Selling products or providing services online has many benefits compared to only selling from a physical store, so it’s not surprising that more and more businesses are moving toward e-commerce platforms.

According to data from INE, over 31% of businesses with 10 or more employees sold goods online in 2022. These numbers are expected to be even higher in the next report.

Data from the EU statistical office also confirms this trend: in 2023, 75% of the EU population using the internet made an online purchase. Among the 16–44 age group, more than 80% bought something online during the year.

If you want to start an e-commerce business, you’ll need to understand the specifics of value-added tax (VAT) for e-commerce. As with any business operating in Spain, you will be required to collect and remit VAT to the tax authorities. Below, we will discuss the key points to help you comply with tax regulations for your online business.

What’s in this article?

• What is VAT in e-commerce?
  
• VAT changes for e-commerce businesses
  
• VAT rules for e-commerce businesses
  
• Step by step: How to manage VAT for e-commerce businesses
  

What is VAT in e-commerce?

VAT is an indirect tax that applies both in Spain and throughout the European Union. For e-commerce, all Spanish online companies and foreign companies selling products in Spain must be aware of the specific VAT regulations for e-commerce. In general, you need to know that once you have collected VAT, you must declare and remit it to the Agencia Tributaria. To do this, each product you sell or service you provide must include the tax, unless it qualifies as a transaction not subject to VAT.

The VAT rate on e-commerce varies depending on the category of the taxed consumer goods. The general VAT rate is 21%, but there are different VAT rates in Spain for 2024. The products and services covered under each tax rate changed slightly after the most recent update of the VAT Law, so we recommend consulting the full list.

To ensure you always apply the correct amount of VAT, Stripe Tax enables you to automate the calculation and collection of tax on your sales in more than 50 countries (with an updated list of exclusions). You can activate it with a single click from your Dashboard, and Stripe will handle adding the necessary percentage, collecting the amount, and preparing reports to make your next declarations much easier.

VAT changes for e-commerce businesses

On 1 July 2021, new VAT rules on e-commerce were introduced to reduce fraud, a common tax problem in online transactions, especially cross-border sales. Another important goal of the EU was to simplify the taxation process for intra-community transactions (i.e. transactions between different EU countries). Here is a brief summary of the three main changes that were introduced:

• Introduction of the VAT One Stop Shop: Referred to as VAT One Stop Shop (OSS), this electronic system simplifies and streamlines many tax obligations for online businesses. Previously, it was used only for broadcasting and telecommunications services. However, recent legislative changes have extended the OSS to all types of services. For cross-border transactions, you can declare VAT through this online portal.
  
• Changes to VAT exemption: Previously, imports of products valued at less than €22 were exempt from VAT. However, as of the July 2021 update, VAT must be applied regardless of the value of the product. Although this change will affect all e-commerce businesses, it will particularly affect drop-shipping businesses. These businesses, which do not hold inventory but pass orders from customers to suppliers for direct shipment, often sell products valued at less than €22.
  
• EU-wide threshold: Any e-commerce business that sells more than €10,000 to customers in another EU country must apply the destination country’s VAT rate on its invoices. Previously, each country had its own threshold, but the new law has simplified the process by introducing a single threshold for all EU countries. If the €10,000 threshold is not exceeded, the e-commerce business can apply the VAT rate of its own country.
  

While other changes have been introduced, such as a new method for defining distance selling that affects both intra-community and external transactions, this list highlights the changes that will most directly affect many e-commerce businesses in Spain. For more information on these regulations, we recommend that you read the full article from the Agencia Tributaria (the Spanish Tax Agency), or the latest updates to VAT for e-commerce from the European Commission.

VAT rules for e-commerce businesses

VAT localisation rules determine whether e-commerce businesses must invoice with or without this indirect tax, depending on the customer’s country of residence, as defined in Law 37/1992.

If you sell products or offer services from Spain, you should determine which of the following scenarios applies to your situation:

• You sell consumer goods through an e-commerce business based in Spain for tax purposes, where the products or services are paid for by customers resident in mainland Spain or the Balearic Islands. If both conditions are met, each invoice must include the applicable VAT.
  

• You sell consumer goods that are exported from Spain to another country or to Spanish territories not included in the previous section. There are a few different variations of this scenario:

  • A private customer living in the European Union: The VAT associated with the consumer goods in question must be included in the invoice.
    
  • A business customer (self-employed or company) living in the European Union: VAT does not need to be charged as this is an intra-community transaction. The business customer is responsible for paying the tax in their country of residence, and they must provide their European VAT identification number (also known as a “VAT ID”) on the invoice. If the customer does not provide a valid European VAT number, you must issue an invoice with the VAT applicable in your country, just as you would for a private customer.
    
  • A private or business customer living in Ceuta, Melilla, or the Canary Islands: Although the taxable goods are purchased in Spain, these transactions are considered exports. Therefore, the invoices will not include the VAT, but the corresponding tax for these territories will be applied – IGIC in the Canary Islands or IPSI in Ceuta and Melilla.
    
  • Customers living outside the European Union: These sales of consumer goods are exempt from VAT. Although no VAT is payable on exports, this doesn’t mean that the person who purchases the product or service is exempt from paying taxes. In particular, they must pay the tax specified by the country from which they process the payment.
    

In addition, for the first of these cases (private customers in another EU country), you should be aware of some exceptions:

• If your e-commerce business sells to an EU country for more than €10,000, you must charge VAT at the destination country’s rate. To do this, you must register your e-commerce business in that country.
  
• If your e-commerce business sells to another EU country for a total value below the €10,000 threshold, but you want to take advantage of a lower VAT rate in the destination country, you can invoice using that country’s VAT as long as you register your e-commerce business there.
  

Step by step: How to manage VAT for e-commerce businesses

• Calculate the VAT: Calculating VAT is a somewhat straightforward process:

  • Determine the taxable amount of the sale, which is the amount without VAT applied. The Agencia Tributaria explains on its website how it is calculated, but it’s straightforward: For example, if your e-commerce business sells an item for €50 excluding taxes, that is its taxable base.
    
  • Make the VAT calculation. The formula is as follows:
    
    • Taxable Base x (VAT Percentage ÷ 100)
      
  • Using the previous example and assuming that the general VAT rate of 21% applies to this product, the calculation would be:
    
    • 50 × (21 ÷ 100)
      
    • So, 50 × 0.21 = €10.50
      
  • Calculate the total amount. Add the result from the previous step to the taxable amount. For this example, the calculation would be as follows:
    
    • 50 + 10.50 = €60.50
      

• Settle the VAT: As we have seen when discussing the VAT rules for e-commerce businesses, you may need to apply VAT to consumer goods, whether the sale is made in Spain or as an export. In both cases, the VAT must be settled (i.e. the amount collected must be paid to the State). If these products or services were purchased by Spanish customers (except those in Ceuta, Melilla, and the Canary Islands), you only need to submit Form 303. If your e-commerce business has sold consumer goods outside Spanish territory for a value of more than €10,000, you need to submit another form every quarter—Form 369.

Regardless of whether you use these tools, it’s important to understand the steps to follow if your company has exported goods from Spain. To make this process a little easier for you, we have prepared a brief guide on how to fill out Form 369:

• Step 1: Visit the personal area of the Agencia Tributaria website, and use your Cl@ve PIN or digital certificate to identify yourself.
  
• Step 2: Fill in the form with your identifying information. In the “Ejercicio” (Fiscal year) field, enter the year. In the “Período” (Period) section, enter the quarter corresponding to the transactions. If your e-commerce business didn’t sell any consumer goods during that quarter, check the box “Declaración sin actividad” (Declaration without activity).
  
• Step 3: Provide the total revenue received from e-commerce sales. Regardless of whether these are products or services, choose the correct option and then click on “Nuevo registro” (New registration) to manually input each transaction. To do this, you’ll need to include the country code (refer to the complete list in the country code sheet), the VAT rate, the taxable amount, and the total VAT amount.
  

It’s important to remember that VAT regulations are updated regularly, and the specifics affecting e-commerce have changed in recent years (and are likely to continue changing). If you are in any doubt about how these rules might affect your business, we recommend that you consult with your tax advisor.