You are registered as autónomo in Spain and you are about to issue your first invoice to a client outside the European Union. Do you add Spanish VAT? In most cases, no. But the reason matters, and so does what you write on the invoice.
Services to businesses outside the EU are, as a rule, outside the scope of Spanish VAT.
It is not an exemption: the service is taxed where your client is established.
Why is there no Spanish VAT?
Because of the place-of-supply rules. When you provide services to a business, the general rule is that the service is located where the client is established. If your client is a business outside the EU, the service is not located in Spain, so Spanish VAT does not apply. There are exceptions, for example for certain services related to property or events held in Spain, so it is worth checking your activity once.
Is your client a business?
The rule applies when your client acts as a business or professional. This includes non-profit organisations when they contract your services for their own activity. It is worth keeping evidence of it:
- The client’s legal name and tax identification number.
- A contract or order that shows it contracts as an organisation.
- Its address and country of establishment.
With that, the invoice is well supported if anyone asks.
Clients in the EU and in Spain are different
For business clients in another EU country, Spanish VAT is not charged either, but the client accounts for it under the reverse charge, its VAT number must be valid in the EU VIES system and you need to be registered in the Spanish register of intra-community operators. For clients in Spain, you charge Spanish VAT at the standard rate and, where applicable, the client withholds income tax on your invoice. And for private individuals, the rules change.
A freelancer works for an organisation in the United States, an agency in Germany and a company in Madrid. Her three invoices are different: the first without Spanish VAT, stating that the service is not subject to Spanish VAT; the second without VAT, under the reverse charge; and the third with Spanish VAT. Same work, three correct invoices.
Any questions?
Talk to a Cigarrán expert
First consultation, no commitment.
You still file VAT returns
Even if none of your invoices carries Spanish VAT, you remain registered for VAT and file your periodic returns, reporting those operations. Invoicing without VAT is not the same as having nothing to declare.
Where Cigarrán fits in
At Cigarrán we set up your invoices so that each type of client gets the right wording from the first day, and we file your VAT returns. Once it is configured, you no longer have to think about it each time.
The right invoice, every time
Knowing whether to charge VAT is not a detail: it is what makes each invoice correct. Set it up once and it works for every client.
If you invoice clients outside Spain and want to be sure you are doing it right, let’s talk it over.
