VAT and personal income tax withholding on your invoices

VAT rates

In mainland Spain and the Balearic Islands, these rates apply depending on the type of goods or service:

• 21% (general rate): most goods and services.
• 10% (reduced rate): for example, certain prepared foods, hospitality and passenger transport.
• 4% (super-reduced): basic foodstuffs, books or medicines, among others.
• 0% / exempt: transactions the law exempts, such as some education or healthcare services.

Each line of the invoice carries its own rate, and the breakdown is shown separately: never mixed into a single figure.

Personal income tax (IRPF) withholding: who applies it and when

If you're a professional (not a business) and you invoice another professional or a company, you normally have to show a personal income tax (IRPF) withholding on the invoice: your client doesn't pay you that amount — instead, they pay it to the tax authority (AEAT) on your behalf.

The general rate for professionals is 15%; freelancers starting out can apply a reduced rate of 7% during the year they register and the following two years, if they meet the conditions. If you invoice individuals (not businesses), no withholding applies.

Equivalence surcharge (retail trade)

Retailers under this regime don't file VAT returns quarterly like everyone else: their suppliers charge them an additional surcharge (5.2% on top of the 21% VAT rate, 1.4% on top of the 10% rate and 0.5% on top of the 4% rate). If you're under this regime, your invoices must reflect it.

How Lúcido helps

Lúcido calculates VAT by rate, personal income tax withholding and the equivalence surcharge from the lines you enter, and saves the summary for your tax module. The calculations are automatic; deciding which regime or withholding applies to you is still a decision for you and your accountant.