What is IVA in spain? VAT rates explained for expats
IVA (Impuesto sobre el Valor Añadido) is Spain's value-added tax. It's a consumption tax added to almost every good and service sold in the country, charged at one of three rates: 21%, 10% or 4%. The amount is already included in the price you see on the shelf or the bill. If you live, work or run a business here, IVA touches your daily life and, often, your tax filings.
TL;DR: IVA in Spain in 60 seconds
Three rates: 21% (standard), 10% (reduced) and 4% (super-reduced)
All retail prices in Spain already include IVA by law
If you're an autónomo, you charge IVA on invoices and file the difference quarterly using Modelo 303
No minimum turnover threshold: IVA applies from your first euro of activity
Non-EU tourists can reclaim IVA on goods they take home through the DIVA system
01. What IVA means
IVA stands for Impuesto sobre el Valor Añadido, Spanish for value-added tax. It's the same family of tax as VAT in the UK or TVA in France. It's an indirect tax: the consumer pays it, but businesses collect it and hand it over to Hacienda, the Spanish tax authority.
Two things make IVA different from a US-style sales tax:
It's collected at every stage. A wholesaler charges IVA to a retailer, the retailer charges IVA to you. Each business deducts what they paid from what they collected before remitting the difference to Hacienda.
It's already in the price. Spanish retailers must show prices with IVA included. The receipt usually breaks out the amount, but you don't add anything at the till.
02. Why IVA matters for you
Your situation determines what IVA actually means in practice:
You're a resident consumer. You pay IVA on almost everything you buy. There's nothing to file. The price you see is the price you pay.
You're a tourist or non-EU visitor. You can reclaim IVA on goods you take home through the DIVA refund system at the airport.
You're an autónomo or run an SL. You charge IVA on your invoices, deduct it on your business expenses, and file the difference quarterly. There's no minimum turnover threshold: from your first euro of activity, IVA applies.
You provide services from outside Spain. Depending on the client and the service, you may need a Spanish VAT number and have to charge Spanish IVA on your invoices.
IVA isn't one rule. It's four very different situations, and the action you need to take is completely different in each.
03. The three IVA rates in 2026
Spain has three active IVA rates, plus a category of exempt and zero-rated services. Knowing which applies matters most when you're issuing invoices or calculating what you owe Hacienda.
Standard, 21%. The default rate. Electronics, clothing, alcohol, tobacco, fuel, professional services, restaurants, gyms, most online subscriptions.
Reduced, 10%. Most food, hospitality (hotel rooms, restaurant meals), public transport, cultural activities like cinema and concerts, and the construction of new homes.
Super-reduced, 4%. Basic foodstuffs (bread, milk, cheese, eggs, fruit, vegetables, cereals), olive oil (permanently from January 2025), books, newspapers, magazines, medicines for human use, and vehicles for people with disabilities.
Exempt or 0%. Education, medical and dental services, financial services, insurance, postal services, and certain artistic or scientific work. No IVA is charged, and the provider can't reclaim IVA on related expenses.
The categorisation is set by law, not by the seller. If you're invoicing a mix of services, each line might fall under a different rate.
04. How IVA works in practice
For a consumer, the mechanics are invisible. You pay €100 for a pair of shoes: €82.64 is the price and €17.36 is the 21% IVA, which the retailer sends to Hacienda.
For a business, there are four things to manage:
You charge IVA on every invoice. Typically 21%, sometimes 10% or 4%, depending on what you sell.
You pay IVA on business expenses. Your laptop, office rent and software subscriptions all include IVA.
You file Modelo 303 quarterly. By the 20th of April, July and October, and the 30th of January. You report what you collected, subtract what you paid, and remit the difference. If you paid more than you collected, you can carry the credit forward.
You file Modelo 390 once a year. By 30 January, as an annual summary of all four quarters.
Keep records for ten years: invoices issued and received, in chronological order, ready for an AEAT inspection. Missing a quarterly deadline costs a minimum of €400, and applying the wrong rate on an invoice is a separate fine. For a full picture of how IVA fits with your other tax obligations as an autónomo: Autonomo taxes: everything you need to know.
05. IVA for expats and freelancers
If you're an expat freelancing or running a business in Spain, there are a few extra things to know.
You need a Spanish VAT number first. Before you can charge IVA, you need a NIF (or CIF for a company), assigned when you register with Hacienda. Full process here: What is a Spanish VAT number (NIF/CIF)?
There is no turnover threshold. Unlike the UK's £90,000 VAT threshold, every autónomo and SL has to charge IVA from the first euro of taxable activity.
Intra-EU B2B sales use reverse charge. If your client is a VAT-registered business in another EU country and you're listed in VIES, you don't charge Spanish IVA. The client accounts for it at their end.
Sales to non-EU clients are usually outside the scope of IVA. A US client paying for your service generally isn't charged IVA, but you still report the invoice on Modelo 303.
Verifactu changes how you issue IVA invoices. From January 2027 for SLs and July 2027 for autónomos, every invoice must be issued through certified software with a QR code and reported to AEAT. More details: Verifactu Spain: dates, QR code and penalties.
For most expats setting up as self-employed, IVA registration isn't optional and isn't separable from registering as autónomo. It happens at the same time, on the same form (Modelo 036 or 037). Full guide: How to register as a freelancer in Spain.
06. IVA vs sales tax and other VATs
If you've moved from somewhere else, the comparison helps:
UK VAT. Same model as IVA, with a 20% standard rate and a £90,000 turnover threshold. Spain has no threshold, so smaller earners can't opt out the way UK micro-businesses can.
US sales tax. Collected only at the final sale to the consumer, and varies state by state. IVA is collected at every transaction in the chain, and the rate is national.
French TVA, German MwSt., Italian IVA. All the same EU model. Cross-border B2B sales between EU member states use reverse charge.
07. Real example: how IVA flows on a single invoice
Say you're an autónoma graphic designer based in Madrid. You bill a Spanish client €1,000 for a project. Here's what happens:
You add 21% IVA on the invoice. Total: €1,210
You also withhold 15% IRPF (income tax retention) on the €1,000 base, which is €150. The client sends that to Hacienda on your behalf
The client transfers you €1,060 (€1,210 minus €150 IRPF)
That month you bought a laptop for €1,210, of which €210 was IVA
On Modelo 303 next quarter: €210 IVA collected minus €210 IVA paid. You owe Hacienda €0 of IVA this quarter
The IVA you paid on business expenses isn't lost. It offsets what you owe. To understand how to maximise the expenses you can deduct before filing: Deductible expenses for autónomos in Spain.
08. When you'll come across IVA in daily life
On any receipt. Spanish receipts itemise IVA at the bottom. Look for "IVA incluido" or a line showing the percentage and amount.
When you ask for an invoice. Saying "factura, por favor" instead of taking the simple receipt means you can claim the IVA back if it's a business expense. Worth asking at restaurants, hotels and stationery shops.
When you import goods. IVA applies on imports from outside the EU, collected at customs along with any duty.
At the airport leaving Spain. Non-EU residents can refund IVA on goods they're taking home through the DIVA self-service kiosks. Bring receipts and the goods unused.
When buying property. IVA applies on new-build homes (10%), while resale homes are subject to ITP (transfer tax), not IVA.
IVA in Spain: frequently asked questions
What does IVA stand for?
Impuesto sobre el Valor Añadido, Spanish for value-added tax. It's pronounced "ee-bah."
How much is IVA in Spain?
21% on most goods and services, 10% on food and hospitality, 4% on basic essentials like bread, milk, books and medicines.
Is IVA included in the price?
Yes, by law. Every retail price in Spain must already include IVA. Receipts break out the amount but the headline price is what you pay.
Can I get IVA back as a tourist?
If you live outside the EU and are visiting, yes, through the DIVA system. Get the receipts stamped at the airport, export the goods within three months, and the refund is processed back to your card or in cash.
Do freelancers pay IVA?
Freelancers (autónomos) charge IVA on most invoices and remit the difference between collected and paid IVA quarterly using Modelo 303. There's no minimum turnover: everyone files from day one.
What's exempt from IVA?
Education, medical and dental services, financial services, insurance, postal services, and certain artistic and scientific activities. Exempt providers don't charge IVA but also can't reclaim it on their own expenses.
Is IVA the same as sales tax?
No. Sales tax (US-style) is charged once, at the final sale to the consumer. IVA is charged at every stage of production and distribution, with each business deducting what they paid before remitting what they collected.
