VAT Rates in Spain

Spanish VAT Rates

Spain has opted for the reduced and super-reduced VAT rates on a number of items allowed by the VAT Directive.

‍

Vat Tax Spain

‍

Spanish VAT Deduction limits

The right to deduct input VAT generally follows the rules on deduction of Corporate Tax. Expenses need to be incurred for business purposes. In practice, the below items are generally deducted at the following rates:

• Input VAT on hotel accommodation or restaurant meals is 100% deductible provided the invoice is issued to the company and the expense is incurred for business purposes.
• Input VAT on conferences, fairs and exhibitions is normally 100% deductible.
• Business gifts are 0% deductible unless for promotion samples or low value gifts (less than 200€ per year)
• Car rental, car repair and fuel expenses are 50% deductible where the expenses is connected to both, business and personal purposes. If wholly and entirely for business purposes, then VAT can be deducted at 100%.
• Taxi, train and other transport expenses are 100% deductible provided an invoice or simplified invoice is issued.
• Entertainment expenses are generally 0% deductible.

Deducting VAT before starting your activities is only allowed under certain conditions. The expenses incurred should be connected to the expected business, there should be a short period between the expense and the start of the business and all accounting and tax obligations must be met. Find official information here.

‍

Spanish statute of limitations

Input VAT should be claimed in a VAT return filed no later than the end of the fourth year following the year during which the deductible VAT fell due.

Regarding the obligation to pay VAT, the Spanish authorities have four years and 11 months to claim output VAT from the first quarter VAT return; four years and seven months for the second quarter; four years and four months for the third quarter and four years for the fourth quarter.

‍

Spanish tax point rules

The tax point is the time when VAT becomes due (arts. 75 & 76 Spanish VAT Law). VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to pay the VAT return.

In Spain, the following tax point rules apply:

• General rule: Tax point arises when the goods are placed at the disposal of the customer or when the services are completed. For services connected to a supply of goods, the same tax point rules as for the supply of goods apply. In general, an invoice must be issued when the tax point occurs.
• Prepayments or advanced payments create a tax point. In these cases, VAT is due when the prepayment is made.
• Intra-Community acquisitions: Tax point occurs when the goods are placed at the disposal of the customer. An invoice must be issued by the 16^th day of the following month.  In these cases, a prepayment would not bring the tax point forward. Also, tax point occurs at the issuance of the invoice, when the invoice documenting the supply is issued prior to the commencement of the dispatch/transport.
• Intra-Community supplies: The tax point is the 15^th day of the month following the dispatch of the goods or the date of the issuance of the invoice, whichever happens earlier. For example, if goods are dispatched the 12^nd of February and an invoice was not issued, the tax point is the 15^th of March.
• Import: Tax point occurs when the goods are imported according to the relevant import documents.

Spanish use and enjoyment rules

When it comes to establishing the place of supply of a transaction, Member states may introduce another exception to the B2B rule according to the place where the services have been used and enjoyed. This exception may be introduced to avoid double taxation (positive use and enjoyment rules) or to avoid non-taxation (negative use and enjoyment rules) or both. Spain has introduced the negative use and enjoyment, hence attracting the place of supply to Spain if the customer is established outside the EU but the actual use of the service is connected to Spain. This the scope of the use and enjoyment rule in Spain:

• The following services are in scope for the B2B transactions: the lease of means of transport.
• Also, the negative use and enjoyment rule applies to the B2C supplies of intangible services and lease of means of transport made to customers not established in the EU, when the actual consumption takes place in Spain. The list of intangible services consists of the transfer of copyrights and similar services, supply of staff, financial and banking services, data processing, consultancy services, advertising services, hiring of moveable property, and access to electricity and gas.

Find here the VAT news related to the recent change on the Spanish use and enjoyment rules.

Spain has not introduced the positive use and enjoyment rules which deviate the place of supply to a non-EU country where the services are used and enjoyed in that EU country. In these scenarios, there is indeed a risk of double taxation in Spain.

‍