VAT Guide for Freelancers in Spain

Regardless of where you're based, you have to deal with Spanish VAT regulations if you have clients in Spain. VAT, or Value Added Tax, is a consumption tax levied on the purchase of almost all goods and services in the EU. While you might already know that, you might be unaware of the specific rules surrounding your product, which you should follow if you want to stay tax compliant. 

Check this guide to going freelance first if you haven't registered to be an Autónomo. For registered freelancers, the standard VAT rate in Spain is 21%, with reduced rates of 9%, 6%, and 0% applied based on the products you sell. The Spanish VAT law is dictated within the General Tax Code and is administered by the Agencia de Administración Tributaria. If you're a freelancer looking to learn more about how VAT works in Spain, keep scrolling! 

VAT Rates in Spain

What are the different VAT rates in Spain? The Spanish government levies four different VAT rates, and freelancers must charge the amount that applies to their products and services.

  • The Standard Rate - Unless the items or services you offer are in the reduced rate or zero-rated category, you should charge the standard VAT rate of 21%.
  • The Reduced Rate of 10% - Applies to items such as air and road passenger transport, hotel accommodations and restaurant services, etc.
  • The Reduced Rate of 4% - Applies to items like non-alcoholic drinks, foods, goods from chemists, construction work, and some newspapers.
  • The Zero Rate - When items are zero-rated, they are still VAT-taxable, but the rate of VAT you must charge your consumers is 0%. This rate applies to some gold coins, international transport, goods purchased on international flights, etc. 

Although there is no applicable VAT on zero rated products, you should record sales of goods and services and create a report based on your returns.

Who is required to account for VAT in Spain?

Like other businesses, all freelancers in Spain must pay VAT, irrespective of annual turnover. Although, some goods and services such as educational services, assistance to individuals by medical and health professionals, artistic endeavors, and some forms of independent writing are exempt.

When to register for VAT

You have to pay VAT every January. Additionally, you need to report your VAT every quarter (January, April, July, and October) using the Modelo 303 form. In January, you must summarize your VAT declarations for the whole year in the Modelo 390 form. All of this can be done online through the Agencia de Administración Tributaria

If you provide exempt services, you don't have to file for VAT returns, and you cannot reclaim VAT on your costs.

How to Register for VAT in Spain

First you have to register as a freelancer, or aútonomo, with the tax authorities. If you're an expat or resident, you must also apply for the Número de Identificación de Extranjero (NIE), or Foreigner's Identification number. Then, to pay your freelance taxes, including VAT, you'll need to submit the registration tax form Modelo 037.

Like a formal business, freelancers, too, must pay 21% VAT, regardless of their annual net income. You must use Modelo 303 to submit your quarterly VAT reports and Modelo 390 to submit your yearly VAT declarations. 

All of this can be completed online through the Agencia de Administración Tributaria webpage.

Another option is to use the Mini One-Stop Shop (MOSS) system, which allows you to consolidate all of your EU VAT in one single tax return. This system is optional but beneficial if you have customers in multiple countries, including Spain, within the EU. MOSS allows you to avoid registering in each Member State of consumption. Even if you're outside the EU, you can register with MOSS in Spain or any other EU country. To learn more, click here.

Alternatively, you can hire an accountant (or agency) to handle your VAT returns and dealings with the tax office. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

Financial Obligations of VAT Registered Freelancers In Spain

Registering for VAT is only the first step. From the day of your registration's effective date, you must:

  • Charge the correct VAT rate
  • Pay any VAT owed to the Spanish government every quarter
  • File VAT returns
  • Maintain VAT records and a VAT account

Furthermore, every VAT-registered individual is required to:

  • Keep track of all purchases and transactions,
  • Keep a running total of their VAT account, and
  • Make sure their VAT invoices are accurate.

If you opt to use the Mini One-Stop Shop (MOSS) services, you must maintain your VAT records for at least six to ten years. These records can be stored electronically, on paper, or in a software application. Your records should be precise, readable, complete, and simple to comprehend. As a freelancer, you must maintain a record of the following things:

  • Printed copies of the invoices you send out,
  • Received invoices
  • Agreements on sell-billing.
  • The self-billing vendors' names, addresses, and VAT numbers.
  • Notes (debit/credit)
  • Records of imports and exports.
  • You cannot claim VAT on records of items that have been received and sent.
  • You must also preserve records of bank statements, check stubs, cash books, till rolls, and paying-in slips in addition to your VAT account.

Getting overwhelmed? At Xolo, we can help you to future-proof these vital documents by automatically generating, storing, and maintaining them electronically in our servers for as long as you need them.

How Xolo Can Help?

Why submit your tax reports with help from certified tax consultants? Learning all the Spanish tax guidelines can be challenging, especially if you're a sole proprietor and in charge of several aspects of your business. Luckily, at Xolo, we offer a range of solutions that can handle all the paperwork and legal jargon, allowing you to focus on your core competencies.

With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC. 

  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.

Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!

  • We offer different tiers of service depending on the solopreneur's, or as we call them, Xolopreneur's, individual needs.
  • Once you get your business set up, you can run it from anywhere in the world! So whether you're looking to gain access to the EU market or a digital nomad - this is the place for you! 

With Xolo Spain, you can easily work as an autónomo in Spain and have all business administration handled by Xolo

Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we'll help you get your one-person business up and running in Spain in no time!