Why clients pay IVA on our fees

Many clients ask what IVA is and why it is added to your bill for our services. IVA stands for 'Impuesto sobre el Valor Añadido’, which means Value Added Tax or VAT. IVA is an indirect tax for the delivery of goods and services. You’ll find IVA is added to almost every service or product you buy in Spain.

It is a legal requirement to add IVA. Therefore, as a legal company, VillaMía (part of Mia Costa Blanca SL) has to charge IVA on the services we offer. We have to provide quarterly tax and IVA returns, which can be inspected by the authorities.

What is the IVA rate in Spain?

The usual rate is 21% for most goods and services. That's why when you see our invoice it has our fees plus 21% IVA. Pretty much everything you buy or pay for - from sports activities, cosmetics, and white goods to your electricity bill - will have 21% IVA added.

If you budget for IVA at 21% on everything, then it’ll come as a pleasant surprise if the rate is lower.

There are two lower rates - 10% and 4%. The 10% rate is paid on bar, restaurant and hotel bills, public transport and new-builds among other things.

The 4% rate applies to foods including milk, cereals, bread, eggs, fruit and vegetables, as well as a few other things such as medicines, books, magazines and newspapers.

Do I have to pay IVA when buying property in Spain?

If you buy a new-build property, you will also pay 10% IVA on top of the purchase price. (21% if it is a new commercial property). This is paid when signing the deeds and the seller will then transfer the money to the tax authorities  - Agencia Tributaria.

You don't pay IVA on second-hand properties. Instead you pay a transfer tax - ‘impuesto sobre Transmisiones Patrimoniales’ or ITP - which is set by the regional governments and varies from region to region. In the Comunidad Valencia, which includes the Costa Blanca, the usual rate is 10%. There are exceptions, such as people under the age of 35 buying their own home who will pay 8%.