This guide is an overview of Spanish Value Added Tax (“IVA”) system, focused on how it affects foreign businesses trading with Spain. It is general in nature and unlikely to cover the specifics of your scenario. It should be read as such and not be construed as advice. For advice as to how your business is affected by Spanish VAT please contact a Kreston Global Spain VAT specialist.
January 17, 2025
April 11, 2024
Elena Ramírez Marín currently oversees the Tax and Outsourcing areas at Kreston’s office in Catalonia, representing Kreston International in Spain, Andorra, and Portugal. With a 30-year background in the tax and auditing sector, her career has been particularly focused on outsourcing and tax services. She holds the position of Manager at the Kreston Iberaudit International Office and is a member of the Kreston Board.
January 11, 2024
We recently spoke to Elena Ramírez Marín, partner at Kreston Iberaudit about the surging interest in investing in Spain during 2023 and the outlook for 2024. Spain attracts international businesses from the USA, UK and Germany, a trend underscored by striking figures: a gross foreign investment exceeding €34,178 million in 2022, marking the second highest since records began in 1993. With record FDI coming in, exports going out also hit a record €319.86 billion. This good news is underlined by the European Commission’s prediction that Spain will continue to outperform the German economy almost 2:1 for the next 2 years.
“In the first three months of 2023, Spain saw an 8.1% increase in gross foreign investment compared to the same period in 2022, with non-ETVE (holding) investment growing by 20.3% to reach 9,912 million euros. This marks a 50.8% rise from the five-year average. Industry emerged as a key sector, attracting 48.8% of total foreign investment, almost equal to the 48.5% garnered by the services sector, while construction received 2.6%.”
Marín highlights Spain’s unique geographical position: “at the crossroads of Europe, Africa, and Latin America.” This strategic placement not only facilitates entry into diverse markets but also enables companies to establish robust international business connections. The time zone advantage is a cherry on top, allowing for efficient global coordination, which is vital in today’s interconnected business world.
The availability of a skilled workforce is a crucial asset for any country aiming to attract business. Marín emphasises Spain’s strength in this regard, citing its “internationally renowned universities and specialised training centres.” This, coupled with Spain’s high quality of life, positions it as an attractive destination for both businesses and talented professionals from around the globe.
Spain’s economic resilience, particularly in overcoming recent challenges, cannot be overstated. Marín points out that this stability creates “an enabling environment for companies seeking to grow and expand in a climate of certainty.” In an era marked by global economic volatility, this stability is a beacon for companies seeking a secure environment for their investments.
“Despite a challenging international environment, Spain’s foreign trade remains robust, particularly in exports, which have grown faster than those in neighbouring countries. In 2022, Spain ranked as the fourth largest exporter of agri-food and fisheries products in the European Union, trailing only the Netherlands, Germany, and France. Globally, it stood as the eighth largest exporter in this sector, with the top three being the United States, Brazil, and the Netherlands.”
The country’s fiscal policies are strategically designed to attract investment. Marín notes the “various tax incentives and benefits to companies, including patent box, digital nomad incentives, holding companies and tax exemption on digital innovation” within the Spanish tax system. These incentives, along with accessible financing and attractive banking conditions, lower the barriers to entry for businesses and stimulate job creation, vital for any thriving economy.
Spain’s infrastructure plays a significant role in its business appeal. Marín underscores this, pointing to the country’s “modern infrastructure and efficient transport network.” From extensive road and motorway networks to advanced rail systems and strategic seaports, Spain offers seamless connectivity essential for business operations and logistics.
As a member of the European Union, Spain offers businesses key access to the single market and a network of international trade agreements. This access is invaluable for companies looking to expand within the EU or establish global operations. The significant foreign investment and dynamic foreign trade, particularly in the agri-food sector, underline Spain’s role as a pivotal player in the global economy.
Famatel is one such success story of the rapidly growing Spanish economy. A Spanish multinational with a global presence experienced a rapid expansion. As a family business, Famatel needed flexible and adaptive support.
Kreston Iberaudit’s supported restructuring the group for optimal taxation, along with providing expert advice on Transfer Pricing and compliance with Spain’s tax obligations, underlines the critical support local expertise can offer in the complex arena of international business expansion.
Famatel’s satisfaction with Kreston Iberaudit, led to subsequent collaborations in other countries. Montse Duran, CFO at Famatel, attests to Kreston Iberaudit’s ability to “quickly detect and satisfy the needs” of Famatel in areas like accounting, tax, and finance, highlighting the importance of close attention and customised solutions in international business.’
If you would like to talk to one of our experts about doing business in Spain, please get in touch.
David Olivares Martínez has been Managing Partner at Kreston Iberaudit in Madrid for almost 2 years. With over 20 years in the legal profession, working in networks such as Crowe and BDO, Martínez recently was included in the 16th edition of Best Lawyer in Spain™ 2024 in the Corporate and M&A category.
David Olivares Martínez Managing Partner at Kreston Iberaudit shares insight from 20 years of developing successful M&A strategies in Spain. David was recently included in the 16th edition of Best Lawyer in Spain™ 2024 in the Corporate and M&A category, making him well-placed to understand the nuances of buying and selling companies is more than just a business necessity – it’s an art form, particularly with a volatile M&A market in Spain.
“Corporate professional services in purchase and sale transactions are not just obligations but essential for our clients, especially given the growth in corporate transactions in recent years,” says David Olivares Martínez.
Understanding when and why to sell a company is a decision layered with complexities. As David notes, “It could be due to a new competitor altering industry norms, the retirement of an owner, or the challenges of generational replacement.” These factors underscore the need for expert guidance in timing and strategy.
The process is far from formulaic. “Not all companies hold the same value or are sold in the same manner,” David remarks. Each transaction is unique, and influenced by internal dynamics, management styles, sector specifics, and market conditions. This demands a tailored approach, considering factors like speed, confidentiality, and price.
Investment groups, too, face their challenges. “Buying a company at the right time and price, understanding market synergies and strengths, these are strategic issues that require in-depth analysis,” David adds. This highlights the importance of expertise in guiding acquisition decisions.
Bringing all elements of M&A transactions under one roof offers value for money to the client, with the role of the legal team particularly crucial.
“They ensure compliance in various areas like commercial, labour, tax, and financial regulations, while also identifying potential contingencies that could impact a transaction. Our goal is to offer legal coverage in all areas, ensuring our clients always operate within the legal framework,” David emphasises.
“Once a transaction is closed, our involvement doesn’t end. We continue providing services based on the client’s ongoing needs, be it legal, tax, or outsourcing,” says David, “This coordinated effort across all business areas ensures that we provide an optimal service focused on our client’s best interests.”
If you are looking for support with an M&A strategy, or are planning on doing business in Spain, please get in touch.
Guillermo Narvaez is a Tax Partner at Kreston FLS Mexico City Office and the Technical Tax Director, Global Tax Group, Kreston Global and member of the International Fiscal Association (IFA). Guillermo is a tax expert on international taxation, corporate taxes, transfer pricing, mergers and acquisitions, corporate reorganisations and litigation.
Within international taxation, Guillermo specialises in the analysis and interpretation of treaties to avoid double taxation applied to international transactions.
December 18, 2023
A certificate issued by a competent tax authority confirming residence for tax purposes is broadly accepted as proof of residence of an individual. However, a recent ruling in the Spanish courts casts doubt on that.
One of the main uses of these certificates is when a person has a double residence and needs to define in which State should be considered a tax resident. To achieve this, double tax agreements (DTA) include a tiebreaker in their residence provision commonly identified in Article 4 of DTAs. But before going to the tiebreaker must be clear that the same individual is deemed a tax resident of two different States and evidently such States has in force a DTA.
The tax administration of Spain disregarded a tax certificate issued by the US under the argument that “Americans can get one just for being US citizens”. Accordingly, the position of the authority was that the individual did not demonstrate his double tax residence in both countries, US and Spain, thus it was not necessary to apply the tiebreaker of the DTA given that the tax residence of that person was already defined.
The highest tribunal of Spain (“Tribunal Supremo”) overturned the ruling of the tax authority to conclude that a domestic authority does not have the power to disregard the effects of a tax certificate issued for international taxation by another government if such certificate was prepared to be applied in a double tax agreement.
If you would like to talk to someone about double tax treaties and proof of residence, please get in touch.
March 7, 2023
Each year on 8 March, the world observes International Women’s Day to acknowledge women’s accomplishments in various social, economic, cultural, and political fields. It is also an opportunity to advocate for gender equality and women’s empowerment. Kreston Global uses this occasion to highlight exceptional women within their network and gain their perspectives on what defines success as a woman in their organisation.
Mercè Martí Queralt is a highly experienced professional with over 30 years of expertise in auditing. As the Executive President of Kreston Iberaudit, Mercè plays a crucial role in representing Kreston Global in Spain, Portugal, and Andorra, and is responsible for driving the company’s expansion and internal development plan. Iberaudit is a leading audit network in the region, representing Kreston. Mercè’s exceptional leadership and strategic vision have driven the company’s success and cemented its reputation as a top-tier auditing firm in the area. With her extensive experience and deep knowledge of the industry, she continues to be an inspiration to her colleagues and a driving force behind the firm’s continued growth and success.
Why did you decide to run your firm?
After several years as a Partner in a well-known consulting firm, I decided to leave to fulfil my objectives. Unfortunately, I needed more support to grow and consolidate the firm’s future, so I founded my own company. At that time, becoming part of the Iberaudit project had already been proposed to me, so I decided to join the two projects and create a firm in which quality was the central pillar and with international projection, from here to our integration in Kreston.
When it came to assuming the executive presidency, the only condition I set was to have the unanimous support of the entire team. I did not want obstacles; I wanted to be supported fully in my efforts to lead the company.
What qualities do you need to run a successful accounting firm?
There are many qualities that one must have to run any company successfully.
Having the capacity for resolution and determination in decision-making is vital. The ability to adapt is fundamental, especially in auditing, where change is part of our routine.
The curiosity to learn about a subject and expand knowledge to other spheres allows us to acquire a global vision and anticipate possible events.
Last, good communication is essential to improve negotiation through active listening and enthusiasm.
How do you support equality in your firm?
As Executive President of the firm, I am actively involved in all issues related to equality in general, participating in the development of internal policies that ensure genuine equality of opportunities within our organization in all processes: selection, promotion, and development of our professionals- regardless of origin, gender, age, sexual orientation, and ideologies.
I participate in mentoring projects for women and try by my example to be a reference for all the professionals in my firm.
On the other hand, I continually propose team meetings to learn about problems and suggestions, and from these initiatives, I implement actions that contribute to equality.
We recently surveyed ‘interpreneurs’ – entrepreneurs looking to expand internationally. The data showed that female CEOs were more likely than males to consider expanding overseas. Why do you think this might be?
Honestly, I wouldn’t just say it’s a gender issue, regardless of the results of the surveys. Instead, it is an entrepreneurial attitude—restless men and women who thirst for innovation.
From my experience, after having been part of a prestigious auditing firm for more than 20 years, I understood that I had to take risks to improve and grow, and I believe that these actions speak of one of the entrepreneurial spirits that transcend gender.
That entrepreneurial motivation gives us the courage to leave our comfort zone and take risks to grow, develop new businesses, and expand globally.
What advice would you give female entrepreneurs starting today, or would you give your 28-year-old self?
The best advice I could give an entrepreneur starting today is to believe in herself, her goals, and her objectives. And that if she “falls, she should get up,” No matter how many times, you must persevere.
All my work has paid off, and my efforts were worth it, but the most valuable thing that stands out is the experiences I have lived, which is the key to enjoying the road.
Finally, I would advise you never to stop training, growing, innovating, and participating in congresses, meetings, and travelling; it is a vital learning process that allows you to analyse your surroundings in a more empathetic and global way that has helped me a lot, both personally and professionally.
To learn more about doing business with Iberaudit, click here.
April 22, 2022
March 11, 2022
Investment in Spanish property, particularly by British investors, has been growing in popularity since the early 2000s, as expats look to retire in the sun, or spending cold winters in Spain and returning in the Spring.
This common practice could be subject to double taxation rules and those looking to invest in Spanish property should consider how long they intend to stay at the property to determine the Non-Resident Income Tax (NRIT). Habitual residency is defined as spending more than 183 days in Spain during a calendar year or when the main core or base of their activities or economic interests is located in Spain. Residency in Spain is assumed when the spouse and minor children are habitual residents in Spain.
Researching tax residency and any double taxation laws between the domicile country and Spain is critical before buying or selling property, however, double taxation treaties signed by Spain tend to claim tax on the sale of a property, in accordance with the Non-Resident Income Tax (NRIT).
NON-LEASED PROPERTIES
Next, a distinction must be made between leased and non-leased property. Residential property can be subject to Personal Income Tax (PIT), meaning that non-residents must declare them each year as real estate capital gains:
It should be noted that the tax rate for citizens of the EU and European Economic Area (EEA) states is 19%, with effective exchange of tax information (Iceland and Norway). For all other taxpayers, the tax rate increases to 24%.
LEASED PROPERTIES
Rates as above, but commercial properties must pay withholding tax to the Tax Authorities on rent. This withholding tax, 19% in the case of EU citizens or Iceland and Norway and 24% in all other cases, will exempt the owner from making the aforementioned quarterly declarations. Rental-related expenses are tax-deductible for EU citizens and Iceland and Norway.
The 60% reduction provided for in the PIT is not applicable to income from rental housing and that is per property, so it is not possible to offset them.
Value added tax (VAT)
Non-resident landlords, subject to VAT, are defined as
VAT will be charged at 10%, will need to register and file VAT returns quarterly.
a) Renting to a long-term tenant is VAT exempt.
b) If the rental of the property is not exempt, the Central Economic-Administrative Court in its ruling of 20 November 2016 applies, endorsed by the Directorate General of Taxation in various consultations (CV1145-17, CV2915-17 and CV 2897-18). VAT obligations therefore only apply to long term rental agreements. Simply owning a property in this instance does relieve landlords from VAT. Rental of subject and non-exempt leases (offices, commercial premises, warehouses, etc.), are as follows:
Usual VAT recovery on purchase and maintenance of properties apply, depending on if the non-resident is established or not in Spain:
a) Non-resident/permanent establishment – should input tax paid in the VAT forms that he/she files periodically (form 303).
b) Non resident/non permanent establishment- should apply for a VAT refund through the non-established refund procedure:
For further tax advice on the selling of Spanish property, please visit our Spanish member Kreston Iberaudit website, here.
July 8, 2021
July 2, 2021
Our client, Favorite Gifts, is a successful international company. They trade with several companies (like Van Helden Relatiegeschenken, EuroGifts and Giving Europe) within Europe. They are known as a “no-nonsense” company for promotional products.
Founded as a family business in 1965, it has expanded to become one of Europe’s largest companies in the sector. Its core business is advising on and supplying a vast range of promotional gifts, from colour-changing umbrellas to eco-friendly travel cups.
They import supplies from all over the world which arrive for processing at its centres in the Netherlands and Poland, before being distributed to clients across Europe. This means that dealing successfully with varying tax rules and legislative requirements is very important to the growth of the business.
Dutch accounting firm Kreston Van Herwijnen (KVH) has connected Van Helden to Kreston firms in Spain, Germany, Italy and Poland to advise on all their local legal requirements. The firms involved are Kreston Bansbach, Kreston Iberaudit, Kreston GV and BPG Poland, and they deal with issues ranging from complying with transfer pricing obligations and national VAT legislation, to setting up local branches.
Our ongoing relationship with Van Helden is helping them evolve, expand and adapt their international trading.
Cor van Gessel, Kreston Van Herwijnen, commented: “It has been a privilege getting ‘under the skin’ of the business and getting to know their people well during our long-term partnership. We continue to learn from them so we can help their business grow and be always ready for new challenges and opportunities.”
Michiel Warners, Chief Financial Officer at Van Helden, said:
“For us, the most important aspect is that we can work with people we trust as we need to share sensitive information. I can reach out to the Kreston Van Herwijnen team anytime and know I will get an answer that counts.”
