The Spanish local tax number and the VAT number are both crucial pieces of information that companies in Spain must possess. However, there is an essential distinction between them. The Spanish local tax number is used to identify registered companies in Spain, while the Spanish VAT number is employed by the Spanish government to collect value-added tax.

What is the VAT rate in Spain?

Spanish VAT (Value Added Tax) is applicable to:

The use of Spain overseas storage, sales shipped to Spain, or other countries in the EU (provided they do not exceed the remote sales threshold).

Annual sales sent by the EU to Spain that surpass the Distance Selling threshold. Distance Selling refers to the transportation of goods stored in one EU country and the sale of these goods to individual consumers located in another EU country. According to the relevant regulations of the European Union, the threshold for distance sales in Spain is€35,000.If the annual sales sent to Spain from other EU countries exceed€35,000, Spanish VAT must be paid.

There are three standard VAT rates in Spain:

21% (applicable to the vast majority of goods and services).

Low tax rate: 10% (applies to food and catering, meat, fish, etc.).

4% (applies to medicines, bread, milk, vegetables, and other daily necessities).

The Difference Between Local Tax ID and VAT ID in Spain

Spanish Local Tax Code: Also known as the Spanish Economic Growth Tax Code, this code is assigned by the Spanish Tax Office to companies in Spain for the purpose of identifying registered companies in Spain.

Spain VAT Number: Also known as the VAT number, this is the tax identification number assigned by the Spanish Tax Office to companies in Spain. It serves as the means by which the Spanish government collects value-added tax.

The Difference: While both the Spanish local tax number and the Spanish VAT number are necessary for companies in Spain, there is a fundamental distinction between them. The Spanish local tax number is the tax identification number assigned by the Spanish Tax Office to a company in Spain. In contrast, the Spanish VAT number is used by the Spanish government to collect VAT.

Application: The application for a local tax ID and VAT ID in Spain is processed through the Spanish tax bureau, but the application procedures differ. Applying for a local tax ID requires providing more information, whereas obtaining a VAT ID only necessitates providing the local tax ID.

Use: The Spanish local tax ID is used to identify registered companies in Spain, enabling them to apply for loans, open bank accounts, and file tax returns. Conversely, the Spanish VAT number is employed by the Spanish government to identify registered companies in Spain and is required each time a product or service is sold for VAT purposes.