How vat / sales tax works in Spain
Spanish VAT (IVA) defaults to 21% on goods and services, with traders charging output VAT, deducting input VAT, and settling through Modelo 303 and the annual Modelo 390 summary.
A 10% reduced rate covers hospitality, passenger transport, processed food, culture, and new residential housing, while 4% applies to bread, milk, eggs, fruit, vegetables, books, and human medicines.
There is no general registration threshold: economic activity starts the VAT duty from the first euro, and the Canary Islands apply the separate IGIC system with a 7% general rate instead.
Tax rates at a glance
- Standard VAT
- 21%
- Reduced VAT
- 10%
- Super-reduced VAT
- 4%
- Zero-rated operations
- 0%
- Equivalence surcharge
- 5.2% / 1.4% / 0.5%
- Canary IGIC general
- 7%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersFreelancersExpatsFoundersHospitality operators
Watch out for
- Retailers under the equivalence surcharge pay extra VAT to suppliers and skip VAT on their own sales, which simplifies filing but permanently embeds input VAT in margins.
- New housing at 10% versus commercial premises at 21% makes property classification a high-stakes call, with regularisation risk when the declared use changes.
- Digital invoicing duties are tightening through VeriFactu and SII-style reporting, so 2026 starters should configure compliant billing software from day one.
- Exempt health, education, finance, and insurance supplies block input VAT recovery, while zero-rated exports and intra-EU supplies preserve it.
Frequently asked questions
What is the standard VAT rate in Spain?
The standard Spanish VAT rate is 21% in 2026. Reduced rates of 10% and 4% apply to defined food, hospitality, transport, housing, book, and medicine categories.
Is there a VAT registration threshold in Spain?
No general one. VAT duties start with economic activity from the first euro through Modelo 036 or 037 registration, unlike countries with a turnover shelter.
What tax applies in the Canary Islands?
The Canary Islands use IGIC instead of mainland VAT, with a 7% general rate. Ceuta and Melilla have their own IPSI system as well.