Special VAT Regimes in Spain (RECC and REAGP)

What Are Special VAT Regimes in Spain?

Spain’s VAT system (governed by Ley 37/1992) includes several special regimes that modify the general accrual-basis VAT rules for taxpayers in specific circumstances. The two most practically important for businesses are:

1. RECC (Régimen Especial del Criterio de Caja): Cash basis VAT, introduced in 2014 to help SMEs avoid the cash flow problem of paying VAT before their customers pay them
2. REAGP (Régimen Especial de la Agricultura, Ganadería y Pesca): A flat-rate compensation scheme for the agriculture, livestock, and fishing sectors that eliminates VAT obligations for these operators

Other special regimes include the Simplified Regime (módulos), the Special Regime for Used Goods (REBU), the Gold Investment Regime, and sector-specific rules for travel agencies. This entry focuses on RECC and REAGP as the most relevant to investors and businesses operating in Spain.

RECC: Cash Basis VAT

The Problem RECC Solves

Under Spain’s standard general VAT regime, VAT is due at the point of accrual — which generally means the date the invoice is issued or the service is delivered, whichever is earlier. A company that invoices €100,000 on 31 March (Q1) with 21% VAT must declare and pay €21,000 in VAT to the AEAT in its Q1 Modelo 303, even if the customer has not yet paid. If the customer pays in May, the company has financed the AEAT’s €21,000 for two months from its own cash reserves.

RECC solves this by shifting the VAT accrual date to the date of actual payment or collection (or, at the latest, to 31 December of the year following invoice, even if the invoice has not been paid by that date).

How RECC Works

Under RECC:

• Output VAT (on sales): Only becomes due when the customer pays — the company does not remit VAT until cash is received
• Input VAT (on purchases from non-RECC suppliers): Also only deductible when the company itself pays its suppliers — creating symmetry and preventing the regime from being used to delay output VAT while accelerating input VAT recovery

For RECC invoices, the invoice must include a specific legal notice: “Régimen especial del criterio de caja”. This notifies the buyer that the mirror deductibility restriction applies to them.

Eligibility and Election

Maximum Deferral

Even under RECC, if an invoice remains unpaid by 31 December of the year following its issue date, the output VAT becomes due on that date regardless of payment status. This prevents indefinite deferral and ensures the AEAT eventually collects the VAT even on bad debts.

REAGP: Agriculture, Livestock, and Fishing Regime

Structure of REAGP

REAGP is fundamentally different from RECC: rather than modifying when VAT is paid, it removes VAT from the supply chain for agricultural and fishing operators. These operators:

• Do not charge VAT on their sales of qualifying agricultural, livestock, and fishing products
• Cannot recover input VAT on their purchases through the standard mechanism
• Instead, receive a flat-rate compensation (compensación a tanto alzado) from the businesses that buy their products

The compensation rates are:

• 12% of the value of agricultural and livestock products sold
• 10.5% for forestry products
• 7.5% for fishing products

This compensation is paid by the buyer (a supermarket, processing plant, or wholesaler) to the farmer or fisherman as part of the purchase price. The buyer can then recover the compensation amount as if it were input VAT in its own Modelo 303.

Why REAGP Exists

REAGP exists because agricultural and fishing operators typically have very complex input VAT recovery situations (land, water, fuel, fertilisers, equipment — all at different VAT rates across many suppliers). REAGP replaces this complexity with a simple flat-rate compensation that approximates the input VAT they would otherwise recover, without requiring them to maintain VAT ledgers or file VAT returns.

Operators within REAGP are exempt from filing Modelo 303 and from most formal VAT obligations. They must, however, issue receipts to buyers recording the compensation received.

Exclusions from REAGP

REAGP does not apply to sales made through cooperatives or agricultural entities on behalf of their members, to processed products (a farmer selling olive oil as a finished product falls outside REAGP), or to agricultural businesses above certain size thresholds. Once an operator exceeds these limits, they must switch to the general VAT regime.

Key Regulations

• Ley 37/1992 (Ley del IVA), Articles 163 bis–163 nonies: RECC legal framework
• Ley 37/1992, Articles 124–134: REAGP legal framework
• Real Decreto 1624/1992 (RIVA): implementing regulations for both regimes
• Orden HAP/2224/2014: technical rules for RECC invoicing and reporting obligations

Practical Implications for Foreign Investors

RECC for SMEs

Foreign-owned SMEs in Spain with turnover below €2 million — particularly those selling to large clients with long payment terms — should actively evaluate RECC. Retail, services, and B2B supply chains where 60–90 day payment terms are standard can create a significant quarterly VAT financing gap that RECC eliminates.

REAGP in M&A and Agri-Business Investment

Foreign investors acquiring Spanish agricultural operations, vineyards, olive groves, or fishing businesses must understand whether the target operates under REAGP. Post-acquisition restructuring — for example, adding value-added processing to the operation — may trigger exclusion from REAGP and require full VAT registration. The resulting VAT position (potential input VAT recoverability on historical capital investments) should be modelled as part of acquisition planning.

How BMC Can Help

Our VAT team advises on whether RECC is the right regime for your Spanish operations, manages the election and annual renewal process, and ensures that invoices and Modelo 303 filings are correctly structured for cash-basis reporting. For agricultural and agri-business investments, we assess REAGP status, plan the transition to the general regime where applicable, and advise on the VAT implications of adding processing or value-added activities to farming operations.