Following up on our article Buy-to-Let in Spain: Landlord Tax Reliefs, VAT invoices are the backbone on claiming landlord tax relief. As explained in previous articles on holiday rentals, landlords can deduct from their tax bill on average 70%, or more, of all their property-related expenses (including the lawyer’s fees to prepare the quarterly accounts).
The ‘trick’ to vastly reduce your rental income tax bill is for suppliers to give you proper VAT invoices. In this short blog post we will examine what requirements must a VAT invoice meet to be accepted by the Spanish Tax Office.
Many suppliers will be highly reluctant to issue you with one (because they work off the books and do not pay any taxes). You may typically get asked in Spanish the following question: “¿Con o sin factura?” You must always reply; “Con, por favor”. Others will hand you a ‘factura’ just to keep you happy, but it will be missing key elements which make them void i.e. VAT missing, client’s name and personal details are missing, client’s tax number is not mentioned, no invoice number, service is not described, etc. A VAT invoice that misses out on key elements cannot be claimed for tax relief purposes.
By law, you must store all VAT invoices on which you are claiming landlord tax relief over the next 5 years. This is in case you are landed with a tax inspection, where you will be required to produce copies of all the VAT invoices you claimed tax relief on.
In today's tax blog we will collate the key elements which constitute a proper VAT invoice (factura). The Spanish Tax Office lists the full requirements in painstakingly detail on its web. In this blog, for simplicity’s sake, we are only going to give a brief outline on the main points.
Anatomy of a VAT invoice (factura)
1. Personal details of invoicer
- Full name and surname.
- Company name.
- NIF number of trader/service provider; if a company, it’s CIF number.
- Address.
2. VAT invoice number. i.e. 37/2021
3. Personal details of invoicee
- Full name and surname.
- Company name.
- Personal tax number: NIF or NIE number
- Address.
4. Service date
5. Brief description of service
6. Breakdown of Value Added Tax i.e. 21%
7. Total amount to pay, including VAT on top.
8. Company’s rubber-stamp seal (optional)
The Spanish Tax Office only accepts tax relief claims on the back of proper VAT invoices. If the VAT invoice you have been handed over does not meet all the above requirements, it will be turned down by the tax office, and we will not be able to claim tax relief on your behalf on submitting your tax returns.
We gently remind all taxpayers that till tickets from supermarkets, commercial centres and petrol stations are not accepted by the tax office as tax-deductible. Only proper VAT invoices such as the ones featured above.
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