Glossary

IVA explained in English

IVA is Spain's VAT — a sales tax added to most goods and services. Here's everything you need to know as a foreign business owner.

What is IVA?

IVA stands for Impuesto sobre el Valor Añadido — Spain's equivalent of VAT (Value Added Tax). It's a tax added to the price of most goods and services sold in Spain.

As a business, you collect IVA from your clients on behalf of the Spanish tax office (AEAT). You then pay the collected IVA to AEAT quarterly, minus any IVA you've paid on your own purchases.

IVA rates in Spain

There are three main IVA rates in Spain:

21% — Standard rate. Applies to most products and services. If you're unsure which rate applies, use 21%.
10% — Reduced rate. Applies to food, hospitality, transport, construction works, and some cultural services.
4% — Super-reduced rate. Applies to basic food items, books, newspapers, medicines, and certain disability aids.

Some services are IVA-exempt (0%) — including certain educational, medical, and financial services. Confirm with your gestor if you think this applies to you.

Do I need to charge IVA?

Most businesses in Spain need to charge IVA on their invoices. However, there are exceptions:

Some professional services are exempt (check with your gestor)
Services invoiced to businesses in other EU countries may use the reverse charge mechanism
Exports outside the EU are generally zero-rated

How does IVA work in practice?

Here's a simple example. You provide a consulting service for €1,000:

You add 21% IVA: €210
Your client pays you: €1,210
You keep your €1,000 service fee
You pay the €210 IVA to AEAT each quarter (minus IVA you've paid on your own purchases)

What is the IVA quarterly return?

Every quarter, you (or your gestor) file a Modelo 303 — a quarterly IVA return. This shows the IVA you've collected minus the IVA you've paid on expenses. If you've collected more than you've paid, you pay the difference to AEAT. If you've paid more than you've collected, you can carry the credit forward or request a refund at year end.

Common questions

What if I don't know which IVA rate to use?

Use 21% as the default for most services. If you think a reduced rate might apply, confirm with your gestor before invoicing at a lower rate.

Do I charge IVA to foreign clients?

It depends. For B2B services to EU businesses, the reverse charge usually applies and you don't charge IVA. For non-EU clients, different rules apply. Ask your gestor to confirm for your specific situation.

What happens if I charge the wrong IVA rate?

You may need to issue a correction invoice. In BillBee, this is handled through the correction invoice flow which keeps your records legally correct.

BillBee calculates IVA automatically

Select your IVA rate once and BillBee handles the maths on every invoice.

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