VAT and Sales Tax in Spain

What rates does Spanish IVA operate at?

Spain's value-added tax is governed by Ley 37/1992 del Impuesto sobre el Valor Annadido (LIVA), transposing EU VAT Directive 2006/112/EC. Three rates apply on mainland Spain and the Balearic Islands. The standard rate of 21% applies to the broad majority of goods and services, including electronics, clothing, professional services, advertising, construction materials, and most digital services [1]. The reduced rate of 10% covers hospitality services (hotels, restaurants, cafes), passenger transport by road, rail, sea and air, drinking water supplied by utilities, residential cleaning services, certain fresh foods not at the 4% level, live cultural events including cinema and theatre admissions, and residential housing construction [2]. The super-reduced rate of 4% applies to first-necessity goods: basic breads, pasteurised milk, eggs, cheese, fruits, vegetables, legumes and cereals listed in Article 91.2 LIVA, plus human medicines, books (including electronic books since 2018), newspapers, and orthopaedic prosthetics [1].

Olive oil, previously subject to the standard or reduced regimes, received a permanent 5% intermediate rate from 1 January 2025 under the post-inflation fiscal package, reflecting an EU flexibility provision for foodstuffs of significant cultural or economic importance [3].

What happened to the temporary 0% and 5% food VAT rates?

Between January 2023 and December 2024 Spain applied emergency inflation-relief measures reducing IVA on essential foods. Under Real Decreto-Ley 20/2022 and successive extensions, basic staples (bread, milk, eggs, cheese, fruit, vegetables, pasta, cereals) were temporarily zero-rated (0%) through 30 September 2024. From 1 October 2024, a transitional rate of 2% applied to those same products. From 1 January 2025 the emergency measures expired and basic foods reverted to the standard super-reduced rate of 4% -- the rate that had applied before the crisis measures [3]. Olive oil, also temporarily zero-rated during the same period, did not revert to a prior rate; instead it was permanently assigned to the new 5% intermediate tier as of 1 January 2025 [3]. Electricity IVA, separately reduced to 5% during the energy crisis, returned to 10% from early 2024. As of mid-2026 no further temporary food-rate relief is in force; the rate structure is 21%/10%/5%/4%.

How does the recargo de equivalencia apply to retailers?

Spain operates a special VAT surcharge regime -- recargo de equivalencia -- for retail traders who sell goods to end consumers without processing or manufacturing them, provided that direct consumer sales in the prior year exceeded 80% of total sales. Under this regime the retailer does not file VAT returns for its retail activity. Instead, the wholesaler or manufacturer supplying the retailer charges both the applicable IVA rate and an additional equivalence surcharge on the same invoice. Current surcharge rates: 5.2% on goods subject to the 21% standard rate; 1.4% on goods subject to the 10% reduced rate; 0.5% on goods subject to the 4% super-reduced rate [2]. The surcharge compensates for the retailer's non-filing status. Businesses operating the recargo de equivalencia regime cannot deduct input IVA on their purchases, making it cost-neutral in aggregate but administratively simpler for small retailers. There is no general small-business turnover exemption from IVA in Spain equivalent to the UK's PS 90,000 threshold -- the recargo regime is the closest functional equivalent and it is sector-specific, not a universal exemption.

How does the Canary Islands IGIC differ from mainland IVA?

The Canary Islands apply the Impuesto General Indirecto Canario (IGIC) under Ley 20/1991, a parallel indirect tax that replaces IVA in the archipelago entirely. The standard IGIC rate is 7%, well below the 21% mainland standard, reflecting the Islands' Special Economic Zone status and their exclusion from the EU VAT area under Article 6 of Directive 2006/112/EC [4]. Reduced IGIC rates include 3% (most services, passenger transport) and 0% (basic foods, water, essential medicines). A higher 15% rate applies to certain luxury goods. Crucially, goods and services moving between mainland Spain and the Canary Islands are treated as imports and exports for tax purposes, not as intra-national transfers -- mainland IVA is zero-rated on departure and IGIC applies on arrival in the Islands. Businesses operating in the Canary Islands register for IGIC with the regional Hacienda Canaria, not with the central AEAT, and file quarterly Modelo 420 returns rather than Modelo 303. Ceuta and Melilla, as non-EU Spanish territories, operate a separate production-and-services tax (IPSI) at rates of 0.5%-10%, further distinct from IVA and IGIC.

What are the SII real-time reporting obligations?

The Suministro Inmediato de Informacion (SII) system, introduced by Real Decreto 596/2016 and mandatory since 1 July 2017, requires qualifying taxpayers to transmit detailed invoice records electronically to AEAT within four calendar days of issuance or accounting registration [5]. SII is mandatory for: large taxpayers with annual turnover exceeding EUR 6 million; businesses in VAT groups (consolidated group regime); and businesses registered under the monthly VAT refund scheme (REDEME). Voluntary opt-in is available. Transmissions use structured XML via AEAT's published Web Services API; major ERP platforms (SAP, Sage, Holded, A3) include native SII connectors. A key compliance benefit: SII-registered businesses are exempt from filing Modelo 347 (annual third-party operations declaration) and Modelo 340 (detailed transaction listing). An exceptional exit window from SII ran 25 December 2025 to 31 January 2026, allowing businesses to de-register from SII effective 1 January 2026 by filing Modelo 036 or 037 -- relevant for businesses that voluntarily opted in and wish to exit ahead of the broader Verifactu e-invoicing rollout. Separately, the mandatory B2B e-invoicing framework under Ley 11/2023 (Verifactu) will apply to large taxpayers from 1 July 2026 and to most other businesses from 1 January 2027.

How do Modelo 303 and Modelo 390 work?

Every IVA-registered business files Modelo 303, the periodic self-assessment return, either quarterly or monthly. Quarterly filers submit within 20 days following the end of each of the first three quarters (deadlines: 20 April, 20 July, 20 October) and by 30 January for the fourth quarter [6]. Monthly returns apply to SII-registered taxpayers, REDEME monthly-refund-regime businesses, and large taxpayers. All returns are filed electronically through the AEAT Sede Electronica portal; individuals may authenticate via Cl@ve while most businesses require an electronic certificate. Modelo 390 is the annual recapitulative VAT summary covering the full tax year, due by 30 January of the following year; it consolidates all quarterly/monthly Modelo 303 data and confirms the cumulative annual position [6]. Spain imposes no registration threshold -- every autónomo or entity conducting taxable activities registers before the first supply via Modelo 036 (general) or Modelo 037 (simplified individual form). EU intra-community supplies trigger an additional Modelo 349 monthly or quarterly intrastat-style declaration. The EU Small Enterprises Scheme transposed by Ley 14/2023 from 1 January 2025 allows small Spanish businesses to elect simplified cross-border EU treatment up to EUR 85,000 in cross-border turnover, but domestic Spanish supplies remain subject to full registration and quarterly Modelo 303 filing from the first euro of activity.

For more on the tax landscape in Spain overall, see the Spain country overview and the self-employed tax guide which covers IRPF withholding obligations that interact with IVA filings for autónomos.

The rules above are a factual summary of the Spanish IVA framework sourced from official AEAT and legislative publications. The specifics of which rate applies to your goods or services, how to handle intra-EU transactions, or whether the recargo de equivalencia regime applies to your business depend on the facts of each situation -- consult a qualified gestor or asesor fiscal registered with the Consejo General de Colegios de Gestores Administrativos or the Consejo General de Economistas for advice on your specific circumstances.