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Taxes

Frihet supports the main Spanish and territorial taxes. Here you will learn how to configure and apply them correctly on your invoices.

Supported Tax Types​

VAT (Value Added Tax)​

The main tax in Spain. Frihet supports:

TypePercentageApplication
General21%Services, products, most cases
Reduced10%Hospitality, food, certain services
Super-reduced4%Medicines, books, newspapers
Exempt0%Financial services, education, public health

IGIC (Canary Islands General Indirect Tax)​

For companies in the Canary Islands (replaces VAT). In-force rates in the selector for current invoices (tax point from 1 January 2020 onward, filtered by issue date):

TypePercentageStatutory Scope (Legislative Decree 1/2025, art. 32.1)
Zero rate0%Zero-rated supply: basic goods basket, residential electricity up to 10 kW, unblended biofuels
Super-reduced (reduced)3%Food (with exceptions), electrical energy, and certain basic services (art. 34 TR IGIC)
General7%Any supply, import, or service not subject to another rate (art. 32.1 TR IGIC)
Increased (9.5%)9.5%Vehicles, vessels, and aircraft depending on the case (arts. 39 to 41 TR IGIC)
Increased (15%)15%Cigars > €2.50, spirits, jewelry, perfumery, and energy drinks (art. 36 TR IGIC)
Special (20%)20%Tobacco products, except cigars and cigarillos (art. 37 TR IGIC)
  • Historical 13.5% rate (art. 51.1.f and art. 56 Law 4/2012, in force only for tax points up to 31 December 2019 and replaced from 1 January 2020 by 15% under Law 19/2019): Frihet does not offer it in the selector for current invoices; it only appears when the document issue date is on or before 31 December 2019 and is retained in Form 420 boxes 09-10 solely to declare or rectify historical operations.
  • Statutory 1% and 5% rates: art. 32.1 of Canary Islands Legislative Decree 1/2025 establishes the specific 1% rate (art. 33 bis: supplies and imports of petroleum, refined products, and gas) and the reduced 5% rate (art. 38.Cuatro: qualifying primary-residence housing within statutory caps; art. 35: sweetened soft drinks with added sugar up to 5 g/100 ml). Both rates are not included in the default selector and are not declarable in Frihet's automated Form 420 and Form 425 calculation (if an invoice contains a non-declarable rate, Form 420 calculation stops with an error rather than omitting its tax amount).

IPSI (Tax on Production, Services, and Imports)​

For Ceuta and Melilla (replaces VAT):

  • Preset rates in Frihet's selector: 10% (general), 4% (reduced), and 0% (exempt)
  • Automatically applied if your tax address is in Ceuta/Melilla

IRPF (Personal Income Tax)​

Withholdings applied on invoices issued by self-employed professionals and lessors to companies or professionals:

TypePercentageApplication
General professional activities15%Consulting, law, architecture, design, advisory, engineering
New self-employed / reduced7%First year of activity and the following two calendar years (and art. 95 RIRPF cases)
Urban property leases19%Commercial premises and office rentals
Objective estimation (modules)1%Module-taxed activities subject to withholding (art. 95.6 RIRPF)

Equivalence surcharge​

For sales to retail merchants under this regime (Mainland Spain and Balearic Islands):

VAT TypeSurcharge
4%0.5%
10%1.4%
21%5.2%

It is added to VAT, not replaced by it. Frihet's automated equivalence surcharge toggle applies these three brackets linked to standard, reduced, and super-reduced VAT; Spanish VAT law (art. 161.4.º of Law 37/1992, LIVA) also sets a specific 1.75% surcharge rate for tobacco products.

Configure Taxes​

Tax zone and default tax​

  1. Go to Settings → Billing
  2. In Your Fiscal Zone, select your territory: Mainland Spain/Balearics (VAT), Canary Islands (IGIC), Ceuta/Melilla (IPSI), European Union (VAT-exempt) or Outside EU (export)
  3. Set the Default Tax % and the Default IRPF %

Frihet uses the tax zone for the automatic tax calculation on your invoices. For Spain you must choose Mainland/Balearics, Canary Islands or Ceuta/Melilla before saving.

Your tax details (tax ID, address) are in Settings → Tax Profile.

Apply Taxes on an Invoice​

VAT per Line Item​

Each item/service line has its own VAT type:

  1. In the invoice form, go to each line item
  2. In the VAT Type field, select:
    • 21% (standard)
    • 10% (reduced)
    • 4% (super-reduced)
    • 0% (exempt)
  3. Frihet automatically calculates the tax

Calculation:

Line: Web Consulting
Quantity: 1
Unit price: €1,000
VAT Type: 21%

Line subtotal: €1,000
VAT (21%): €210
Line total: €1,210

Total Taxes on Invoice​

Frihet automatically sums all VAT by type:

Line items:
  - Consulting (21%): €1,000 → VAT €210
  - Design (10%): €500 → VAT €50
  - Book/reference (4%): €100 → VAT €4
  - Financial service (0%): €100 → VAT €0

Subtotal: €1,700

VAT breakdown:
  - VAT 21%: €210
  - VAT 10%: €50
  - VAT 4%: €4
  - Total VAT: €264

Total invoice: €1,964

IRPF (Withholdings)​

If withholding applies to your work:

  1. On the invoice, go to the Withholdings section
  2. Check Apply IRPF
  3. Select percentage according to your profession
  4. Frihet automatically deducts from the total

Calculation:

Services: €1,000
VAT (21%): €210
Subtotal: €1,210
IRPF (15%, on base): -€150
Total payable: €1,060

Note: The client pays you €1,060, and withholds €150

Equivalence Surcharge​

If you are a distributor:

  1. On the invoice, go to Advanced options
  2. Check Apply equivalence surcharge
  3. It is automatically added to the VAT

Calculation:

Product: €100
VAT (21%): €21
Surcharge (5.2%): €5.20
Total: €126.20

Special Cases​

Intra-community Services​

If you sell services to a company in another EU country:

  1. The client must be a business owner/professional
  2. You need their VAT ID (European VAT number)
  3. On the invoice, check Intra-community operation
  4. Apply 0% VAT (client's responsibility)

Exports outside the EU​

If you sell to clients outside the EU:

  1. Check Export/outside EU
  2. Apply 0% VAT
  3. You need customs documentation

Operations with the Canary Islands​

If your company is in mainland Spain and sells to the Canary Islands:

  1. Ask Hacienda if 0% VAT or IGIC applies
  2. Varies by product type
  3. When in doubt, contact an advisor

Regulatory Changes​

If there is a change in VAT rates (e.g., rises from 21% to 23%):

  1. Frihet maintains a history of rates by period
  2. It will automatically use new rates on new invoices
  3. Old invoices maintain their original rate

Tax Reports​

Go to Reports → Tax Period (Tax Report by Period) to see the invoice-by-invoice VAT breakdown:

  • Filter by quarter (Q1 to Q4), year or custom range
  • For each invoice: client, date, taxable base, VAT rate, VAT amount and total
  • Period totals: gross total, taxable base and output VAT
  • Totals by tax rate
  • Export CSV

The Tax Liability tab in Reports summarizes the VAT for the period.

Quarterly Tax Returns​

Frihet automatically calculates your quarterly tax models based on your invoices and expenses. The available models depend on your tax zone:

For more information, consult the Quarterly Tax Models section.

Audit Tax Calculations​

If you need to review manual calculations:

  1. Open an invoice
  2. Click on View tax breakdown
  3. The calculation formula is displayed: 
    Taxable base: €1,000
    × VAT 21%: €210
    = Total: €1,210

Exemptions and Special Cases​

Insurance Company​

  • Insurance operations: 0% VAT
  • Insurance consulting: 21% VAT (generally)

Healthcare Activities​

  • Healthcare services: 0% VAT
  • Medicines: 0% VAT
  • Optics: 0% VAT
  • Medical equipment: 0% or 4% VAT

Education​

  • Classes and courses: 0% VAT
  • School supplies: 0% or 10% VAT
  • Books: 4% VAT

Transportation​

  • Passenger transport: 4% VAT
  • Cargo: 10% VAT
  • Logistics services: 21% VAT

Tip: If you are unsure of the applicable type, consult a tax advisor. Frihet allows you to manually change the type before sending.

Quarterly VAT Return​

Frihet automatically calculates your quarterly return with official fields:

  1. Go to the Tax Calendar
  2. Select quarter and year
  3. Frihet shows the complete breakdown:
    • Accrued VAT by type (21%, 10%, 4%)
    • Deductible VAT (expenses with VAT)
    • Special operations (exempt, exports, intra-community, ISP)
    • Settlement result
  4. Download the PDF as a reference for your advisor

This is not the official return (you must submit it at the AEAT headquarters), but it calculates all fields to facilitate the process.

For a complete detail of the calculation, consult the Model 303 documentation.

Common Errors​

❌ Mixing VAT with IRPF​

These are different taxes:

  • VAT: What increases the price for the client
  • IRPF: What the client withholds from your payment

For liberal professionals: Both apply.

Correct:

Services: €1,000
VAT (21%): €210
Subtotal: €1,210
IRPF (15%, on €1,000): -€150
Total: €1,060

❌ Applying Reduced VAT to General Services​

10% VAT is for:

  • Hospitality (food/drink)
  • Some transportation
  • Repairs

Do not use for consulting, design, development (these are 21%).

❌ Forgetting Surcharge if you are a Distributor​

If your regime is "Equivalence Surcharge", you must apply it. It is not optional.

Contact Tax Authorities​

If you have doubts about which tax applies:

  1. Consult your tax advisor (recommended)
  2. Or contact the Tax Agency (+34 901 333 555)
  3. Or use the online simulator: aeat.es

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