Taxes in Spain: Spanish withholding tax on invoices

Taxes in Spain. To withhold a tax rate (percentage) of a Spanish invoice received and to
deposit the amount withheld at the end of each quarter at the Inland Revenue in Spain is
an obligation that all entrepreneurs and companies should give special attention. We
have an obligation to retain the amount even so the person issuing the invoice does not
state the same on the invoice.
We are often approached b clients of our Spanish accountanc firm! "rcos # $amers
"sociados! our %ultilingual Spanish accountanc firm in %arbella! who have
difficult in understanding the concept of the &withholding tax in Spain'( when the
should! and when the should not! withhold. )or this reason "rcos # $amers would li*e
to give some basic guidelines which we hope will help to remove this dilemma.
What do we mean by Spanish Withholding Tax?
When Spanish companies or entrepreneurs! who are tax resident in Spain! receive an
invoice which includes an amount to withhold! the need to understand that the are not
being taxed! but that the person who has issued the invoice is the one who should ma*e
an advance pament of his+her future ,ersonal Income Tax and that the
companies+entrepreneurs are the channel through which the Spanish Inland Revenue
will ensure the advance pament! b ma*ing them responsible for retaining the
stipulated amount! and depositing it correctl in form and on time.
Who needs to include a Withholding tax rate on their invoices?
"ll individuals (not companies) who exercise a professional activit! such as lawers!
economists! accountants! solicitors! notaries! architects and translators! for example! are
obliged to issue their invoices with an amount to be withheld b the receiver of the
invoice.
It must be ta*en into account that! in order to qualif to withhold! the professional
should be acting under his own name and not under a legal entit! such as a $imited
-ompan (Spanish S.$. or S.".)! which is not required to withhold an amount on its
invoices.
What tax rate to apply?
"t present the Spanish Tax.$aw states that a rate of /l0 of the gross amount (amount
prior to Spanish 1at) should be applied
2xample of an Invoice sub3ect to Withholding Tax4
Fees: 100,00! "uros
5 1at 6 /70 /7!88.. 2uros
Total Fees a#ter Tax: 1$1,00! "uros
. Withholding Tax 6 /70 /7!88.. 2uros
Total to be paid: 100,00! "uros

The amount of 788!88.. 2uros will be paid to the supplier of the service and /7!88..
2uros Withholding Tax should be paid directl to the Inland Revenue at the end of the
quarter through declaration 777.
,lease do not hesitate to contact our accountanc firm in Spain now9 :our initial advice
is free
www.arcos.lamersasociados.com
%arbella ;une /87<