- Record VAT Collection and Economic Context: In 2023, Spain achieved a record VAT collection of €83.9 billion, driven partly by a GDP growth of 2.5% and an average inflation rate of 3.3%, reflecting the financial pressures faced by citizens and prompting government adjustments to VAT rates.
- Reduced VAT Rates and Products: The standard VAT rate in Spain is 21%, with a reduced rate of 10% applied to specific goods and services, including cultural activities, hospitality services, and essential utilities. Certain products, like olive oil and pasta, have temporary VAT reductions aimed at alleviating economic burdens during the inflation crisis, with olive oil reduced to 0% and pasta remaining at 5% until the end of 2024.
- Comparison with EU VAT Rates: Spain’s reduced VAT rate of 10% is consistent with Italy and France, while Germany has a lower rate of 7%. The EU has diverse VAT structures, with some countries applying only a standard rate. The current temporary measures are expected to revert to the standard reduced rate of 10% by 2025, in accordance with EU directives aimed at fiscal stability.
Source: stripe.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
