Depending on your involvement in the day-to-day business, both business owners and company directors are responsible for ensuring that invoices are issued correctly. Even if your accounting department independently reviews and correctly records incoming invoices, it is always advisable, even if you are not directly involved in invoicing, to review at least the larger invoices once a quarter.
1) Issued Invoices
In addition to the specific rules regarding Value Added Tax (IVA) and withholding tax (retenciones) explained below, it is particularly advisable to carefully check the following basic aspects:
1. Invoices must always have a consecutive invoice number. The numbering sequence should not be interrupted during the tax year and generally starts again at the beginning of each year. A series may be placed before the consecutive number, for example the tax year: 2026-01, 2026-02, etc.
2. The invoice must always state your full name or the company's registered name, your business address and your Spanish tax identification number, NIF (Número de Identificación Fiscal). Depending on the circumstances, the NIF corresponds to your NIE or the company's tax identification number.
3. The invoice must always state the taxable amount (base imponible), Value Added Tax (IVA) and the total invoice amount. If the invoice or the service provided is exempt from VAT, the legal basis for the exemption should be stated (see the following section).
4. If the invoice is issued to a private customer, their name, tax identification number and, where applicable, country should be stated.
5. If the invoice is issued to a company or business customer, the customer's details referred to in point 2 must be included. VAT liability, VAT exemptions, reverse charge and withholding tax must also be taken into account. Goods and services in Spain are generally subject to VAT and, unlike in Germany, there is no general VAT exemption equivalent to the German small-business exemption. Although new tax benefits and reduced Social Security contributions have made self-employment in Spain easier, as a general rule quarterly VAT returns must be filed whether or not turnover has been generated, and 21% VAT must be shown separately on invoices. If your activity is completely exempt from VAT (exento), you may skip this section (medical treatment, certain educational services, etc.).
Whether VAT must be charged generally depends on the location of the customer and the type of transaction or service provided:
A) Customers in Spain
If you issue an invoice to a customer in Spain, you must generally charge 21% VAT on the invoice (special rules apply to the Canary Islands). If you operate as a sole trader or self-employed professional and your customer is a company or an individual carrying out a business or professional activity, you may also be required to apply withholding tax (retención) on account of your personal income tax. In the same way that VAT is added to the taxable amount, the withholding tax is deducted from the invoice total.
Example:
| Taxable amount (Base imponible): | €100 |
| + 21% VAT (IVA) | + €21 |
| -15% Withholding tax (Retención) | - €15 |
| Invoice total (factura) | €106 |
Your customer must then pay the withheld amount to the Spanish Tax Agency on your behalf by filing Modelo 111.
Further information on withholding tax on invoices can be found in our article Withholding Tax (Retenciones) on Invoices in Spain.
B) Customers in the European Union (EU)
If your customers are located within the EU, a distinction must also be made between private and business customers. In these cases, withholding tax generally does not apply, but the distinction affects the VAT treatment. In particular, a distinction must be made between private customers and business customers without a valid EU VAT identification number (NIF-IVA), on the one hand, and business customers with a valid NIF-IVA, on the other.
You can check whether your customer has a valid EU VAT identification number via the European Commission website.
Private customers or business customers without a valid NIF-IVA
As a general rule, Spanish VAT must be charged on your invoices. Important exceptions apply, particularly where digital services are provided or where goods are sold to private customers in other EU Member States and the applicable thresholds or rules requiring VAT to be accounted for in the customer's Member State are met. In both cases, the specific circumstances should be analysed individually.
Business customers in the EU with a valid NIF-IVA
If your business customer has a valid EU VAT identification number (NIF-IVA), the invoice may generally be issued without Spanish VAT by applying the reverse-charge mechanism. This procedure is particularly important because the customer accounts for the VAT in their own country and may, where entitled, deduct the corresponding amount as input VAT, meaning that no effective VAT burden arises. As no Spanish VAT is charged, this must be expressly stated on the invoice: “Reverse charge”.
c) Customers Outside the EU
Exports of goods and certain supplies of services to customers outside the EU may generally be invoiced without Spanish VAT, depending on the applicable place-of-supply rules. In the case of services, it is particularly important to determine where the service is deemed to be supplied. As a general rule, in certain transactions the place of supply may be outside Spain if the customer has their business address abroad and the service is provided electronically or remotely (Internet, telephone, home office, etc.). Typical examples include business consulting, bookkeeping and translation services.
However, if the service is actually supplied in Spain (for example, a guided city tour for a tourist resident in Switzerland) or relates to real estate located in Spain (real estate agents, lawyers, etc.), Spanish VAT may still have to be charged even though the customer is resident outside the EU.
Summary of Invoicing:
Customer in Spain
Private customers = + 21% VAT
Business customers = + 21% VAT – where applicable, 15% withholding tax
Customer in the EU
Private customers = + 21% VAT
Business customers = No Spanish VAT (reverse charge)
Customer Outside the EU
Service supplied in Spain = + 21% VAT
Service supplied abroad = No Spanish VAT (subject to the applicable place-of-supply rules)
Special rules apply to businesses in the Canary Islands. In any event, it is advisable to prepare the different invoice templates together with your accountant and have them reviewed before they are used.
2.) Received Invoices
In order for business expenses to be tax-deductible in Spain, they must generally be attributable to the economic activity, properly recorded in the accounts and supported by the corresponding invoice (factura).
Unlike in other countries, such as Germany or Austria, Spain has very few automatically applicable flat-rate deductions, and the possibility of substantiating expenses with simple receipts (recibos) is very limited. Although certain exceptions may apply depending on the tax concerned (primarily personal income tax and VAT), the following three requirements generally have to be met for an expense to be deductible:
1. The expense must be directly attributable to the economic activity (afecto).
2. The expense must be properly recorded in the accounts.
3. The expense must be supported by an invoice (factura).
This last requirement in particular results in a relatively high administrative burden in practice, as invoices should include at least your name, tax identification number, address and the applicable VAT. If only “tickets” or simplified invoices (facturas simplificadas) are submitted, there is a risk that the Spanish Tax Agency will not accept them as sufficient evidence for certain deductions. As a general rule, business expenses should therefore be supported by a corresponding full invoice. Tickets, payment receipts, bank transactions, etc. may not, on their own, be sufficient evidence for tax purposes and should therefore only be used as supporting documentation where permitted by the applicable rules.
Documents that do not properly identify the issuer, the customer and, where applicable, the VAT may not satisfy the requirements for tax deductibility. If invoices or tickets are issued in a foreign currency, it is advisable to record the equivalent amount in euros and the exchange rate used. To avoid subsequent problems, it is therefore always advisable to request a complete invoice.
Further information on deductible expenses can be found in our article Self-Employment in Spain: Deductible Business Expenses
Your PAE: Law - Spain
As a PAE (Punto de Atención al Emprendedor) authorised by the Spanish Ministry responsible for economic affairs, our firm has direct access to the relevant public authorities, the Spanish Tax Agency and Social Security. This enables us to complete the most important administrative procedures electronically, accelerate the registration process and avoid unnecessary visits to public authorities.
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As lawyers, tax advisors and a registered PAE, our firm will be pleased to assist you in analysing your specific situation, carrying out the necessary administrative procedures and preparing and filing the corresponding tax returns on your behalf. Further information about our services for self-employed professionals and business owners can be found in the section Businesses.
If you are interested in our services or have specific questions regarding this topic, please do not hesitate to contact us by email or telephone.
Author:
Christoph Sander
Lawyer and Tax Advisor
CEO, Partner, Director
info@sspartners.es
Tel: (+34) 951 12 13 06
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