with a net of 24,393 euros per year, which divided by 12 payments gives an effective payroll, of 2,032 euros per month.

Example 2: rental income tax rate in Spain for non-EU/EEA residents

Using the same example as above, a person who has an annual rental income of 15,000 €, and expenses of 3,600 €, will pay the following tax on their rental income in Spain:

  • Total rental income: 15,000 €
  • Deductible expenses: 3,600 €
  • Tax base: 11,400 €
  • Tax rate: 24%
  • Total due: 2,736 € (11,400 € * 0.24)

Example 3: rental income deductions

Assuming you have a rental property that generates an annual rental income of €15,000. If the community expenses are €2,000 per annum and repair and improvement costs amount to €1,600 per annum, the tax on your rental income in Spain will be calculated as:

  • Total rental income: 15,000 €
  • Deductible expenses: 3,600 €
  • Tax base: 11,400 € (15,000 – 3,600)
  • Tax rate: 19%
  • Total due: 2,166 € (11,400 * 0.19)

Get help from an accountant to do your taxes in Spain.

income tax return for rental income

Frequently asked questions on Rental income tax in Spain

Below you can find the answers to some frequently asked questions about rental income tax in Spain.

Is the Personal Income Tax the same throughout the Spanish territory?

Partially, while the national Spanish tax office has put forward national income tax rates, there are still differences between the regions because they can set their tax rates. Next to the rental income tax rates, there are specific differences in terms of tax deductions. It is best to contact an accountant in Spain who knows the tax implications of the local property tax.

How to declare rental income?

The frequency of declaring your rental depends on your status as a Resident or Non-resident. For residents as we know, the Spanish tax on rental income declaration takes place on annual basis, nevertheless, for non-residents, the declaration has to be submitted every three months based on a set calendar, as follows:

  • April 20th: Declaration for incomes obtained in January, February, and March.
  • July 20th: Declaration for incomes obtained in April, May, and June.
  • October 20th: Declaration for incomes obtained in July, August, and September.
  • January 20th: Declaration for incomes obtained in October, November, and December.

What happens if I pay late?

The deadlines are very clear in the previous question. If you pay just one day late, the Tax Office will send you a penalty for:

  • 5%: payment made within three months of the deadline
  • 10%: if more than three months pass, but less than 6
  • 15%: between 6 and 12 months
  • 20%: plus interest if you pay more than one year late

So why does Spain have a rental tax?

The main purpose is to respond to the principle established by the Spanish Constitution that all Spanish Citizens must contribute to the support of public expenditures. On the other hand, it tries to favour those people who are in a more precarious situation. Thus, it aims to contribute to a more efficient economy by promoting or taxing certain activities.

How many income taxes are there?

In this article, we will focus on the rental income for individuals. However, there are two income taxes: the Personal Income Tax is levied on the income of individuals, while the Corporation Tax is levied on that of limited entities. In some exceptional cases, there are legal persons and other entities that do not pay Personal Income Tax or Corporation Tax, but it is the natural or legal persons involved in that entity who declare the income obtained based on their participation in that legal entity. There is also a tax on Tax on Economic Activities (IAE) in Spain, which is paid under certain circumstances.

Next to rental income tax, individuals that own property in Spain might have a tax liability in the form of wealth tax. Individuals that own more than 700.000 euros worth of assets in Spain, will have to pay this wealth tax.

tax for non residents

A word from SublimeSpain

In conclusion, Spanish rental income tax is one of the most common of Spanish property taxes. The Tax Office charges everyone who gets income in the Spanish territory regardless of whether they are a Spanish resident or not. Depending on how you are registered and the money you make you will either pay income tax, vat tax, tax on economic activities, wealth tax or taxes on your property. We strongly recommend hiring a tax advisor or accountant if you are planning to rent out your property. For a fixed fee, you can take care of all the government forms that are required in Spain. Contact us for a quote today.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more