What Is IVA? Or: Why the Price Tag Is Lying to You 🇪🇸💸

Let’s clear something up immediately.

If you’ve ever stood in Spain thinking:

“Hang on… why is this more expensive than I expected?”

Congratulations.
You’ve just met IVA.

IVA is Spain’s version of VAT — and it quietly sneaks onto everything from property purchases to haircuts, often after you thought you’d finished the maths.

So let’s demystify it.
No tax degree required.

What Is IVA (in Normal Human Language)?

IVA = Value Added Tax.

It’s an indirect tax, which means:

• it’s not taken from your salary
• it’s added to what you buy

You don’t usually file it personally.
You just… pay it. Constantly. Casually. Forever.

Unlike income tax, IVA is baked into:

• goods
• services
• renovations
• new builds
• many things you assumed were “just the price”

The Three IVA Rates You’ll Actually Encounter

Spain doesn’t do “one rate fits all”.
It does three, depending on what you’re buying.

🧾 1. General IVA — 21%

This is the default.

If nothing special applies, assume 21%.

This covers:

• most goods and services
• professional services
• hairdressers & aesthetics
• flowers
• funerals (yes, really)
• club tickets, fairs, exhibitions

If you didn’t ask about IVA, this is probably the one you’re paying.

🛠️ 2. Reduced IVA — 10%

This applies to things Spain considers… essential-ish.

Common examples:

• food (excluding alcohol)
• water
• passenger transport
• hotels, restaurants, bars
• renovation and repair works on homes
• new-build residential property
• cinema, theatre, concerts, sporting events

This is why:

• eating out feels affordable
• but other everyday services don’t

🥖 3. Super-Reduced IVA — 4%

Spain being genuinely kind.

This applies to:

• basic food staples (bread, milk, eggs, fruit, veg)
• books and newspapers (actual ones, not ads)
• medicines
• mobility vehicles and medical aids
• social housing

This is why grocery shopping often feels refreshingly reasonable.

IVA and Property: The Bit People Get Wrong 🏡

This matters.

Buying a resale property?

You don’t pay IVA — you pay ITP (transfer tax) instead.

Buying a new build or off-plan property?

IVA absolutely applies:

• 10% IVA on the purchase price
• plus stamp duty (usually 1–1.5%)

This is why new builds often come with a sharp intake of breath at completion.

IVA is not optional.
And it’s not included unless it’s stated very clearly.

IVA If You’re Self-Employed (Autónomo): Read This Twice

If you’re self-employed in Spain, IVA stops being background noise and becomes your responsibility.

This is where many people come unstuck — not because IVA is complicated, but because it’s misunderstood.

You Don’t Pay IVA — You Collect It

If your activity is subject to IVA:

• you add IVA to your invoices
• you collect it from your clients
• you hold it temporarily
• then you hand it over to the tax office

That IVA money is not your income.
It never was.

Treating it like spending money is how people panic every quarter.

Typical IVA Rates for Autónomos

Most autónomos charge:

• 21% IVA

Some activities qualify for:

• 10% IVA
• or are IVA-exempt

Which rate applies depends on what you do, not who you are.

Quarterly IVA Declarations (Yes, Quarterly)

Most autónomos must file IVA:

• every quarter
• declaring:
  • IVA collected from clients
  • minus IVA paid on business expenses

You pay the difference.

Example:

• You collect €2,100 IVA from clients
• You paid €600 IVA on expenses
• You owe €1,500 to Hacienda

No reminders.
No grace period.
Spain assumes you’re organised.

IVA-Exempt Does Not Mean “Better”

Some professions are IVA-exempt, including:

• certain healthcare professionals
• education and training roles
• therapists and psychologists
• some coaching and teaching activities

IVA-exempt means:

• you don’t charge IVA
• but you can’t reclaim IVA on expenses

So yes, you avoid charging it —
but you absorb IVA costs yourself.

This is why “IVA-exempt” isn’t automatically a win.

International Clients: The 2am Google Spiral

If your clients are outside Spain, IVA may:

• not be charged
• be reverse-charged
• or fall outside Spanish IVA altogether

It depends on:

• where the client is based
• whether they’re a business or individual
• the service you provide

There is no one-rule-fits-all answer here — which is why autónomos need proper tax advice early.

The Golden Rule for Autónomos

If you remember nothing else, remember this:

IVA is not your money. Ever.

Put it aside the moment it lands in your account.

Most “Spain tax disasters” aren’t about high tax —
they’re about poor cash-flow planning around IVA.

IVA-Exempt Goods & Services (Surprisingly Useful)

Some things are fully IVA-exempt, including:

• insurance products
• savings and financial products
• postage stamps
• certain educational services
• professional medical care
• social housing rentals

Spain taxes a lot — but not absolutely everything.

What Changed Recently (Because It Always Does)

Since 2020:

• sugary soft drinks are charged 21% IVA
• not the reduced rate

Spain giveth cheap vegetables…
and Spain taketh fizzy drinks.

The One Thing to Always Ask

“Is that price with IVA?”

If you:

• renovate
• buy property
• run a business
• or budget tightly

Always ask the question.

IVA is rarely the headline price — and it loves a surprise appearance.

Final Reality Check

IVA isn’t scary.
It’s just everywhere, inconsistent, and assumed knowledge.

Once you understand:

• the three rates
• when they apply
• and when they don’t

You stop being surprised — and start budgeting properly.

Which saves money, stress, and the classic

“Hang on a minute…” moment at the till.

Small but Important Disclaimer

While we can always point you in the right direction, we are not tax advisors.
This is a practical guide, not personalised tax advice.
If your situation is complex, ask before you assume.