Not every invoice in Spain carries IVA. Doctors, private tutors, landlords of residential flats and insurance brokers routinely issue invoices with no IVA at all, and that is perfectly legal. But "exempt" has a precise meaning in Spanish tax law, and getting it wrong in either direction is costly. Charge IVA when you shouldn't and your client pays 21% too much. Skip it when you shouldn't and you end up owing the tax yourself, plus surcharges.

This guide explains which services are IVA-exempt in Spain, how exempt differs from "not subject" and from reverse charge, what an exempt invoice must say, and what exemption means for your quarterly filings. It is a deeper look at one section of our complete guide to IVA in Spain. Start there if you need the basics of rates and filing first.

What "IVA-exempt" actually means

In Spain, VAT is called IVA (Impuesto sobre el Valor Añadido) and is governed by Ley 37/1992. An exempt operation (operación exenta) is one that falls inside the scope of IVA, so it is a supply of goods or services by a business or professional in Spain, but which the law expressly frees from the tax. You invoice it with no IVA line.

The catch: under a standard exemption you cannot deduct the IVA you pay on your own costs. If you are an exempt physiotherapist, the 21% IVA on your new treatment table, your software subscription and your clinic's electricity becomes a cost of doing business. For that reason these are often called "limited" exemptions. They make you cheaper for private clients, but you absorb the input IVA.

If you are unsure what IVA is in the first place, or why it shows up on receipts, read what IVA means on a Spanish bill first.

The main IVA-exempt services in Spain

Most domestic exemptions are listed in Article 20 of Ley 37/1992. Each one has its own conditions, and the exemption usually depends on what the service is, not just who provides it. The categories freelancers and small businesses meet most often are:

Healthcare by medical and health professionals

Medical and health care given to individuals by recognised professionals (doctors, dentists, physiotherapists, psychologists, nurses and similar) is exempt when its purpose is diagnosing, preventing or treating illness. The purpose test matters. Purely cosmetic treatments, or a medical report written for an insurance dispute rather than for care, are generally taxed at the normal rate.

Education and private tuition

Two exemptions apply. The first covers education in subjects that are part of an official study plan, delivered by public or authorised private centres. The second covers private lessons given by an individual on their own account (clases particulares a título particular) in subjects from those study plans. If you teach as an employee of an academy, or through your own company, your situation can be different. Language schools, coaching, and courses that sit outside official curricula are frequently taxable, so check your specific case.

Residential rentals

Renting a home to be used as a dwelling is exempt. Renting an office, a commercial premises (local) or a parking space on its own is taxable at 21%. Short-term holiday lets that come with hotel-type services (cleaning during the stay, reception, and so on) are treated as accommodation and taxed instead of exempt.

Insurance and financial services

Insurance operations and the related services of brokers and agents are exempt, and so are most banking and financial services: loans, account management, payment services and transactions in shares. Advisory or management services that are not strictly financial may still be taxable.

Second-hand property sales

The second and later sale of a building is generally IVA-exempt and pays the transfer tax (ITP) instead. The first sale of a new-build home by the developer is subject to IVA. There are waiver options between businesses, which is a specialist area.

Social, cultural and sports services

Some social care, cultural and sports services are exempt when they are provided by public bodies or by non-profit entities that meet the legal requirements. A commercial gym or a private event company does not qualify just because the activity is cultural or sporty.

Exempt vs. not subject vs. reverse charge vs. 0%

Four different situations all produce an invoice with no IVA amount. They have different legal bases and different consequences, so your invoice wording must match the right one:

  • Exempt (exenta, Article 20). Inside the scope of IVA but freed from it. No right to deduct input IVA.
  • Not subject (no sujeta). Outside the scope of Spanish IVA altogether. A common case is a service to a business client established outside Spain, where the place of supply is the client's country.
  • Reverse charge (inversión del sujeto pasivo). IVA is due, but the client accounts for it instead of you. This applies to B2B services for EU businesses and to some domestic sectors such as certain construction work.
  • Exports and intra-EU supplies of goods. Also exempt, but these are "full" exemptions: you keep the right to deduct the IVA on your costs.

The cross-border cases are covered in detail in charging IVA to foreign clients in the EU, UK and US. The key point is that "my client is abroad" and "my service is exempt" are different reasons for leaving IVA off, and each needs different invoice text.

What an IVA-exempt invoice must include

Being exempt does not exempt you from invoicing. You still issue a full invoice with every standard element: number and series, date, your NIF and the client's, a description of the service, the taxable base and the total. See legal invoice requirements in Spain for the full checklist. On top of that, the invoice must state why no IVA is charged, citing the legal provision. Typical wording:

  • "Operación exenta de IVA en virtud del artículo 20.Uno.3º de la Ley 37/1992" for medical and health care.
  • Or the same formula with the sub-section that applies to your activity (education, rentals, insurance and so on).

Showing an IVA line at 0% without the legal reference is a frequent mistake. It leaves your client unable to justify the missing tax, and it leaves you without evidence if the Agencia Tributaria asks.

IRPF withholding still applies

An IVA exemption says nothing about income tax. If you are a self-employed professional (for example a psychologist or a tutor) and you invoice a Spanish business or another professional, you normally still apply IRPF withholding. That means the total is base minus retention, with no IVA added. Private individuals do not withhold. Our guide to IRPF withholding on freelance invoices explains when the retention applies and at what rate.

Exempt activities and your tax returns

Exemption changes your filing picture, but it does not remove you from the system:

  • Registration. You still register your activity with the Agencia Tributaria (census declaration, Modelo 036/037) and with Social Security if you are an autónomo.
  • Quarterly IVA return. If all your operations are exempt under Article 20, you are generally released from filing the quarterly Modelo 303 and the annual summary. Once you add any taxable activity, even a small one, the obligation comes back.
  • Mixed activities and the pro-rata rule. If you combine exempt and taxable services, for example a physiotherapist who also sells products or runs taxable courses, you can only deduct part of your input IVA. That share is set by the pro-rata rule (regla de prorrata) or, in some cases, by separate sectors of activity. This is the point where an advisor usually pays for themselves.
  • Income tax. Your quarterly IRPF payments (Modelo 130, unless most of your income already carries withholding) and your annual return are unaffected by the IVA exemption.

Common mistakes with IVA exemptions

  1. Assuming the profession decides it. A doctor doing aesthetic work, or a teacher running a corporate workshop, may be fully taxable. The nature and purpose of each service decides.
  2. Mixing up exempt and not subject. Using "exempt under Article 20" text on an invoice to a US client, or the other way round, misstates the legal basis.
  3. Claiming input IVA you can't deduct. If your activity is entirely exempt, the IVA on your expenses is a cost, not a credit.
  4. Forgetting the legal reference. Every exempt invoice needs it, every time.
  5. Not revisiting after a change. Adding a product line, a new type of course or a commercial rental can move you from fully exempt to a mixed or fully taxable regime.

Check the rules for your own case

The exemptions above are summaries. Each has conditions and exceptions set out in Article 20 of Ley 37/1992 and in rulings (consultas vinculantes) from the Dirección General de Tributos. Before you change how you invoice, read the official guidance on the Agencia Tributaria website (sede.agenciatributaria.gob.es) or confirm with a gestor or tax advisor, especially for mixed activities, property and education.

Issue exempt and taxed invoices without the guesswork

With Facturi you set the IVA rate on each line, so exempt services go out with no IVA while taxed items keep their 21%, 10% or 4% rate. You add the legal exemption wording to the invoice once and reuse it, IRPF withholding is applied only for business clients, and your invoice records stay VeriFactu-ready for your gestor. Try Facturi free and send your first compliant invoice today.