Value Added Tax (VAT) is a cornerstone of taxation for any freelancer or SME in Spain. However, its application isn't uniform for everyone. Depending on your activity and turnover, you'll fall under either the general scheme or one of the special schemes. Knowing their differences is crucial for correct and optimized tax management, especially with new digital obligations on the horizon.
The General VAT Scheme: The Default Rule
As its name suggests, the general scheme is the most common and applies by default to most business owners and professionals, provided their activity isn't mandatorily included in a special scheme.
Its operation is based on the difference between the VAT you charge your customers and the VAT you pay on your deductible purchases and expenses:
- Output VAT: This is the VAT you charge on your sales invoices.
- Input VAT: This is the VAT you pay to your suppliers for goods and services necessary for your activity.
The quarterly settlement (Form 303) involves subtracting the input VAT from the output VAT. If the result is positive, you must pay it to the Tax Agency. If it's negative, you can offset it in future returns or request a refund.
The Special VAT Schemes: Simplifying Management
Special schemes aim to simplify tax obligations for certain sectors or business types with particular characteristics. The most relevant for freelancers and SMEs are:
* Simplified Scheme (Modules or "Módulos"): Aimed at freelancers in specific activities (small retail, hospitality, transport, etc.). Instead of calculating VAT based on actual turnover, the tax liability is determined by objective indexes or "modules" (premises size, number of employees, electrical power). Its goal is to simplify accounting, but it's not always the most advantageous option. It's crucial to know that even if the settlement is simplified, the obligation to issue correct invoices remains. If you are taxed under this system, it is vital that you know how the new invoicing regulations affect you. You can find more details in our guide on VeriFactu for freelancers in the modules scheme.
* Equivalence Surcharge ("Recargo de Equivalencia"): This is a mandatory scheme for retailers (individuals or entities under income attribution) who sell to the final consumer products they have not transformed. Its mechanism is simple: the retailer pays their supplier a slightly higher VAT rate (the general rate plus a "surcharge"). In return, they are not required to file VAT returns (Form 303) for this activity, as it is understood that they have paid the tax in advance.
* Other schemes: Others exist, such as the one for agriculture, livestock, and fishing (REAGP) or the one for second-hand goods (REBU), designed for the specificities of those sectors.
How Does the VeriFactu Regulation Affect These Schemes?
Tax digitalization is advancing and is a factor that affects everyone equally. The implementation of verifiable invoicing systems, known as VeriFactu, will be mandatory for all business owners and professionals, regardless of their VAT scheme.
This means that even if you are in the modules or equivalence surcharge scheme, you will have to use software adapted to this regulation to issue your invoices. The key deadlines to remember are:
* January 1, 2027: Deadline for corporations and companies.
* July 1, 2027: Deadline for freelancers and micro-enterprises.
Choosing the right VAT scheme is one of the first strategic decisions for your business. Analyze your activity, turnover forecasts, and expenses to determine which one applies to you and which benefits you most, without losing sight of the new technological obligations that are already on the horizon.