There are three types of VAT in Spain : standard, reduced and super-reduced. This partly depends on the European VAT directive, but also on national decisions.
In an environment marked by internationalisation and international competition, it is important to know how VAT rates work . You should consider that there are differences between countries and that these are part of the context in which you make your decisions.
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1) What is VAT?
Although there are others, VAT is the indirect tax par excellence in Spain . It taxes many goods and services that you regularly consume and some international trade transactions. Specifically, the following are subject to VAT:
1. The delivery of goods and provision of services made by businesspeople or professionals in the course of their work.
2. Imports of goods , both by businessmen or professionals and by individuals.
3. Intra-Community acquisitions of goods , carried out mostly by professionals or businessmen.
With Sage 50 , you will more easily meet your accounting, tax and billing obligations while improving your business decisions.
2) How does VAT affect companies and self-employed workers?
One of the characteristics of this tax is that it affects almost all activities , except for some that are exempt or not subject to it. This means that, although it is intended to tax the final consumption of goods and services, it affects companies in all sectors, including the industrial sector.
Whether you are a company or a self-employed person , you act as a kind of tax collector who has to settle accounts with the Treasury. To do so, you are obliged to declare this tax on a quarterly or monthly basis . And, in both cases, you must use form 303 , which must include, among other things:
The deductible portion of the VAT that you have borne on purchases and on the provision of services received. If you only carry out taxable and non-exempt activities, you will be able to deduct all of that VAT. Otherwise, you will only be able to deduct in proportion to your apportionment.
The VAT that you have passed on to customers .
All of these obligations will be easier for you if you have a solution like Sage 50. Keeping your accounting records well and maintaining a fluid relationship with your clients are necessary points to ensure that the information you are going to present is in order.
3) How to calculate VAT?
As for the amount of VAT, it will vary depending on the good or service purchased by customers. They will not pay the same amount for a ticket to go to the cinema as for buying a bag of fruit at the supermarket. Products considered basic have a lower tax .
The most common question is how to calculate the VAT of an exact amount. To solve this, let's look at a simple example with the general VAT of 21% :
Calculating VAT by adding. You must multiply the price without VAT by 0.21. For example, if the amount without VAT is 18, you will do the following calculation: 18*0.21 = 3.78. Note that if you add this VAT to the price without VAT, the result is 21.78.
Calculate the price with VAT from the price without VAT . You will have to multiply the price without VAT by 1.21. In the example above, you get a result of 21.78 if you multiply 18 by 1.21. Therefore, it is the same as if you had added the VAT to the price without VAT.
Calculating the initial price without VAT . You will need to divide the price with VAT by 1.21. For example, let's say the price with VAT is 21.78. Then, you divide 21.78 by 1.21. The result is 18.
4) VAT rates for self-employed workers in Spain
There are currently three types of VAT in Spain , which are not applied in the Canary Islands, Ceuta or Melilla. However, other taxes apply in these territories. In addition, there are special situations (such as the transitional rates of recent times) and an international panorama that you should not lose sight of.
1. General VAT (21%)
It applies to most goods and services . In mainland Spain and the Balearic Islands, this tax rate is applied unless an exemption, a non-taxable situation or the reduced or super-reduced rates apply.
