VAT Registration & Compliance in Madrid – A Guide for Foreign-Owned Businesses

🇪🇸 Who Needs to Register for VAT in Madrid?

If you operate a business in Madrid and:

✅ Sell goods or services in Spain
✅ Invoice Spanish or EU-based clients
✅ Exceed the VAT exemption threshold
✅ Want to deduct input VAT on expenses

Then you must register for IVA (Impuesto sobre el Valor Añadido), Spain’s version of VAT.

📌 Even some foreign companies with no Spanish office may need VAT registration if selling into Spain.


📝 How to Register for VAT in Madrid

Step Details
Apply for CIF (Tax ID) Done during SL company setup or autonomo registration
Form 036 Used to register for VAT with AEAT
Choose VAT regime General regime (most common) or simplified
Get SII code (optional) For large taxpayers or special reporting

💡 Madrid-based freelancers (autónomos) also register for VAT using Form 037 (simplified version of 036).


💸 VAT Rates in Spain (Madrid)

VAT Type Rate Common Examples
General 21% Most services, goods, professional fees
Reduced 10% Transport, restaurants, hotels, cultural events
Super-reduced 4% Basic food, books, newspapers, medication

📌 You must issue VAT invoices and declare VAT on both income and expenses.


📅 VAT Filing Deadlines in Madrid

Period Form Deadline
Quarterly Modelo 303 Apr 20, Jul 20, Oct 20, Jan 20
Yearly Modelo 390 Jan 30
EU Sales Modelo 349 Monthly or quarterly, depending on volume

All submissions must be done digitally via AEAT using a firma digital.


📦 Intra-EU VAT (VIES Registration)

If you trade with clients or suppliers in other EU countries, you must:

✅ Register with VIES (VAT Information Exchange System)
✅ Apply reverse-charge where applicable
✅ File Modelo 349 for intra-community operations

We handle your VIES inclusion and ongoing filings.


🧾 How VAT Works in Practice

Example VAT Applied Action Required
Invoice to Spanish client 21% Charge and declare via Modelo 303
Invoice to EU VAT-registered client 0% (reverse charge) Declare in Modelo 349
Expense with Spanish provider Includes VAT Deductible if related to business
Foreign invoice (non-EU) 0% May trigger customs VAT obligations

📌 Input VAT can only be reclaimed if the expense is tied to your declared activity and properly documented.


❌ Common VAT Mistakes in Madrid

⛔ Not registering for VAT when legally required
⛔ Using personal expenses as deductions
⛔ Late filing of Modelo 303 or 390
⛔ Ignoring EU transaction declarations
⛔ Incorrectly applying reverse charge rules


🧑‍💼 Our Madrid VAT Services

Borderless Lawyers offers:

✅ VAT registration via Form 036 / 037
✅ Filing of Modelo 303, 390, 349
✅ Invoicing system review and setup
✅ VIES and EU compliance support
✅ Tax representation for foreign-owned SLs


📞 Register and File VAT the Right Way in Madrid

Whether you’re a freelancer or a growing company, VAT compliance is essential for running a legal business in Madrid.

👉 Contact us to manage your VAT registration and filings in Madrid.

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