Taxation in Spain: the VAT

In order to start a business in Spain you have to get a CIF (Código de Identificación Fiscal). This number is the tax identification number of your company; it is the Spanish equivalent of the VAT.

This number enables you to undertake economic and business activities in Spain and throughout Europe.

You are not obliged to include VAT on customer bills for a company which is established in the European Union, and conversely, they will not charge you if you are registered in the VAT register (VIDAS census).

Take care of asking your client to provide a VAT number when ordering. Doing so, your client will not be charged if the VAT. It is also necessary to specify it on the invoice.

In Spain, the standard rate of VAT is 21%. But depending on the company activity, this rate can be reduced down to the reduced rate of  10% or the super-reduced rate of 4%.

The Spanish VAT  reduced rateof 8% concerns the following list of activities:

• Food and health products,
• Animal Health products,
• Ground transportation of passengers and crew to air and sea travel to the Balearics,
• Big majority of hotel and housing services,
• Tickets: cinema, theaters, circuses, concerts, libraries, museums, exhibitions.

Exceptions:

• Alcoholic beverages,
• Soft drinks,
• Tobacco,
• Cosmetics and personal care products.

The 4% rate impactes:

• Basic food products such as bread, cereals, milk, cheese, eggs, fruits, vegetables
• The media: books, newspapers and magazines
• Means of conveyance for disabled persons
• housing official protection of special regime