Spain is a country with a dynamic economy and great potential for growth. It is recognized for its business-friendliness and its favourable tax system. One of its most important elements is VAT. Lets take a closer look at how VAT in Spain is accounted for – from the point of view of those wishing to do business in the country.
Obligation to register and obtain a VAT number
The VAT exists in most countries around the world. In Spain, it is dealt with by a tax agency called the Agencia de Administración Tributaria. Any non-resident company must register and obtain a Spanish VAT number. The current law is that if a companys turnover exceeds EUR 10,000 within the European Union, it must be registered for VAT in all countries where business transactions take place.
Various formats of the NIF tax number
The VAT number in Spain is referred to by the symbol NIF – Número de Identificación Fiscal. It is not difficult to obtain one. To do so, you need to submit a request to the tax office with the intermediation of a local representative who will deal with the contact with the tax authorities. The NIF number can vary in format, but always consists of 11 characters. It begins with the country code, ES, and then contains nine digits and one or two letters, which together form the following forms: X11111111, X1111111X or 11111111X.
Standard, reduced and super-reduced VAT rates
There are several VAT rates in Spain. The standard rate of 21% applies to popular services such as energy, water, fuel, and cosmetics and internet services. A reduced rate of 10% applies to public transport, hotel accommodation, and pet medication purchases, among other things. Spain also has a super reduced rate of 4%. This is used for products such as basic foods and human medicines. Some services, for example educational, are also exempt from VAT. People interested in doing business in this country should read the detailed information and directives on this subject.
Deadlines for submitting VAT tax returns
VAT in Spain must be settled in different periods, depending on the companys sales value. Annual settlement is mandatory for all entities, the period of which expires on January 30 of the year following the commencement of business. VAT declarations can be filed monthly or quarterly, unless our companys turnover does exceed EUR 6 million. In this case, the entrepreneur is automatically assigned to monthly settlements. The deadline for filing quarterly declarations is the 20th day after the end of the previous period, while for monthly declarations – the 30th day of the following month.
Possibility of VAT refund
Doing business in Spain can also involve companies that are residents outside the European Union. However, from a VAT perspective, there is a significant limitation here. In this case, you can apply for VAT refunds upon returning to your home country. This is only possible if VAT was paid on goods that were then transported to your country of residence.
Professional tax office assistance
Running a business, including settling VAT in Spain, can seem complicated. That is why many companies decide to work with a tax office such as INTERTAX. More information you can read at: https://polishtax.com/vat-in-spain-brief-introduction/. Thanks to this, companies can be sure that their actions will not have negative consequences and can focus on developing products offered to their customers.
