VAT in Spain

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In the modern world, nearly everything we do is a subject to some kind of tax. Spanish laws are not different. Although there are many forms of taxation, two of them are the most popular: an income tax and a value-added tax. What is a VAT, what are VAT rates in Spain and how to obtain a Spanish VAT Number?

What is a VAT?

Value added tax, commonly known as VAT, is a tax applied to the net value of goods. This means that every time we buy something, in addition to the price of the goods, we also pay tax. A different percentage is charged depending on the type of good purchased. VAT rates also vary from country to country. Spain is one of the countries that apply this tax.

VAT in Spain

Spanish VAT laws are based on European Union regulations, which set common rules for VAT compliance throughout the EU. The rules for charging and collecting this tax are therefore similar to all other countries in the EU. Spanish tax agency is called Agencia de Administración Tributaria. If your turnover exceeds 10 000 EUR within the borders of the EU, you are required by law to apply for VAT number in each country you are selling to. This makes it crucial to know what the rules are in each country.

VAT rates in Spain

Spain had to follow certain rules set by European Union while setting their VAT rates. For example, the standard VAT rate must be above 15%. As a result, there are four different VAT rates in Spain:

  • 21% – standard VAT rate, most commonly used,
  • 10% – reduced VAT rate, used for public transportation, pets medicine, hotels, restaurants and catering services,
  • 4% – super reduced VAT, on basic food and pharmaceutical products, medical equipment for the disabled, some books,
  • 0% – education services and some other services provided by professionals (e.g. medical services) are VAT exempt.

The list doesnt cover everything – there are more examples for each category. To assign your products or services to appropriate group and charge VAT correctly, check the official webpage of Spanish Tax Agency for detailed information.

Spanish VAT number

VAT number in Spain is called Número de Identificación Fiscal or – in short – NIF. It consists of a total of eleven characters: starts with a country code (ES), followed by another letter, seven digits and another letter. Its slightly different for domestic companies. They only use country code, eight digits and a letter.

Obtaining NIF is relatively easy, although it may take some time. With that in mind, one should plan in advance. To apply for a VAT number, it is needed to register with your local branch of the Administración de la Agencia Estatál de Administración Tributaria (AEAT).

There are also some documents required:

  • VAT certificate from other EU countries, if available;
  • declaration that the company does not permanently reside in Spain;
  • Notarized Power of Attorney of a local agent or representative in Spain;
  • articles of Association and memorandum;
  • extract of your company from the national trade register

Summary

There are a few things to keep in mind while applying for a VAT in Spain. You need to know the rates and prepare some documents. Its not very complicated once you read into it, but you need to know what to look for and where to look for it. For more infomation, visit https://polishtax.com/vat-in-spain-brief-introduction/

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