What is the Monthly VAT Refund or REDEME?
As a freelancer or SME in Spain, you are likely familiar with filing quarterly VAT returns using Form 303. Typically, the output VAT on your invoices is higher than the input VAT on your expenses, resulting in a payment to the Tax Agency (Hacienda). But what happens when the situation is reversed and you have a balance in your favor? Normally, you must wait until the last quarter's return (filed in January of the following year) to request a refund.
The Monthly VAT Refund Register (REDEME) is a special scheme that changes this dynamic. It allows registered businesses to request refunds of their favorable VAT balances every month instead of annually. This provides a crucial cash flow injection for companies that consistently have more input VAT than output VAT due to their business model.
Who can apply to join REDEME?
Not all businesses can opt into this system. To be eligible to register for REDEME, you must meet the following requirements:
* Be up to date with your tax obligations.
* Not be taxed under the simplified scheme, the special scheme for agriculture, livestock, and fishing, or the equivalence charge scheme.
* Not have been excluded from the register in the 3 years prior to the application.
This scheme is particularly useful for:
* Exporting companies, as their sales abroad are VAT-exempt, but they do incur VAT on their domestic purchases.
* Businesses in an initial investment phase, which make large asset purchases and have not yet started generating significant revenue.
Key Obligations when joining REDEME
Opting for a monthly VAT refund brings not only cash flow benefits but also significant administrative obligations you should be aware of:
1. Monthly filing of Form 303: You will stop filing VAT returns quarterly. Instead, you must do so every month.
2. Immediate Supply of Information (SII): This is the most significant obligation. You must send the details of your billing records (invoices issued and received) to the AEAT's electronic office almost immediately, within a four-business-day deadline.
This digital reporting system is ahead of the trend that the new invoicing regulations will set. In fact, adapting to the SII can be an advantage for the mandatory implementation of VeriFactu systems, which will become effective for freelancers and micro-SMEs on July 1, 2027. If you want to be prepared, we recommend our VeriFactu Guide for Freelancers: Complete Manual.
How and when to apply for REDEME?
To apply, you must use the census declaration Form 036, checking box 129. The deadline to do so is during the month of November of the year before it is to take effect. You can also apply when you first register your business activity.
Once you are in, you must remain in the REDEME scheme for the entire calendar year. If you decide to opt out, you must also communicate this in November using the same Form 036.