VAT for the self-employed in Spain: modelo 303 and modelo 390

VAT (IVA, Impuesto sobre el Valor Añadido) is a tax that you do not bear as a business: you charge it to your clients on every invoice (IVA repercutido, output VAT) and you pay it on your purchases and expenses (IVA soportado, input VAT). You act as a collector for Hacienda (the Spanish tax office).

Modelo 303 is the self-assessment return with which, every quarter, you declare the VAT you have charged, subtract the deductible input VAT and settle the difference. If you have charged more VAT than you have paid, you pay the difference in; if you have paid more, the result is negative (to carry forward or to be refunded).

Filing is exclusively electronic, in the Sede electrónica of the Agencia Tributaria (AEAT, the Spanish tax agency and its online office), with Cl@ve (the official login system for Spanish public services) or a digital certificate. Managora calculates the result from your invoices and files it for you.

Modelo 303 is filed by every autónomo (self-employed worker in Spain), professional or company carrying out activities subject to VAT. The general frequency is quarterly.

Monthly filing applies to businesses with a volume of operations above €6,010,121.04 (Grandes Empresas, large companies), to VAT groups and to those registered in the Monthly Refund Register (REDEME), who are also obliged to use the SII.

Certain activities do not charge VAT on their invoices (for example healthcare, regulated education or insurance), and retailers under the recargo de equivalencia (the equivalence surcharge scheme) do not file modelo 303 for their sales. Managora checks your case before filing.

To deduct input VAT, the AEAT requires 3 conditions: that the good or service is used for your activity, that you hold a full invoice in your name recorded in your register of invoices received, and that you claim the deduction within the 4 years following the moment the tax became chargeable.

Deductible items include, for example, materials, the utilities of premises used in the business, software, advisory fees or machinery. Private expenses are not deductible and, as a general rule, neither are client entertainment, gifts, or meals and travel without proven business use.

For passenger cars and their associated costs (fuel, repairs, tolls and parking) Hacienda accepts a presumption of 50% business use; deducting more requires you to be able to prove professional use. Other mixed use expenses, such as your phone, do not have that legal 50% presumption: you can only deduct their VAT to the extent that you can evidence they are used for the activity. Managora reviews which VAT is deductible in your case so that you are not exposed to a tax review.

General scheme: the usual one. You charge VAT on your invoices, deduct the input VAT and settle the difference on modelo 303.

Recargo de equivalencia: compulsory for retail traders who are individuals selling to the end consumer. They pay their suppliers an additional surcharge (5.2%, 1.4% or 0.5% depending on the VAT rate of the product) and in exchange they do not file VAT returns for their sales.

Criterio de caja (the cash basis scheme): optional for those who do not exceed €2,000,000 in volume of operations. It lets you delay paying in the output VAT until you collect the invoice, but it also delays the deduction of input VAT until you pay. You opt in with modelo 036, and anyone who receives more than €100,000 in cash from a single client in the year is excluded.

Modelo 390 is the annual VAT summary return: nothing is paid with it, it summarises all the operations of the year. It is filed from 1 to 30 January of the following year.

Exempt from filing it are those who apply the SII, those taxed under the simplified scheme and/or who only rent out urban property (with quarterly returns in common territory), the Grandes Empresas required to do so and VAT groups. Those who are exempt complete an informative section in the fourth quarter modelo 303.

The SII (Suministro Inmediato de Información, the immediate supply of invoicing information) obliges large companies, VAT groups and REDEME filers to send the details of their invoices to the AEAT within 4 working days. Anyone in the SII files neither modelo 390 nor modelo 347.

If input VAT exceeds output VAT, the result of modelo 303 is negative. In the first, second and third quarters you can only carry it forward: the balance stays in your favour and is subtracted in the following self-assessments.

A refund can only be requested in the last self-assessment of the year (the fourth quarter one, in January), unless you are registered in the REDEME, which allows you to claim it every month. The AEAT has 6 months from the end of the filing period to pay it; once that period has passed, with late payment interest.

The balance pending carry forward expires after 4 years. Managora keeps track of the carry forward so that you do not lose VAT that is in your favour.