Doing Business Abroad from Spain? What You Need to Know About VAT

Introduction

Spanish businesses, whether self-employed professionals (autónomos) or companies, increasingly operate in international markets. A common question arises: when a Spanish business provides services or goods to a business client located outside Spain, how should VAT be applied?

This article provides a clear overview of the VAT rules for B2B cross-border transactions, distinguishing between EU and non-EU clients, and summarising the main compliance requirements.

1. Transactions with EU Business Clients

When a Spanish business supplies goods or services to another VAT-registered business established in an EU member state:

• No Spanish VAT is charged.
• The transaction is subject to the reverse-charge mechanism, meaning the client accounts for VAT in their own country.
• The Spanish supplier must ensure that both parties are registered for intra-community operations (VIES validation).

These operations must be reported in the Spanish Modelo 303 (periodic VAT return) and in the Modelo 349 (informative return of intra-community transactions).

2. Transactions with Non-EU Business Clients

For business clients established outside the EU, supplies of services are generally considered to be located where the client is established. As a result:

• Spanish VAT is not charged.
• The transaction is subject to the reverse-charge mechanism, meaning the client accounts for VAT in their own country.

Such transactions must still be included in Modelo 303.

3. Invoicing Requirements

Even if VAT is not charged, invoices must contain:

• The client’s business details and tax identification number.
• The Spanish supplier’s VAT number.
• A statement indicating that VAT is not charged because the transaction is subject to reverse-charge mechanism.

4. Compliance Summary

Client Location	VAT to Charge?	Declarations
EU business (VAT-registered)	0 %	Modelo 303 and Modelo 349
Non-EU business	0 %	Modelo 303 (exports also require customs evidence)

Conclusion

For B2B transactions, the general rule is straightforward: Spanish VAT is not applied to sales made to businesses established outside Spain. What matters most is ensuring that:

• The client is correctly identified as a business.
• Invoices explicitly state why VAT is not charged.
• The relevant declarations (Modelo 303 and, where required, Modelo 349) are submitted on time.

Getting these details right avoids potential challenges in a tax inspection and ensures smooth cross-border business operations. At Spence Clarke, we assist clients in understanding and applying these rules so that their international transactions remain fully compliant.