VAT and IRPF Obligations for Self-Employed in Spain
VAT and IRPF Obligations for the Self-Employed in Spain
Value Added Tax (VAT) Obligations
Article 164 of the VAT Law outlines the obligations of taxpayers, including the following:
Books and Records
The VAT Regulations require the following books:
- Record Book of Invoices Issued
- Record Book of Invoices Received
- Record Book of Investment Goods
- Record Book of Certain Intra-Community Transactions
These books can be replaced by other registration systems, provided they can provide the required data and ensure compliance with tax obligations. These registry systems should also be part of the company’s administrative and accounting records. Companies benefiting from the special VAT schemes (Simplified, Agriculture, Livestock and Fishing; Surcharge of Equivalence) are exempt from keeping all these record books.
Record Book of Invoices Issued
This book records issued invoices, substitute documents, and, where appropriate, corrective invoices used in commercial relationships, as well as tickets and receipts that may fulfill this function. Invoices should be recorded individually, providing the following information:
- Invoice number
- Date of issue
- Date of completion
- Recipient: Full name or business name, Tax Identification Number (NIF)
- Taxable income
- Tax rate
- Tax amount charged
The following entries are allowed in the record book of invoices:
- Grouping of invoices in a single entry.
- Division of an invoice into several entries.
Record Book of Invoices Received
All companies must consecutively number all invoices, substitute documents received for goods and services purchased, and customs documents for imported assets. The following information should be recorded for invoices:
- Reception number assigned to the invoice
- Date of issue
- Date of completion
- Sender: Name and surname or business name, Tax Identification Number (NIF)
- Taxable base
- Tax rate
- Tax amount charged
The following entries are also allowed in the record book of invoices received:
- Grouping of invoices in a single entry.
- Division of an invoice into several entries.
Record Book of Investment Goods
For investment goods, the percentage deducted in the year of purchase is not considered definitive. It is tracked for four years (nine years for land and buildings). If the deduction percentage varies by more than 10% in subsequent years, an adjustment to the deduction should be made, increasing or decreasing it as appropriate.
This book should individually record purchased investment goods. It is only required when the company simultaneously carries out transactions with and without the right to deduct tax.
Record Book for Certain Intra-Community Transactions
This book is maintained to record specific intra-community transactions, including the sending and receiving of goods for valuations, as outlined in Articles 9.3 and 16.2 of the VAT Law.
How to Keep Books and Conservation Measures
Entries in the books must be in chronological order, with clarity and accuracy. There should be no alterations, deletions, or blank spaces in the books to prevent data manipulation. Any errors or omissions in accounting records should be corrected as soon as detected, making a new entry to correct the effects of the erroneous annotation and noting the mistake.
All books related to tax obligations should be kept for a period of four years from the last entry made.
Accounting Obligations under the Personal Income Tax (IRPF)
Income earned by sole proprietors is subject to Personal Income Tax (IRPF). Under the normal direct assessment scheme, maintaining accounting and bookkeeping records is required. Employers under the simplified direct assessment scheme (where there are no accounting records like journals, ledgers, inventory, and annual accounts) are required to keep certain record books, such as:
- Sales and Revenues
- Purchases and Expenses
- Capital Goods
Under the objective assessment scheme, there is no such obligation. For all schemes of this tax, the preservation of records of transactions is required.