Direct versus Indirect tax in Spain

From Welex, your tax adviser in Marbella , we explain you the main difference between direct and indirect taxes in Spain is the basis on which they are applied.


While direct taxes tax people’s wealth, indirect taxes tax how this wealth is used.


Most Spanish tax payers spend on average 43% of their income on paying taxes. But these are differentiated into direct or indirect taxes.


Income Tax in Spain (IRPF) VAT in Spain – General 21%
Company Tax in Spain (IS) VAT in Spain – Reduced rate 10%
Inheritance Tax in Spain VAT in Spain – Super reduced rate 4%
Property Rates (IBI) Transfer Tax & Stamp duty (ITP& AJD)
Activity Tax (IAE) Special Tax
Tax on Vehicles (IVTM)


Direct and Indirect taxes in

Think of taxes as direct and indirect, direct being what taxes a certain act or fact (in obtaining income), or indirect ones that are derived to the consumer of final goods or services (value added tax).


The multiplicity of taxes, as well as the rest of obligations that the law itself imposes on the taxpayers, such as the presentation of quarterly declarations, the final yearly summary of the declaration, the collaboration with the tax inspection or the obligation to perform acts or payments such as Payments on account represent a whole list of obligations for citizens in relation to their tax obligations, which contribute a significant degree of technical-legal complexity to this matter.


The above is complemented by the determination of the tax capacity, which includes the different public administrations.



Finally, and for greater complexity of our Spanish tax system, the Spanish General Tax Law designates that both natural and legal persons are bound to certain obligations, with special focus in the following:


  1. a) Taxpayers. (e.g. if you buy a vehicle).


  1. b) The taxpayer substitutes. (e.g. forced to pay instead of another citizen).


  1. c) Those obliged to make fractional advanced payments. (e.g. independent professionals).


  1. d) The retainers. (e.g. companies with respect to workers; buyers of non-resident properties).


  1. e) Those forced to practice income on account. (e.g. forced companies).


  1. f) Those forced to reverberate. (e.g. professionals regarding VAT).


  1. g) Those forced to bear the impact. (e.g. final consumers).


  1. h) Those forced to withstand retention. (e.g. tenants of business premises).


  1. i) Those forced to bear the income on account. (e.g. the landlord of the business premises).


  1. j) The successors.


  1. k) The beneficiaries of cases of exemption, refund or tax credits, when they do not have the status of taxpayers.


This list is configured as numerus apertus, and others may be established in the specific regulations of each tax, rate or special contribution, making it necessary to go to each of the rules to determinate the taxpayers.


In short, a whole list of obligations, subjects and administrations with tax capacity that makes this, exciting and complex subject, a sector of the system in which Welex offers you the best advice.


If you are a professional or a company that requires compliance with all Spanish tax obligations thus avoiding unwanted liabilities or problems, Welex will be there to guide you and help you.


Contact one of multilingual tax advisors in Marbella of our accounting firm in Spain now.


More information:

Plusvalía Tax in Spain: all you need to know

How to know whether you are tax resident in Spain or not

Income tax and wealth tax in Spain. Tax liabilities for non-tax residents