Luis lets a commercial unit and files Modelo 303, the Spanish VAT return, every quarter. In January his software also offers him Modelo 390, but he may be exempt from it. The exemption covers, among other cases, people who file quarterly, are taxed only in the common territory (Spain outside the Basque Country and Navarre, which run their own tax systems) and carry on exclusively activities under the simplified VAT scheme, the letting of urban property, or both. It also covers people who keep their books through the SII, the system for sending invoice records electronically to the tax office. Being exempt does not do away with the annual close: the information is carried into the Modelo 303 for the last period.
Modelo 390 summarises; it does not settle tax again
Modelo 390 is an annual information return. It recaps taxable bases and output VAT charged, deductible VAT, activities, schemes and the volume of transactions. On its own it does not produce a new payment, and it does not replace the four quarterly 303 returns. Its job is to show how the annual total is built up.
That is why Hacienda, as the Spanish tax office is commonly called, can compare the two sources automatically. If your four 303 returns declared a base of 18,000 € at 21 %, the summary cannot show 16,000 € without an explanation. Differences can be legitimate, for instance because of certain corrections, but they have to be reconciled before you file.
| Situation | Files the 390? | Annual close |
|---|---|---|
| Professional under the general scheme, quarterly | In principle, yes | 303 for Q4 and the 390 |
| Only urban letting, quarterly, common territory | No | Annual section of the Q4 303 |
| Only the simplified scheme, quarterly, common territory | No | Annual section of the Q4 303 |
| Within the SII | No | Information in the last monthly 303 |
| An additional activity under the general scheme | The exemption has to be reviewed | It must not be taken for granted |
Who can be released from the summary
The exemption by type of activity requires you to read all of its conditions. Filing quarterly is not enough. The taxpayer must be taxed only in the common territory, and the activity must fit the simplified scheme, the letting of urban property, or a combination of the two. If you also carry on another activity subject to the general scheme, the conclusion can change.
Taxpayers within the SII, who send their invoice records electronically, are exempt as well. Being exempt does not mean the tax office lacks the data; it means the data reaches it by another route.
Nor does the exemption apply if there is no obligation to file the return for the last period of the year. Registrations, deregistrations, changes of scheme and simultaneous activities deserve an individual review rather than a copy of last year's answer.
The annual boxes in the last 303
Anyone who does not file the 390 must complete, in the 303 for the fourth quarter (or for month twelve if they file monthly), the section on activities and transactions carried out during the year. That is where the annual volume and the different kinds of transactions are reported, using the boxes the form itself provides.
That block is not filled in with the December result or with the sum of VAT payable. It collects figures for the whole year: transactions under the general scheme, exempt transactions, exports, intra-Community supplies and other categories where they apply. Using the income figure from your income tax (IRPF) return without checking the VAT criterion can produce differences caused by the accrual rules, transactions outside the scope of VAT or different activities.
You can send your activities, the four 303 returns and a summary of your books through the self-employed form. The exemption and the annual boxes have to be reviewed together: leaving out the 390 and leaving the replacement section blank does not complete the close.
A reconciliation worked through
A professional declares these bases at 21 % during the year:
| Period | Base declared |
|---|---|
| Q1 | 12,000 € |
| Q2 | 14,000 € |
| Q3 | 11,000 € |
| Q4 | 13,000 € |
| Total | 50,000 € |
The starting point for the close is 50,000 €, not the balance collected in the bank. If the annual summary or the annual section of the 303 shows 48,500 €, the missing 1,500 € has to be found: a corrective invoice, an error of period, a duplicated invoice or a transaction classified in another box. Filing first and searching afterwards tends to turn a simple reconciliation into a formal request for information.
The mismatches that cause the most trouble
It pays to reconcile separately the bases and VAT at each rate, the deductible VAT on ordinary purchases, capital goods, intra-Community acquisitions and corrections. The balance to be carried forward from one quarter to the next must match as well. If an unpaid invoice was corrected under article 80 of the Spanish VAT Act (LIVA), review the procedure for recovering VAT from a client who does not pay.
A 303 with no tax due does not necessarily mean there were no transactions. There may be expenses and a balance to carry forward. The difference is explained in what happens when you file a nil 303. Nor should the VAT close be confused with the payments on account of income tax: Modelo 130 and the annual return serve another purpose.
Deciding without carrying the error forward
Before the last 303, check the activities recorded in the tax register, the VAT scheme of each one, how often you file and whether you are also taxed by the foral administrations of the Basque Country or Navarre. Then export the books, reconcile the four periods and set aside the differences that are justified. Only then do you decide whether a 390 is due or whether its content goes into the last 303.
Starting, stopping and changing activity
If you start in July, the summary covers the period from the start, not a notional full year. If you stop in September, you still have to review the final return and the annual obligations. Deregistering from the tax register does not erase the returns for the period in which you were active.
When you combine activities, classify each one. Urban letting that is exempt on its own can sit alongside another transaction that changes the obligation. The answer comes from the whole set of activities and schemes, not from the heading that brings in the most income.
Nor should you reuse last year's conclusion without checking for changes. Joining or leaving the SII, starting an activity under the general scheme, moving where you are taxed or changing how often you file can alter the close.
Reconciling layer by layer
First add up the bases and output VAT by rate. Then reconcile ordinary deductible VAT and capital goods. Next review intra-Community acquisitions, reverse-charge transactions, imports, exports and corrections. Finally, follow the balance carried forward.
| Layer | Source to check against |
|---|---|
| Domestic sales | Book of invoices issued and the 303 |
| Purchases | Book of invoices received and the deductible VAT |
| Special transactions | Invoices, customs documents and information returns |
| Balances | The chain of 303 returns for the year and the year before |
| Annual volume | Classification of transactions in the last period |
This order avoids hunting for an overall difference among hundreds of entries. If the mismatch sits in one layer, it is narrowed down by period, rate and document.
Filing a 390 nobody asked for does not close the year
If you are exempt, the answer is not to file the 390 "just in case" and leave out the annual boxes of the 303. The formal obligation is set by the rules, and the data must appear through the channel they provide. A return that was not required can also introduce figures that do not fit.
If you discover later that the 390 was missing or that the last 303 contains incorrect annual data, analyse the correction of each form separately. Do not change quarterly returns whose tax was correct just to make them match a badly prepared summary.
At Salama Tax we can review that close and document the reconciliation so that the change from one year to the next does not leave a return unfiled.
File the filing receipt together with the reconciliation and the final books. If the software changes, keep a readable export as well: the close must be reproducible for as long as the tax office can review it.