The mechanics, in two lines
Add up the VAT you charged your clients, subtract the VAT you paid your suppliers, and pay over the difference. If the result is negative it is carried forward against later quarters, or claimed as a refund in the last return of the year. The standard rate is 21 %, with reduced rates of 10 % and 4 % for specific supplies.
VAT falls due when the service is supplied, not when the money arrives. A December invoice still unpaid in January is declared all the same. There is a special cash accounting scheme, but it comes with serious trade-offs — your own customers' right to deduct is delayed too, which makes you a less attractive supplier — and it does not suit everybody. Modelling it before opting in is worth an hour.
What you can actually recover
- A complete invoice in your name, with your NIF and the VAT shown separately. A till receipt confers no right to deduct, no matter how obviously business the purchase was.
- A connection to the activity. Where an item has mixed use, only the business proportion.
- Vehicles: the law presumes 50 % business use for a car. Deducting 100 % requires proof, and in practice it is accepted almost only for commercial vehicles and for travelling sales representatives. Income tax is stricter still: there, exclusive business use has to be shown, which is why the two taxes routinely give different answers on the same car.
- Meals and travel: deductible only where clearly linked to the activity and properly documented. They are the first stop of any review, and the documentation that saves them is the one nobody keeps: who the meeting was with and what it was about.
- Home office: if part of your home is attributed to the activity on form 036, a proportion of the utilities becomes deductible for income tax. For VAT, recovery on a home used partly privately is much harder and is routinely challenged.
Capital goods have a longer memory
Equipment above the statutory threshold is a capital good, and the VAT recovered on it is subject to adjustment over the following years if the proportion of business use changes. In practice this bites when somebody buys a substantial item in a year of high taxable activity and then shifts towards exempt work. Keeping capital purchases separate in your records is not optional: the form itself asks for them separately.
Four patterns that draw attention
- Filing in refund position every quarter with no structural reason — no exports, no exempt supplies, no major investment — to explain it.
- An annual summary, form 390, that does not reconcile to the sum of the four quarters.
- Declared sales that do not match what third parties have reported about you on their own returns. Your clients' form 347 and their withholding returns describe you whether you like it or not.
- Recovering VAT on invoices issued to someone else, including your own company. Two legal persons, two sets of books.
Cross-border transactions, which are no longer unusual
Almost every freelancer now has at least one of these, and each has its own box and its own companion return:
- Business clients in other EU states. Invoiced without Spanish VAT, with both parties' VAT numbers shown, and reported on form 349. You must be on the ROI, the register of intra-EU operators, and both numbers must be valid on VIES on the date of the invoice.
- Services bought from Google, Amazon, Meta, Adobe and similar. Reverse charge: you self-charge the VAT and deduct it on the same return, so the cash effect is usually nil but the reporting is compulsory. EU suppliers also go on form 349; suppliers outside the EU do not.
- Clients outside the EU. Generally outside the scope of Spanish VAT, but the place-of-supply rules have exceptions and the evidence of where the customer belongs has to be kept.
- Sales to private individuals in other EU states. These can pull you into the one-stop shop scheme, with its own registration and its own return.
The full picture is in invoicing clients abroad from Spain, which is worth reading before the first foreign invoice rather than after the first quarter.
The VAT you charge is collected on behalf of the State and sits in your account for up to three months looking exactly like income. The freelancers who have trouble in January are not the ones who earned too little: they are the ones who spent the fourth quarter's VAT. Moving it to a separate account on receipt is crude and it works.
Deadlines and the annual summary
The first twenty days of April, July and October, and the fourth quarter to 30 January, with a shorter window if you pay by direct debit. Form 390, the annual summary, goes in each January and must reconcile to the four quarters. Everything is in the tax calendar.
Correcting a quarter already filed
If you paid too little, the route is a supplementary return, which carries the late-filing surcharge: 1 % plus 1 % per complete month, and 15 % plus interest after twelve months. If you paid too much, the route is a request to rectify the return and recover the overpayment, open for four years. Sooner is always cheaper, and once a formal request arrives the surcharge becomes a penalty.
Registering, and the obligations that come with it
You become a VAT filer by declaring the activity on form 036, which is the census return that tells the Spanish tax office what you do and which returns you owe. From that moment the quarterly obligation exists whether or not you invoice anything, so a quarter with no work is filed at nil rather than skipped. Ending the activity likewise requires a census filing: the obligation does not lapse because you stopped working.
Not every activity charges VAT. Certain medical, educational and financial services are exempt, and an exempt activity carries no right to recover input VAT on the costs that relate to it. Someone with both kinds of work — a psychologist who also writes and consults, for instance — falls into the partial-deduction rules and has to split common costs. That is a case worth setting up properly at the start rather than unpicking later.
The registers behind the return
A freelancer in direct assessment keeps a register of invoices issued, a register of invoices received and a register of capital assets. They are not commercial accounts, but they are the first thing requested in a review and they have to agree with the returns already filed to the cent. The usual problem is not that they do not exist: it is that they were assembled in January from a bank statement, which produces a set of books that match the money but not the invoices, and the difference between those two things is exactly what a reviewer is looking for.
Questions we get asked about your self-employed work
Can I recover the VAT on my phone?
On the business proportion. If the line is mixed, 100 % does not hold up.
What do I do with an invoice from an EU supplier?
Self-charge the VAT on form 303 and report it on form 349. You need to be on the ROI first.
I got a quarter wrong. What now?
Underpaid, a supplementary return. Overpaid, a rectification request. The sooner the smaller the surcharge.
Is this the same as a holiday let owner's return?
Same form, different problems. If you also own a holiday let, see form 303 for a holiday let, and note that the two activities may have to be kept apart in your records.