E-commerce is experiencing significant growth and development, with platforms such as WooCommerce and Shopify playing a pivotal role in this expansion. These platforms collectively host more than 135,000 online stores, which is a testament to the region’s vibrant and ever-evolving online business environment.
This surge in digital commerce is not only reshaping traditional retail models but also creating new opportunities for entrepreneurs and businesses to reach a broader audience.
However, with this growth comes the complexity of managing various legal and financial responsibilities, particularly concerning tax obligations. To assist business owners and entrepreneurs in effectively navigating the intricate tax requirements associated with online sales in Spain, we have meticulously compiled this guide. It offers a comprehensive overview, providing valuable insights and practical advice to ensure compliance and optimize business operations in this dynamic market.
Tax obligations for e-commerce
E-commerce, like any other economic activity, is subject to various tax requirements. To operate legally in Spain, online stores must comply with the regulations of several authorities:
- Spanish tax agency (Agencia Estatal de Administración Tributaria, AEAT): This is Spain’s national tax authority responsible for overseeing and collecting taxes, including income tax (IRPF), VAT (IVA), and other levies that apply to e-commerce activities. Online stores need to register with the AEAT and submit regular tax declarations to remain compliant, with filing requirements depending on the store’s legal status (freelancer, company, etc.).
- Social Security (Seguridad Social, SS): Any individual or entity generating income through online sales must contribute to the Spanish Social Security system if they meet specific income thresholds and do not have an exemption. This includes self-employed contributions for freelancers (autĂłnomos), which provides benefits such as healthcare, pensions, and unemployment assistance.
- Economic Operators Registration and Identification (EORI): For online stores involved in international trade, the EORI number is essential. It’s required for businesses trading goods across EU borders, ensuring compliance with customs regulations. With this registration, stores can facilitate and track cross-border shipments, declare imports and exports, and manage VAT obligations.
- Intra-community Operator Registry (Registro de Operadores Intracomunitarios, ROI): For businesses selling to other EU countries, the ROI registration is needed to obtain a VAT identification number (NIF-IVA) and take advantage of simplified VAT processing under intra-community VAT rules. This helps avoid VAT charges on intra-EU business-to-business sales and aligns with the EU’s “reverse charge” mechanism for VAT.
Keeping up with these requirements avoids legal issues and allows the business to grow while remaining compliant with Spain’s regulatory framework.
Tax regime for online stores
In Spain, online stores are subject to different tax regimes based on their structure and annual income:
- Freelancers (Autónomos): Suitable for individuals and small businesses with moderate earnings. Freelancers pay quarterly IRPF on net income and VAT on sales. Since 2023, autónomos contribute to Social Security through a progressive cuota based on net income, with monthly fees starting as low as €230 for lower-income brackets and scaling up to €590 for higher earnings. This change allows for more flexible contributions aligned with income.
- Companies (Sociedades): Ideal for higher-income businesses, companies pay Corporate Tax on profits and are subject to more comprehensive accounting requirements. This structure benefits businesses with larger operations and growth potential.
Selecting the correct tax regime impacts tax rates, obligations, and available deductions.
Are you required to declare online sales?
Yes, if you run an online store, you must declare your sales to the tax authorities. Your specific obligations will depend on your turnover and the nature of the sales, whether they’re domestic or international.
Domestic Sales: In Spain, autĂłnomos and companies are required to report and charge VAT (IVA) on all domestic sales, regardless of income level. Income tax declarations are also mandatory.
International Sales: For cross-border EU sales, VAT must be declared if annual sales exceed €10,000, typically managed through the One-Stop-Shop (OSS) scheme. For non-EU sales, additional customs and VAT documentation might be required through the Import One-Stop-Shop (IOSS).
Tax forms for online stores
Online stores must submit various tax forms depending on their operations and legal status:
- Form 130: Quarterly self-assessment for IRPF (income tax) required for freelancers, reflecting income and deductible expenses.
- Form 303: Monthly or quarterly VAT self-assessment for businesses collecting VAT on sales.
- Form 349: Monthly, quarterly, or annual declaration for intra-community operations, required for businesses conducting sales or services within the EU.
- Form 390: Annual summary of VAT activity, consolidating the year’s Form 303 filings.
Each form has specific submission deadlines, and meeting them is crucial to avoid penalties. For international e-commerce, businesses may also need to consider the OSS (One-Stop Shop) and IOSS (Import One-Stop Shop) schemes for streamlined VAT reporting within the EU, as well as RAP (Registro de Actividades EconĂłmicas), Intrastat for intra-EU trade statistics, and DUA (Documento Ăšnico Administrativo) for customs documentation on goods entering or leaving Spain. These additional requirements ensure compliance across all areas of e-commerce operations.
Paying income tax if you have an online store
For freelancers running an online store, they must pay income tax (IRPF) after their earnings. The income tax is calculated on your net income—that’s your revenue minus business expenses. For example, if you bring in €25,000 in a quarter and have €5,000 in deductible expenses, you’ll pay tax on the remaining €20,000. It’s a straightforward process, and knowing your taxable income helps you budget better.
Want a clearer picture of what you’ll actually take home? Try Xolo’s net salary calculator to see your income after taxes and deductions.
What can you deduct? Freelancers are eligible to deduct expenses like office supplies, software, and even transportation costs. For a full list of deductible items and tips on staying tax-compliant, head over to our deductible expenses guide. This way, you can keep more of what you earn and avoid surprises come tax time.
What VAT do online stores pay?
VAT in Spain varies by product type, with three main rates that online store owners should know:
- 21% standard rate: This is the default VAT rate, applying to most goods and services. For example, electronics, clothing, and household items fall under this rate.
- 10% reduced rate: This rate covers essentials such as food items (like meat, fish, and bread), health products, and transport services.
- 4% Super-Reduced Rate: Limited to basic necessities, this applies to items like certain bread, books, and medicines.
International Sales: For cross-border EU sales, the distance selling threshold (€10,000) triggers VAT obligations under the One-Stop Shop (OSS) system. If sales exceed this threshold, the VAT rate applied is based on the buyer’s country.
Understanding these VAT rates is crucial for accurate pricing and tax compliance across various product types and destinations.
Are you required to declare VAT on online sales?
VAT declaration is mandatory for online stores with sales in and outside Spain. To declare VAT, you need to file Form 303 (quarterly VAT return) and Form 390 (annual VAT summary) with the Spanish Tax Agency.
If you sell to other EU countries and surpass the €10,000 distance selling threshold, you’ll register for the One-Stop Shop (OSS) scheme, which simplifies VAT reporting across EU countries with a single, consolidated filing. This ensures compliance and avoids penalties for VAT non-declaration.
Need help navigating VAT declarations? With Xolo, our expert accountants handle the entire process, ensuring you’re always tax-compliant. Reduce your stress now→
How is dropshipping taxed in Spain?
Dropshipping is a popular e-commerce model with specific tax obligations, where you sell products directly to customers without holding inventory. Instead, when a customer orders from your store, the order goes to a supplier who ships it directly to the customer. This makes it easy to run a business without warehousing costs, and yes, it’s fully possible to dropship in Spain!
Stores operating under this model must ensure they comply with VAT, income tax, or corporate tax requirements, depending on their structure
How are taxes calculated for dropshipping businesses?
For dropshipping, taxes depend on your role (freelancer or company) and where sales occur:
- Domestic sales (within Spain): You must charge VAT on sales, collect it, and submit it quarterly with Form 303 and annually with Form 390.
- EU sales: For sales over €10,000, you need the OSS (One-Stop Shop) for VAT compliance in other EU countries.
- Non-EU sales: VAT isn’t charged, but customs may apply.
Managing dropshipping taxes can be complex, but Xolo’s expert accountants can take care of all tax filings and compliance, letting you focus on growing your business.
Additional responsibilities for international e-commerce
When selling products outside Spain, additional regulations come into play, such as intra-community VAT and the distance selling regime. It is essential to understand when VAT is applied and in which cases an EORI number or intra-community operator registration is required.
When is VAT Applied?
VAT is applied on cross-border sales when selling to individual consumers (B2C) within the EU if annual sales exceed €10,000. This is managed through the One-Stop Shop (OSS), which simplifies VAT compliance by allowing a single declaration across the EU.
EORI Number
Required for any business importing or exporting goods outside the EU, the Economic Operators Registration and Identification (EORI) number is essential for customs processing.
Intra-Community Operator Registration (ROI)
This registration is needed for B2B intra-EU transactions to apply the “reverse charge” mechanism, ensuring that VAT is managed correctly within EU regulations.
These registrations help streamline VAT and customs compliance for international sales. If you’re navigating these requirements, Xolo can assist with setup and ongoing compliance, freeing up your time to focus on business growth.
Tax advice for freelancers in e-commerce
E-commerce taxation can be complex, especially for freelancers. Specialized tax advice is key to fulfilling tax obligations correctly and maximizing deductions and tax optimization opportunities. Tax advisory services help freelancers avoid mistakes and manage their finances efficiently.
Conclusion
Complying with tax obligations is essential for the success and sustainability of an online store in Spain. Staying up-to-date with regulations allows you to operate smoothly and focus on business growth. To ensure you meet all tax requirements, consider professional tax advice or use services like Xolo, which simplify tax management and let you focus on your business.
Xolo: Your tax management solution for online stores
At Xolo, we understand the specific needs of freelancers and small businesses that sell online. Our service allows you to manage all your tax obligations easily, ensuring your business remains compliant. We offer specialized tools like invoice generator and expense submission and support to help you handle VAT, income tax, and other taxes efficiently.