The monthly invoice from the advertising platform arrives. It shows the amount, it shows your Spanish tax number with the ES prefix, and it shows no VAT anywhere. The instinctive reaction is to be pleased: an invoice without VAT looks like a cheaper invoice. It is not. That VAT exists, you declare it yourself, and the mechanism that explains it is the reverse charge (in Spanish, literally the "reversal of the taxable person") in article 84.Uno.2.º of Ley 37/1992, the Spanish VAT Act.
What exactly is reversed
In a normal transaction, the person liable for VAT is the one supplying the service: they charge you the tax and pay it to the tax office. When the supplier is not established in the Spanish VAT territory and the customer is, the law turns it round: the person liable becomes the customer. That is, you. The reason is pure pragmatism in collecting tax: it is easier for the person who is here to pay the VAT than to pursue a supplier with no presence in Spain.
| Normal transaction | Under the reverse charge | |
|---|---|---|
| Who charges the VAT | The supplier | Nobody: the invoice arrives without VAT |
| Who declares the output VAT | The supplier | You |
| Who deducts the input VAT | You | You |
| How much money leaves your account for the tax office | The tax, through the supplier | Zero, if you are entitled to deduct 100 % |
The accounting effect: two entries that cancel out
What you do on Modelo 303, the quarterly VAT return, is declare the same amount of tax twice, in two different places. You self-assess the VAT (that is, you enter it as output VAT in the section for other transactions under the reverse charge) and at the same time you enter it as deductible input VAT. If you are entitled to deduct one hundred per cent, the two figures cancel out and the result for the quarter does not change by a single cent.
| Invoice received | Taxable amount (€) | VAT self-assessed at 21 % (€) | VAT deducted (€) | Effect on the tax due |
|---|---|---|---|---|
| Advertising on a European platform | 1,400 | 294 | 294 | 0 |
| Software subscription | 360 | 75.60 | 75.60 | 0 |
| Commission from a booking portal | 820 | 172.20 | 172.20 | 0 |
Because the obligation exists just as if there were something to pay, and because the result is not always zero. Someone with an exempt activity or subject to the pro rata rule does not deduct one hundred per cent, and then the reverse charge is a real cost. Besides, leaving it out is a formal breach with its own penalty regime, and in a review it is one of the first things to be cross-checked, because European suppliers report their transactions in their own country and that information travels.
When it applies, and when it does not
Article 84 covers several situations; the one that affects the typical autónomo, or self-employed person, is the supplier not established in Spain. But there are others, and it is worth telling them apart because they do not all work in the same way.
| Situation | Typical example | Does it go on Modelo 349? |
|---|---|---|
| Services from a supplier established in another member state | Advertising, software, commission from European platforms | Yes, as an acquisition of services |
| Services from a supplier established outside the EU | Tools from US companies with no establishment in the EU | No: the 349 is intra-EU only |
| Intra-EU acquisition of goods | Buying materials from an Italian supplier | Yes, with its own code |
| Building works between businesses, and other domestic cases | Contractor and subcontractor on a building job in Spain | No: it is a domestic case |
The second case deserves a note, because it causes a great deal of confusion: an invoice from a supplier outside the EU can also require you to self-assess Spanish VAT, but it is not included on Modelo 349, which only covers intra-EU transactions. Reporting on the 349 what does not belong there produces mismatches with the information the tax authorities receive from other states.
The invoice you receive: what to look for
- Your NIF with the ES prefix. If the supplier does not have it, they have probably charged you their own country's VAT, and that VAT is not deductible on your 303. You need to ask them for a corrected invoice.
- The reference to the reverse charge, or its equivalent in the language of the invoice.
- The supplier's identification and their VAT number, when they are in the EU.
- The currency and the date, which determine the applicable exchange rate as we explain in the exchange rate for each invoice.
If a European platform has charged you its national VAT, it is almost always because you have not given it a valid EU VAT number, or because the one you gave does not show as active on VIES. That amount cannot be deducted in Spain, and recovering it in the other country is a separate procedure, slow and with its own deadline. The cheap fix is to correct it in the supplier's billing panel and ask for the corrected invoice, not to let it run. The registration that prevents it is in registering on the ROI, step by step.
When the tax falls due, which decides the quarter
The reverse charge is not declared when you pay the invoice but when the transaction falls due for tax purposes, which for services is, as a rule, when they are supplied. For subscriptions and other ongoing transactions, the tax falls due when each payment becomes payable, which is what the contract says, not what the bank statement says.
The practical consequence is that a December invoice paid in January may belong to the fourth quarter, and that an annual prepayment falls due according to what the contract says. When the supplier issues the document late (common with platforms, which close their billing a few days afterwards) the transaction has to be put back in its own period, not in the period when you downloaded the PDF. Someone who declares by download date ends up with quarterly mismatches which, added up over the year, do not affect the result but do affect each return.
| Situation | Quarter in which it is declared |
|---|---|
| Advertising campaign used in September, invoice issued on 3 October | Third |
| Annual subscription payable on 15 January, paid that day | First |
| Portal commission on June bookings, settled in July | Second |
The record books
A transaction under the reverse charge is entered in both books: in the book of invoices received, for the supplier's invoice, and in the book of invoices issued, for the self-assessment. It is not double counting: it is what allows the 303 to match the books if anyone compares them. Someone who enters it only in the received book will have a book that does not explain the output VAT box.
If you have gone years without declaring it
This is the most common case that reaches us in this area: an autónomo who has spent three or four years paying for advertising, hosting and subscriptions from foreign suppliers without ever self-assessing. The diagnosis has three steps.
- An inventory of non-established suppliers by period, with their amounts and their country.
- Working out whether there was a full right to deduct. If there was, the substantive impact tends to be neutral and what remains is the formal side; if there was not, there is tax to pay.
- Deciding how far back to go, looking at which periods are still open under the four-year limitation period, and correcting in the right order.
Doing it before a request arrives changes the regime that applies, which is why hurrying here is justified. What we cannot do is promise that correcting several years will have no consequences: that depends on the facts, on the right to deduct and on the view of the office that reviews it. What we do is leave the file submitted with its explanation, which is what makes the difference between an orderly correction and one defended on the back foot.
The case of someone under the pro rata rule or with an exempt activity
Everything above comes to zero when there is a full right to deduct. When there is not, the reverse charge stops being a neutral entry and becomes a cost. That is the situation of someone who combines a taxable activity with an exempt one, or who carries on an exempt activity and still receives invoices from foreign suppliers: the output VAT is paid in full and the input VAT is deducted at the pro rata percentage, or not at all.
| Customer's situation | VAT self-assessed on €1,000 | Deductible VAT | Real cost |
|---|---|---|---|
| Full deduction | 210 | 210 | 0 |
| Pro rata of 60 % | 210 | 126 | 84 |
| Exempt activity with no right to deduct | 210 | 0 | 210 |
For these profiles, advertising bought from a foreign platform is 21 % more expensive than the invoice shows, and that is worth bearing in mind before comparing quotes with a Spanish supplier who does charge VAT. It is the only situation in which this mechanism moves real money.
Summary in four lines
- Invoice from a non-established supplier with no VAT: you declare the VAT.
- It goes into output and input VAT at the same time; if you deduct everything, it comes to zero.
- Only intra-EU transactions go on the 349, and only if you are on the ROI, the register of intra-EU operators.
- Foreign VAT on an invoice you receive is not deductible in Spain.
If you would like us to review your invoices from foreign suppliers and tell you what is still to be declared and for which periods, write to us through the form for self-employed people with international clients. The general picture is on the page for this area and the ordinary workings of the tax in the self-employed person's 303.