General considerations
Companies and self-employed professionals have to pay a series of taxes in accordance with the economic activities they undertake. These taxes are the following: Tax on Economic Activities (IAE), Value Added Tax (VAT) Income Tax (IRPF), or for companies, Corporation Tax (IS).Tax on Economic Activities (IAE)
This is a tax imposed on the undertaking of any commercial, professional or artistic activity, with the amount depending on the type of economic activity undertaken. Companies or professionals with a turnover of less than one million euros annually are exempted from paying the IAE. On the other hand, there are different discounts applicable to companies and the self-employed. There are two places where this tax can be dealt with, depending on where registration for the tax took place: the town halls of the local district councils and the offices of the Revenue Service (Agencia Tributaria).Value Added Tax (IVA)
The sale of goods and supply of services in Spain are subject to this tax, in accordance with a Europe-wide mechanism. Companies officially established in Spain can deduct this tax from the invoices they issue (output VAT) and receive (input VAT). The relevant documents are submitted to the local Tax office and the net tax must be paid (output VAT less input VAT) or reclaimed, depending on economic activity.Some freelance professionals are VAT exempt, such as those engaged in artistic activities: actors, scriptwriters and interpreters among others.
EU-based foreigners can recover VAT paid on goods purchased or services received in Spain (such as rental of premises, technical equipment, sets, filming materials, stages, car hire etc) as long as they can prove that they are 'subject to VAT' in their home country. To obtain this refund they must submit the relevant form ('Refund of Value Added Tax to Foreign Businesses') to the relevant authorities. Non EU-based foreigners can only request a VAT refund if their country has signed an agreement with Spain.
Income Tax (IRPF)
IRPF deductions from salary are calculated depending on amount and the individual and family circumstances of the person concerned. Freelance professionals must show a deduction of 7% in respect of income tax on every invoice issued during their first three years of professional activity and 15% from the third year onwards. All necessary costs incurred in carrying out their work are deductible, including the appropriate Social Security payments. More information can be obtained from the local Revenue offices below.
Delegación de la Agencia Tributaria en Balears
C/. Cecilio Metelo, 9
07003 Palma de Mallorca
Tel.: (+34) 971 44 88 00
Fax. (+34) 971 71 15 85
www.aeat.es
Administración de la Agencia Tributaria Eivissa-Formentera
Avenida Bartolomé Rosselló, 21
07800 Eivissa
Tel.: (+34) 971 31 86 50
Fax. (+34) 971 19 28 18
www.aeat.es
Administración de la Agencia Tributaria Menorca
Moll de Ponent, 1
07701 Maó, Menorca
Tel.: (+34) 971 31 86 50
Fax. (+34) 971 19 28 18
www.aeat.es