IRPF Withholding and Disbursements on Professional Invoices in Spain: Getting Every Line Right

IRPF Withholding and Disbursements on Professional Invoices in Spain: Getting Every Line Right

Lawyers, architects, consultants, healthcare practitioners: a professional's invoice in Spain has two features you will not find on a shop receipt — the IRPF withholding (income tax retained at source) and, in many practices, disbursements (suplidos). Both change the amount payable, and since Royal Decree 1007/2023 came into force (companies from January 2026, self-employed from July 2026), both feed into the billing record your certified invoicing system (SIF) generates and hash-chains at the moment of issue. If the software computes them wrong, the error is sealed with a hash and a QR code. Worth getting right the first time.

When withholding applies, and at what rate

Withholding kicks in when you invoice professional services to a client that is a Spanish business or self-employed person. That client acts as the withholder: they pay your invoice minus the retained amount and pay it to the tax agency on your behalf.

• Standard rate: 15% of the taxable base (your fees, before VAT).
• New freelancers: 7% during the first year of activity and the two following years, provided you notify the client in writing.
• Private individuals as clients: no withholding. A consumer is not a withholder.

Worked example on €1,000 of fees: base €1,000, VAT 21% = €210, withholding 15% = −€150, amount payable €1,060. Note the detail: VAT is calculated on the full base, and so is the withholding — one does not reduce the other.

How the invoice (and the record) must show it

On the invoice, the withholding appears as a stated rate and amount, deducted from the total payable. In the SIF's billing record, base amounts, VAT amounts and totals must be internally consistent: the system hashes the record's data, generates the mandatory QR and, in VeriFactu mode, transmits it to the AEAT in real time. A miscalculated total cannot be "fixed later" — it requires a corrective invoice with its own chained record. That is why the software should compute withholding, VAT and totals automatically and block impossible combinations: withholding applied to a consumer, the 7% rate without a recent registration date, lines that do not add up.

Disbursements: no VAT, not income

A disbursement (suplido) is an expense you pay in the client's name and on the client's behalf: a court fee, a land registry charge, a municipal licence fee. For it to genuinely qualify:

• The receipt is issued in the client's name, not yours.
• You pass on the exact amount, with no markup.
• The client instructed you (expressly or implicitly) to make that payment.

When those conditions hold, the disbursement sits on the invoice outside the taxable base: no VAT, no withholding — it is not your income, it is money you advanced. It does not count towards your business revenue, and the underlying cost is not your deductible expense.

Different animal: the recharged expense — travel, hotel, printing that you pay in your own name and then bill to the client. That is income: it joins the base, carries VAT (at the rate of your main service, as an ancillary supply) and is included in the withholding base. Mixing up the two is one of the most common invoicing mistakes in professional firms — and under a SIF, the invoice is recorded exactly as issued.

Advance retainers (provisiones de fondos)

An upfront retainer has two possible natures. If it prepays your fees, it is a payment on account: VAT is due when you collect it, and it must be documented. If it prepays future disbursements (fees to be paid in the client's name), no VAT arises until applied. The clean workflow: document the retainer on receipt, and on closing the matter issue a final invoice that itemises fees (with VAT and withholding) and disbursements (with neither), deducting the retainer.

Quick checklist

• Client is a business or freelancer → withholding 15% (or 7% if you qualify and notified them).
• Client is a private individual → no withholding.
• Receipt in the client's name, exact amount → disbursement: no VAT, no withholding, outside your income.
• Expense in your name, passed on → base + VAT + withholding.
• Wrong total already issued → corrective invoice; never edit the original.

With the anti-fraud regulation fully in force — and fines of up to €50,000 per financial year for using non-compliant software (Article 201 bis of the General Tax Law) — professional invoicing no longer tolerates hand-tweaked templates: every amount is chained from the second it is issued.