Among the taxes in Spain, value-added tax (VAT) is one of the most significant, applying to most goods and services. VAT is an indirect tax because customers pay it to the business on each sale, and then the business forwards the collected amount to the Agencia Tributaria (AEAT, the Spanish tax agency).
Though it can vary by situation, VAT is typically paid to the state every quarter. Let’s explore how the quarterly VAT declaration works, who has to file it, and the steps for submitting the necessary documentation.
What’s in this article?
- What is the quarterly VAT return?
- Who has to file the quarterly VAT return?
- What happens if the quarterly VAT return is not filed?
- What tax forms affect the quarterly VAT return?
- How is the quarterly VAT return filed?
What is the quarterly VAT return?
The quarterly VAT return involves paying value-added tax every three months by submitting Form 303.
In a transaction, the customer pays the tax percentage, which varies based on the VAT rates in Spain, and the business is the taxable entity, meaning it collects the tax.
The VAT paid on purchases of goods or services required for operating the business (input VAT) needs to be subtracted from the VAT collected on sales (output VAT). The difference is reported by filing Form 303 every quarter.
Though this article focuses on the quarterly VAT return, which is most common for businesses, some pay VAT monthly. To do this, they must meet specific conditions to register in the monthly refund register, or REDEME (in Spanish “registro de devolución mensual”).
Who has to file the quarterly VAT return?
Anyone involved in a professional activity that is subject to value-added tax, such as self-employed individuals, business owners, trading companies, real estate developers, and landlords, must file a quarterly VAT return.
Even if during a quarter you have not carried out any type of professional activity that involves generating invoices, you are still obliged to file a quarterly VAT return. For example, if you have a seasonal business that is only open during the summer months (e.g. May to September), you will have to file your first quarter VAT return for information purposes to let the AEAT know that no invoicing has taken place.
If your activity is exempt from VAT, such as teaching or a medical practice, you don’t need to file a quarterly VAT return.
What tax forms affect the quarterly VAT return?
Form 303 is not the only form that affects quarterly VAT filing. Below is a summary of the key tax forms associated with the quarterly VAT return:
How is the quarterly VAT return filed?
Although there are several tax forms that affect the quarterly VAT return, Form 303 is the main document and the one filled in by the vast majority of companies in Spain. As it is a fairly extensive form, we recommend that you consult our guide to Form 303 to make it easier for you to understand what information you should include in each of its boxes.
We hope you find the information in this article and the specific guide to Form 303 useful for filing your next quarterly VAT return in Spain. Note that Stripe’s revenue and finance automation platform can help you simplify your financial processes, speed up the filing of returns such as the one we’ve just described, and reduce manual errors. Still, if you have any questions about how the nuances of any of the boxes on Form 303 might affect your business, check with your tax advisor.
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.