Have you ever received or been asked for a Spanish bill with Reverse charge (Inversión de Sujeto Pasivo, ISP) and not known what to do with it?


Have you received or have you ever been asked for a bill with Reverse charge (ISP) and you have not known what to do with it?


At Welex, your law and economics firm under one roof in Marbella, we would like to make you aware of this exception to the general VAT rule known as Reverse charge.

As a general rule, the taxable person is the natural or legal person in charge of passing on the VAT, working as a professional and/or businessman, to his clients through the issue of invoices. This taxpayer is also obliged to collect the VAT generated for subsequent presentation to the Tax Agency (AEAT).

In other words, as a businessman, we have the obligation to transmit the value added tax to our clients and declare it in the quarterly VAT forms.

Example VAT in Spain Reverse charge

To explain the common cycle of VAT in Spain, we will give the following example:

We have a business that is dedicated to the retail trade of shoes. Our business consists of buying shoes wholesale from company «X» at an affordable price and then trading them to a third party with a 30% profit margin.

Well, in the following example the supplier X is the taxable person as soon as he issues us the invoice with the corresponding VAT while we will be the taxpayer (final consumer who bears the VAT). Later, when we sell the shoes to our customer we will issue another invoice with its VAT to our customer and thus we become the taxable person and our customer the taxpayer.

However, there are several exceptions to the general rule. In this blog we are going to talk precisely about art. 84. One 2nd article of the VAT law (Law 37/1992) commonly known as the Reverse charge.

Reverse charge is a change in the general rule of VAT that makes the recipient of the invoice responsible for declaring the tax to the Treasury.

This implies that if we are under the exception of the article we will not be the ones in charge of charging the VAT but it will be the taxpayer’s obligation.

In this case, the taxpayer will have to reflect in the quarterly taxes the tax on that invoice for the information of the tax office.


What are the assumptions that condition the Reverse charge in Spain?

The Art. 84. One 2º of the VAT law (Law 37/1992) establishes the following assumptions:

a)      When they are made by persons or entities not established in the territory of application of the tax.

b)      When involves supply of unprocessed gold or semi-manufactured gold products, of a fineness of 325 thousandths or more.

c)       When involves supplies of new industrial waste, foundry waste and scrap, residues and other recyclable materials (supplies of waste or scrap of paper, paperboard or glass).

d)      In the case of the supply of services relating to emission allowances, certified emission reductions and greenhouse gas emission reduction units.

e)      In the case of the following supplies of immovable property following insolvency proceedings, the exempt supplies referred to in Article 20. One paragraphs 20 and 22, where the taxable person has renounced the exemption and supplies made in execution of the security lodged in respect of the immovable property.

f)       When the execution of works is involved, with or without the provision of materials, as well as the assignment of personnel to carry them out.

g)      In the case of the supply of the following products:

·         Silver, platinum and palladium, unwrought, powdered or semi-wrought.

·         Mobile phones.

·          Video game consoles, portable computers and digital tablets.


For any tax or legal question, do not hesitate to contact one


Welex, your office of economists and Tax Advisors in Marbella is pleased to write a few lines about what is understood as a property company in Spain and those that are considered to carry out an economic activity.

We also remind the tax rates and exemptions from corporation tax in Spain.

When does a company in Spain have an economic activity?

A Spanish company will have an economic activity when there is self-organisation of the means of production and human resources or one of both with the aim of producing or distributing goods or services.

In the case of rental of real estate, economic activity will also exist when are used the services of a person employed under a general and full-time employment contract.

What is a property company in Spain?

A company in Spain is considered to be property when it does not carry out an economic activity. And it is understood that there is no economic activity in Spain when more than half the assets on the balance sheet of the company are made up of securities or it does not have a person employed under a general and full-time employment contract.

Are you a participant in a property company in Spain? Do not hesitate to contact our office of economists, accountants and tax advisors in Marbella. We are responsible for the accounting and tax representation of your Spanish company regardless of where it is located.

Do you want to set up a company and carry out an economic activity in Spain? Feel free to contact one of our commercial lawyers in Marbella now. We will guide you through the entire process of incorporating your company in Spain and will be happy to provide accounting and tax representation services.

Corporate tax rate in Spain

From 2016 to date, thehttps://www.welex.es/contact/ corporate income tax rates in Spain are as follows:

Do not hesitate to contact one of our multilingual speaking accountants in Marbella and tax advisors in Spain!

Criticisms of the so-called Tobin tax rate in Spain

The tax on financial transactions in Spain aims to tax the purchase and sale of shares in companies in Spain with a capital of more than 1 billion euros.

The implementation of this tax on financial transactions in Spain will mean an increase in financial costs and therefore reduce the profits of companies and individuals who buy and sell shares in the secondary market in Spain.

Read more…

Non Residents Wealth Tax in Spain

The Wealth Tax in Spain (also called capital, equity or fortune tax) is a Tax that is applied individually, not on annual income or transactions, but on the personal assets of each individual which include among others: bank deposits, real estate and pension plans, and the calculation is based on the total value of these assets of the taxpayer.  In the case of non residents the calculation will include all the assets held in Spain.


Read more…

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