Value Added Tax in Spain is called IVA (Impuesto sobre el Valor Añadido). This guide explains how to charge IVA on your invoices, deduct expenses, and file quarterly declarations.
As an autónomo, you act as a tax collector for the government.
How the IVA system works
The basic principle of the IVA system is simple.
You add IVA to the invoices you send to your clients.
This is called IVA repercutido (charged IVA).
You also pay IVA when you buy goods or services for your business.
This is called IVA soportado (paid IVA).
Every quarter, you calculate the difference between the IVA you collected and the IVA you paid.
If you collected more than you paid, you must pay the difference to the tax office.
If you paid more than you collected, you can offset the difference in the next quarter.
Standard and reduced IVA rates
Spain has three different IVA rates.
The rate you charge depends on the product or service you sell.
Standard rate (21%)
The standard IVA rate in Spain is 21%.
This rate applies to most professional services, including consulting, web development, and marketing.
It also applies to consumer goods, electronics, and clothing.
Reduced rate (10%)
The reduced rate of 10% applies to specific sectors.
These include passenger transport, hotel accommodation, and restaurant services.
It also applies to entry fees for museums and sporting events.
Super-reduced rate (4%)
The super-reduced rate of 4% applies to basic necessities.
These include bread, milk, fresh fruits, and vegetables.
It also applies to books, newspapers, and medical prescriptions.
Exempt activities
Some professions are completely exempt from charging IVA.
This means you do not add IVA to your invoices.
The most common exempt activity is teaching academic subjects.
Medical services and insurance brokerage are also exempt from IVA.
Invoicing rules for IVA
When you issue an invoice, you must show the IVA calculation clearly.
You must state the tax base and the IVA rate applied.
Example: You perform consulting work worth €1,000. You add 21% IVA (€210). The total invoice amount is €1,210. The client pays you €1,210, and you must set aside the €210 for the tax office.
Invoicing EU clients
If you provide services to B2B clients in other EU countries, you do not charge IVA.
This is called the reverse charge mechanism.
You must register for the intra-community VAT register, called the ROI.
Both you and your client must have active VIES numbers for this rule to apply.
Invoicing non-EU clients
If you invoice clients outside the EU, you do not charge IVA.
The invoice is exempt because it is considered an export of services.
You should write a reference on the invoice stating that the service is exempt from Spanish VAT.
Deducting IVA on business expenses
One of the benefits of the IVA system is that you can deduct the tax paid on business expenses.
However, the tax office has strict rules about what qualifies.
Requirements for deductions
To deduct the IVA, the expense must be directly necessary for your freelance activity.
You must have a full invoice containing your name and NIE.
A basic cash register receipt is not sufficient.
This receipt is called a factura simplificada (simplified invoice).
You must ask the vendor for a full invoice, called a factura completa (complete invoice).
Limitations on deductions
Hacienda frequently inspects deductions for items with mixed personal and business use.
For example, you can only deduct 50% of the IVA on passenger vehicles.
For mobile phones and home internet, you can only deduct the percentage used for work.
If you work from home, you can only deduct a small percentage of your utility bills.
Quarterly declarations (Modelo 303)
Every freelancer must submit an IVA declaration every three months.
This declaration is submitted using form Modelo 303.
Quarterly deadlines
You must submit Modelo 303 and pay any tax owed before the following dates:
- First quarter (Q1): April 20
- Second quarter (Q2): July 20
- Third quarter (Q3): October 20
- Fourth quarter (Q4): January 30 of the following year
Annual summary (Modelo 390)
You must also file an annual summary form called Modelo 390.
This form is submitted in January alongside the fourth quarter declaration.
It does not involve any payments, but it summarizes your yearly activity.
Your gestor will typically prepare and submit both Modelo 303 and Modelo 390 for you.
English-speaking tax advisors (gestores) in Madrid
Checklist for managing IVA
Follow this checklist to keep your tax records in order:
- Verify your rate : Confirm if your service is standard, reduced, or exempt.
- Request full invoices : Ask for a factura completa with your NIE for all business purchases.
- Keep a digital archive : Scan and store all invoices for at least four years.
- Register for ROI : Apply for intra-community VAT before invoicing EU clients.
- Save tax money : Set aside the collected IVA in a separate bank account.
IVA rates summary table
This table summarizes the main IVA rates in Spain.
| IVA Rate | Common Applications | Exemptions |
|---|---|---|
| 21% | Consulting, design, goods | None |
| 10% | Restaurants, transport | None |
| 4% | Food, books, medicine | None |
| 0% | Education, medicine | Services to non-EU / B2B EU |
Questions and answers
What happens if I file Modelo 303 late?
You will pay a penalty. Hacienda charges an automatic surcharge starting at 5% if you submit the form late without a demand. The penalty increases to 20% if you delay for several months.
Can I get an IVA refund at the end of the year?
Yes. If your deductible expenses exceed your sales, you can request a refund in January. However, this often triggers a tax audit, so many freelancers prefer to carry the credit forward.
Do I charge IVA to UK or US clients?
No. Services exported outside the EU are not subject to Spanish IVA. You do not need to add the tax to these invoices.
What is the ROI register?
The registry of intra-community operators. You must join this registry to send and receive invoices within the EU without charging VAT. You apply using form 036.
Is language teaching always exempt from IVA?
Yes, if it matches official school curricula. Teaching languages or school subjects is exempt. However, teaching hobbies like yoga or cooking is subject to the standard 21% rate.
Do I need a separate bank account for IVA?
No, but it is helpful. You should keep your collected IVA separate from your daily spending. This ensures you have the funds ready when the quarterly deadline arrives.
What is a factura completa?
A complete invoice. It must include the invoice number, date, issuer details, client details, tax rates, and total amount.
How long must I keep my invoices?
Four years. Spanish tax law requires you to keep all billing records and receipts for four years. The tax office can audit your declarations during this period.
