Discusses pricing formula and other fees, value-added tax (VAT), etc.
Last Published: 6/21/2019

Pricing practices in Spain are similar to those of the United States, although markups tend to be slightly higher. There is greater transparency in agent and distributor commissions in Europe in comparison with the United States.

Products and services in Spain are subject to Value Added Tax (VAT, or IVA in Spanish). Presently, the general VAT rate is 21 percent.

  • VAT on some healthcare products is 21 percent, i.e. medical equipment and instruments, pharmaceutical products, etc.
  • A reduced rate VAT of 10 percent is applied to certain goods and services including ingredients, animals and vegetables used for food products for humans and animals, goods used for agricultural activities, medicines for veterinary purposes, certain healthcare products, i.e. prescription glasses, prostheses, wheelchairs, crutches, bandages, etc. 
  • An extra-low rate of 4 percent is applied to basic foodstuffs such as bread, dairy products, eggs, fruit and vegetables, books and newspapers. Numerous items previously taxed at this extra low rate are now subject to the full 21 percent.
  • VAT is not imposed in the Canary Islands, Ceuta and Melilla, but a general indirect tax is imposed in the Canary Islands. This tax was also increased in 2012, with the reduced rate increasing from 2 to 3 percent, the standard rate from 5 to 7 percent, and the increased rates from 9 to 9.5 percent and 13 to 13.5 percent.
Additional details on the VAT regime in Spain and on the Spanish taxation system
Payment terms are usually based on 15, 30, 60, and under certain circumstances, 90-day terms. Although there is an EU directive covering payments, common practice in Spain is that large corporations and large retailers negotiate or impose longer payment terms of up to four to six months. The Spanish government has deferred payments in the past.

The current repayment time allowed is:
  • Private companies up to 60 days
  • Public administrations up to 30 days
  • Public works up to 60 days.

The economic crisis (2008-2014) caused the payment situation in Spain to deteriorate considerably, with reimbursement in the public sector substantially exceeding the stipulated timeframe. The Government authorized special funding in early 2014 to liquidate outstanding reimbursements by public administrations.  Legislation was also enacted to try to ensure that future obligations be met in a timely manner.

The EU also looks to combat payment delays. All commercial transactions within the EU, whether in the public or private sector, primarily dealing with the consequences of late payment, are covered by Directive 2011/7/EU. Transactions with consumers, however, do not fall within the scope of this Directive.

Directive 2011/7/EU entitles a seller who does not receive payment for goods and/or services within 30 days of the payment deadline to collect interest (at a rate of 8 percent above the European Central Bank rate) as well as EUR 40 as compensation for recovery of costs. For business-to-business transactions, a 60-day period may be negotiated subject to conditions. The seller may also retain the title to goods until payment is completed and may claim full compensation for all recovery costs.  More information on the EU Directive on payment delays

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