VAT (IVA) in Spain
IVA, Impuestos sobre el Valor Añadido, is the UK equivalent of VAT (Value Added Tax) and this is applied to most of your purchases in Spain, except for transactions that are exempt and like in other countries, there are various rates. There are three rates in Spain, that amount for:
IVA General 21%
Standard Rate for goods and services.
IVA Reducido 10%
Reduced Rate for passenger transport, toll roads, amateur sporting events, exhibitions, health products, non-basic foods, rubbish collection, pest control and wastewater treatment.
IVA Superreducido 4%
Super Reduced Rate for essential foods, medicine, books and newspapers.
Business owners with self-employed work and some limited companies are required to make quarterly and annual IVA returns. Quarterly returns should be made by the 20th of April, July and October with an annual return on 31st January, that is a summary and pertains to the entire previous year’s IVA
BUSINESS TO BUSINESS
Businesses that provide products or services to another business, who is registered for VAT, located in the European Union state, will not be charged IVA. This is because the EU is considered to be the country in which the clients business is located. If there is a liability to the client business being liable to pay their local VAT, the IVA will be zero-rated and therefore reversed-charged.
BUSINESS TO CUSTOMER
Providing products or services to a customer in a country within the European Union will require you to apply the necessary IVA rate, while your sales amount should not exceed a specific amount. Otherwise, if your sales exceed this specific amount you should register in that country as a distance seller. There is a liability to you as a business owner, to account for the IVA charge in your IVA returns in each quarterly return.
FINES & SURCHARGES
If there are incorrect or late IVA returns, then surcharges will be levied and therefore it is a requirement to provide your invoices and receipts to an accountant before the final date. Depending on the amount of money owed for the IVA charge and the time frame that has passed since the tax payment fell due, you will need to pay:
5% - three months behind paying the latest IVA.
10% - six months behind paying the latest IVA.
15% - twelve months behind paying the latest IVA.
20% - over twelve months behind paying the latest IVA.
If the outstanding IVA has not been paid after this time frame, then sanctions of up to:
50% may be charged to any outstanding amount that is below €3,000.
100% may be charged for amounts higher than €3,000.
At PSI Consultants, our experienced legal, fiscal & visa experts can help you acquire residency & nationality in Spain through property investment in Spain. We will guide you through the whole process of gaining Golden Visa residency in Spain and we offer a wide range of services related to the management and transmission of property ownership in our department dedicated to conveyancing, donations & inheritances. Also in our legal department we manage the obtaining of NIEs, Residences, Wills, private contracts, representation and personalized legal consultation on all related matters.
If you would like to learn more about our Spanish services in the Costa Blanca area, please feel free to contact us at any time when our office is open between 9am - 2:30-pm, Mondays to Fridays.
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