VAT Rates on the Invoice: Which One to Apply in Each Case
VAT rates in Spain
In Spain several VAT rates coexist. Applying the correct one on each invoice is essential to avoid problems with the Tax Agency and with your clients:
- General rate (21%): most goods and services.
- Reduced rate (10%): hospitality, passenger transport, certain foods, housing, among others.
- Super-reduced rate (4%): bread, milk, fruit, vegetables, books, medicines and basic necessities.
Exempt and non-subject transactions
Some transactions are exempt from VAT (healthcare, education, insurance, certain financial operations) and others are not subject. In those cases, the invoice must state the corresponding mention.
Applying the wrong VAT rate can mean adjustments and penalties, plus problems with the client.
How to know which rate to apply
- Identify the nature of the good or service.
- Check whether a specific reduced rate exists for your activity.
- Check whether the transaction is exempt and, if so, state the reason.
With RegulaKit you configure VAT rates per product or service and they are applied automatically on each invoice. Discover it on our platform.
Conclusion
Knowing the VAT rates and applying them correctly avoids errors and penalties. Configuring the default rate of each product or service saves time and reduces risk.
Frequently Asked Questions
What are the VAT rates in Spain?
General (21%), reduced (10%) and super-reduced (4%), plus exempt and non-subject transactions.
What does the super-reduced 4% rate cover?
Basic necessities such as bread, milk, fruit, vegetables, books and medicines.
What VAT does hospitality apply?
Generally the reduced rate of 10%.
What happens if I apply the wrong VAT rate?
It can mean adjustments and penalties, plus problems with the client.
How do I state an exempt transaction on the invoice?
You must reflect the mention corresponding to the exemption and its reason.