What buying on the recargo de equivalencia really costs you

Who is on the recargo de equivalencia, like it or not

The recargo is not a choice: it is compulsory if you meet the requirements. The VAT Act applies it to retailers who are individuals or entities under the income allocation system — a comunidad de bienes, for instance — all of whose members are individuals. A sociedad limitada is never on the recargo.

And “retailer” has a definition of its own in article 149: you sell movable goods without subjecting them to any manufacturing, processing or making-up, and more than 80% of your previous year's sales went to people who are neither businesses nor professionals. If you process the product, you stop being a retailer for what you process; if you sell mainly to other companies, you do not qualify either.

There is also a list of products that fall outside the regime even when you sell them retail: motor vehicles and their parts, boats and aircraft, jewellery and objects containing gold or platinum, luxury fur garments, works of art and antiques, second-hand goods, industrial machinery, construction materials, minerals other than coal, unworked metals and investment gold.

The three numbers on your supplier's invoice

Your supplier charges you the VAT and a surcharge on top, and then pays it over themselves. The rates are in article 161 of the VAT Act. They have been the same since 2012, apart from the interlude of the temporary reductions on food in 2023 and 2024 — which took some surcharges to 0% and 0.62% — and which have now lapsed:

• Goods at 21% → surcharge of 5.2%.
• Goods at 10% → surcharge of 1.4%.
• Goods at 4% → surcharge of 0.5%.
• Tobacco products → surcharge of 1.75%.

All three are worked out on the same taxable base. The surcharge is not applied on top of the VAT.

Here is where the money is: the VAT is a cost, it is not deductible

This is the point that ruins margins across half of Spain. Article 154 of the VAT Act says two things at once: that anyone on this regime neither settles nor pays over the VAT on their sales, and that they cannot deduct the VAT borne on their purchases. Translated into your accounts:

The cost of the goods is base + VAT + surcharge. It is not the base.

If you record only the base as the cost, every item at 21% looks 26.2% cheaper than it is. With a theoretical gross margin of 40% you can be selling below cost without noticing until the year closes in the red.

The other side, which almost nobody uses to their advantage: since you do not pay over the VAT on your sales, the VAT you charge your customer stays with you. That is why the real margin is worked out by comparing the total sale price — VAT included — against the full cost. It is exactly what the calculator above does when you fill in the retail price.

Your obligations change, they do not disappear

For the activity on the recargo you file no 303 and no VAT record books: that surcharge is your settlement. But you still have IRPF, withholdings if you have staff or rented premises, and you still have to prove to your suppliers that you are on the regime: article 163 says so and it is your obligation, not theirs. And if you make an intra-Community acquisition or receive a reverse-charge transaction, that one is self-assessed separately, on form 309.

If you also have another, non-retail activity, the retail one on the recargo is a separate sector by law. They are two accounting worlds inside the same business.