Invoicing foreign clients from Spain: when there is no VAT and what you still declare

The question is not "does it carry VAT?" but "where is the transaction located?"

Spanish IVA, the Spanish VAT, only taxes transactions the law deems to take place in its territory: the mainland and the Balearic Islands. The Canary Islands have the IGIC and Ceuta and Melilla the IPSI, and for VAT purposes they are treated as territories outside the EU. When you invoice someone abroad, the question is whether your transaction is "located" in Spain or somewhere else. If it is located here, it carries Spanish VAT; if not, the destination country, if anyone, taxes it.

For services, the general rules are in article 69 of Law 37/1992 on VAT, and there are two:

• Business client (B2B): the service is located where the client has its seat, permanent establishment or domicile. A company in Lisbon or in Boston: no Spanish VAT.
• Private client (B2C): the service is located where you are. A private individual in Munich pays Spanish VAT as if they lived in Valencia.

On top of those two rules, article 70 imposes special rules that override the general ones: services connected with real estate are located where the property is; passenger transport, for the distance travelled in Spain; admission to fairs and events, where they take place; restaurant services, where they are served; digital services to consumers, where the consumer lives; and there are specific rules for vehicle hire and work on movable goods. Article 69.Two adds an important exception for private individuals outside the EU, covered in case 3.

Before you write the invoice, answer the three questions. If you have many clients abroad, the page on invoicing outside Spain summarises the circuit; the accrual point is the same as for any other invoice.

Case 1: a business client in another EU country

This is the freelancer working for a Dutch agency or the SL selling software to a French company. The B2B rule locates the service in the client's country and the invoice goes out without Spanish VAT: it is your client who accounts for VAT in their own country under the reverse charge. You need four conditions, all of which can be checked:

1. Be registered in the ROI. The Register of Intra-EU Operators is requested on modelo 036. Registration gives you your NIF-IVA, your NIF with the ES prefix, and lists you in the European VIES database. Without the ROI your client cannot validate you and will ask you to invoice with VAT.
2. Check your client in VIES. Before every invoice without VAT, verify their number on the AEAT's VIES service and keep the query. If they do not appear as a valid operator, the general rule is to invoice with Spanish VAT. The glossary entry on ROI and VIES sums it up.
3. Put on the invoice what the regulation requires. The client's NIF-IVA is mandatory when they are the taxable person (article 6.1.d of the Invoicing Regulation) and the invoice carries the literal wording "inversión del sujeto pasivo" (article 6.1.m). You may omit rate and VAT amount and state only the value (article 6.3), and a simplified invoice is not allowed (article 4.4).
4. Report it twice. In the quarter's modelo 303, in the informative boxes for intra-EU transactions, and in modelo 349, client by client with their NIF-IVA. The 349 is quarterly as long as neither the current quarter nor any of the previous four exceeds 50,000 euros of intra-EU transactions, and it is only filed for periods with transactions.

One nuance that confuses people: the transaction is not "exempt", it is "not subject" in Spain and subject at destination with the client as the taxable person. It does not change what you receive, but it does change the wording and the box in the 303. And another that saves surprises: the reverse charge works the other way round too. When you buy software, advertising or services from an EU supplier, you self-assess the VAT in the 303 and deduct it in the same return, and that purchase also goes in the 349.

Case 2: a private client in the EU

This is where intuition fails. If your client is a private individual in another EU country, the B2C rule locates the service where you are, so the invoice carries Spanish VAT: 21% standard, 10% reduced or 4% super-reduced. It does not matter that they live in Vienna or Krakow; no ROI or VIES applies because the client is not a business, and that invoice does not go in the 349, which only covers transactions with businesses identified for VAT.

The exception is electronically supplied services, together with telecommunications and broadcasting. The law (article 69.Three.4) defines them as services delivered automatically over the network: web hosting, remote software maintenance, supply of software and updates, access to databases, images, text, music, films or games, and automated distance learning. Communicating with your client by email does not make your service electronic: consultancy over a video call is an ordinary service; a recorded course sold and delivered only through a platform is an electronic service.

For those digital services to EU consumers, article 70.One.8 applies with a threshold, set in article 73, of 10,000 euros a year excluding VAT, which adds together your digital services to consumers in other Member States and your distance sales of goods to the EU. As long as you did not exceed it last year and do not exceed it this year, you charge Spanish VAT. From the euro that goes over it, the service is located in the consumer's country and you charge that country's VAT. To avoid registering with 27 tax authorities there is the OSS one-stop shop: you register with the AEAT, declare each country's VAT quarterly in a single return and the AEAT distributes it. You can also opt to be taxed at destination before crossing the threshold, with a minimum commitment of two calendar years.

If your business is of this kind, keep an eye on the running total every quarter: the modelo 303 estimator helps you see how much VAT is yours, and the guide on the myth of 85,000 euros without VAT will stop you confusing this European threshold with a small-business exemption that does not exist in Spain.

Case 3: a client outside the EU (United Kingdom, Switzerland, United States, Russia...)

Outside the European Union there is no 349, no VIES and no EU reverse charge. The United Kingdom has been a third country for these purposes since Brexit, with the sole exception of trade in goods with Northern Ireland.

Business client outside the EU. The B2B rule in article 69.One.1 locates the service in the client's country, so the transaction is outside the scope of Spanish VAT. You invoice without VAT, stating the reason, for example "operación no sujeta por reglas de localización, artículo 69 de la Ley del IVA" (not subject under place-of-supply rules). You do not need the client to have a VAT number, because there is no worldwide VIES; keep proof that it is a business and where it is (contract, website, registration number). The invoice is reported in the 303 in the box for transactions not subject under place-of-supply rules, and it does not appear in the 349.

Private client outside the EU. The B2C rule would say Spanish VAT, but article 69.Two corrects it for a list of services which, when the recipient is a private individual established outside the EU, are not located in Spain: transfers of copyright, patents, licences and trademarks; advertising; consultancy, auditing, engineering, legal services, consultants, accountants and tax experts; data processing and supply of information; translation, proofreading and interpreting; financial and insurance services; supply of staff; film dubbing; and hire of movable goods other than means of transport. A translator in Malaga working for a private individual in Buenos Aires or a lawyer advising a resident of Dubai invoices without Spanish VAT. The list is closed: what is not on it follows the general rule and carries Spanish VAT, and digital services to consumers are not on it, so if you sell digital products to private individuals outside the EU analyse your specific case. The exception does not apply if the individual lives in the Canary Islands, Ceuta or Melilla.

Two warnings. The effective use rule in article 70.Two: if one of those services to a non-EU private individual is actually used in Spain, it becomes subject to Spanish VAT again. And the invoice is still mandatory and is issued under Spanish rules (article 2.3 of the Invoicing Regulation), even though the transaction is not located here. The guide to modelo 349 explains why these invoices never enter that return.

Goods: intra-EU supplies and exports

If you sell goods, VAT does not look at where the client is but at where the product travels, and two figures with their own names appear.

Intra-EU supply of goods (business client in the EU). It is exempt under article 25 of the VAT Law, with three substantive conditions: the client must be a business with a VAT number from another Member State which it has communicated to you; the goods must actually be transported to another EU country, with proof of transport as set out in article 45a of Implementing Regulation (EU) 282/2011 (transport documents, CMR, carrier receipts); and the transaction must be included in the 349. If any of the three is missing, the exemption falls and the VAT is yours. On the invoice the client's NIF-IVA is mandatory and the reference to the exemption must appear (article 6.1.j of the Invoicing Regulation).

Export (goods leaving the EU). It is exempt under article 21, whether the buyer is a business or a private individual, provided the goods actually leave the territory of the EU. The proof is a customs matter: the VAT Regulation (article 9) requires you to keep the invoices, contracts or orders, transport documents and the documents evidencing exit, which in practice is the export DUA. Without a DUA, the exemption cannot be defended. These sales do not go in the 349 either.

Sales to EU private individuals (distance sales). The same 10,000-euro threshold from case 2 applies: below it, Spanish VAT; above it, the VAT of the consumer's country through the OSS one-stop shop. Article 73 adds your distance sales of goods and your digital services to EU consumers into a single count.

A reminder for year end: intra-EU transactions reported in the 349 are left out of modelo 347, because they already travel by another route. And as in all the previous cases, the transaction is reported in the 303 even when the result is zero.

IRPF withholding: your foreign client does not apply it

If you are a self-employed professional invoicing a Spanish company, your invoice carries a withholding line of 15% (or 7% in your first year of activity and the two following ones) that your client pays to the tax office in your name through modelo 111. With a foreign client that line disappears, and not out of courtesy but by law.

The obligation to withhold is imposed by article 99.2 of the Personal Income Tax Law, developed by article 76 of its Regulation, on those who pay income subject to the tax: resident legal entities, self-employed people paying in the course of their activity, and non-residents with a permanent establishment in Spain. Non-residents without a permanent establishment only withhold on employment income and on income that is a deductible expense of income they earn in Spain. Your professional invoice to a company in Amsterdam or Toronto falls under none of those cases: your client has no obligation to withhold, you do not include withholding, and you receive the full amount.

Receiving the full amount does not mean paying less tax. The income tax is still yours, only nobody advances it for you:

• Modelo 130. A professional is only exempt from quarterly instalments if at least 70% of their previous year's income carried withholding. If most of your invoicing goes to foreign clients, you will be obliged to file modelo 130 and pay the advance yourself every quarter.
• Set money aside. The money coming in is not all yours: part is VAT where there is any, and part is the income tax for your annual return. The calculator how much to set aside from each payment gives you the figure for your bracket.

And a warning in the opposite direction, common among freelancers invoicing their country of origin: some countries apply their own withholding at source to payments to foreign suppliers. If your client deducts a percentage, ask for the certificate and check the double taxation treaty with that country: with your Spanish tax residence certificate that withholding is often reduced or eliminated, and whatever is still withheld can be offset in your Spanish return through the international double taxation credit. All of this assumes you are tax resident in Spain; if unsure, start with the guide to tax residence in Spain.

What the invoice to a foreign client must look like

It is a normal Spanish invoice with three or four particularities. The mandatory content is that of article 6 of the Invoicing Regulation, the one detailed in the guide to your first invoice. What changes:

• Identifying the client. With an EU business, its NIF-IVA is mandatory and checked in VIES. With a business outside the EU, its local tax number is not mandatory, but identify it with full name, address and country. If the client has a Spanish NIF or NIE because it also operates here, validate the format with the NIF, NIE and IBAN validator.
• The wording. "Inversión del sujeto pasivo" for EU businesses; a reference to the exemption (article 25 or 21 of the VAT Law) for intra-EU supplies and exports; "operación no sujeta por reglas de localización" for services to clients outside the EU. The regulation requires the wording when the recipient is the taxable person and the reference when the transaction is exempt.
• No withholding when the client is not established in Spain.
• A full invoice, never a simplified one. Article 4.4 prohibits it for intra-EU supplies and transactions located outside Spain.

Three frequent doubts are answered by the regulation itself. Currency: any currency, dollars or pounds included, on condition that, if you charge VAT, the VAT amount also appears in euros at the exchange rate of article 79.Eleven of the VAT Law (article 12.1). Language: any language, although the AEAT can demand a Spanish translation in an audit (article 12.2). Deadline: with a business recipient, the invoice is issued before the 16th of the month following accrual (article 11.1), not when you get paid.

Two calendar notes. These invoices are inside Verifactu like any other: from 2027 they will come out of software that generates the chained record and the QR code. On the other hand, they are outside mandatory B2B e-invoicing, which only reaches recipients with a seat or establishment in Spain; the difference is in the guide to mandatory e-invoicing. And mind your series: using a separate series for foreign clients is legitimate as long as each series is sequential and gap-free.

Typical mistakes and what they cost

The stumbles we see most among freelancers and SLs starting to invoice abroad, from most expensive to most annoying:

1. Invoicing an EU business without VAT while not in the ROI or without checking VIES. If the tax office reviews it, the invoice should have carried VAT and the amount comes out of your pocket, with interest: the client has already paid and will not refund you a 21% you never charged.
2. Forgetting the 349 because "nothing is paid". Informative returns are penalised per omitted item, and the AEAT cross-checks your data with your European client's. If you have missed it, the guide on what to do when you miss a deadline explains how to regularise before they contact you.
3. Treating the United Kingdom, Switzerland or Norway as EU. They are not intra-EU transactions: no 349, no reverse-charge wording, no VIES.
4. Applying withholding to a foreign client, or accepting that a foreign client "withholds 15%" as if it were Spanish. Spanish withholding is only applied by payers established in Spain.
5. Invoicing an EU private individual without VAT because "they are foreign". A European private individual pays Spanish VAT, except for digital services above the OSS threshold.
6. Ignoring the 10,000-euro threshold for digital services and distance sales. Once exceeded, every sale to an EU consumer carries their country's VAT, and not declaring it through the OSS is a debt to 26 tax authorities at once.
7. Believing that "no VAT" means "nothing to declare". All of these transactions go in the 303, in their informative boxes, and the 303 is filed every quarter even when the result is zero.
8. Not keeping the evidence. The dated VIES screenshot, the CMR, the export DUA, the contract showing the client is a business. Without them, the exemption or non-subjection is your word against the inspector's.

How kontora handles it

The difficulty of invoicing abroad is not calculating 21%, but remembering everything else every time: whether this client gets VAT, which wording applies, whether it goes in the 349, whether there is withholding. kontora moves those decisions to the client record: when you create the client you state the country, whether it is a business or a private individual and its NIF-IVA when it is in the EU, and every invoice comes out with the right treatment, the mandatory wording, the client's NIF-IVA and no withholding line when the client is not established in Spain.

Because the same invoices feed the accounts, the draft 303 and the draft 349 come from the same data and reconcile with each other, which is what the AEAT checks. The app guides you through filing them at the tax agency's electronic office; the filing itself is yours to do, with the draft prepared box by box. If you work with clients in several countries, the page on invoicing outside Spain and the plans tell you what each one includes.

What no tool does for you: registering in the ROI, checking VIES before every new invoice and keeping the transport and export evidence. Those are three habits, and they are what separate a defensible VAT-free invoice from one that will end up costing you the VAT.

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