Spain Explained

Spanish VAT – IVA

The Spanish Government has to increase the amount of tax it collects alongside saving money through austerity measures. One of the main ways that countries have been doing this across Europe is through increasing the rate of VAT. Spain followed suit in September 2012.

VAT in Spain is called IVA and there are three types:

  1. super reduced rate IVA – 4%
  2. reduced rate IVA – 10%
  3. general rate IVA – 21%

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1. Super reduced rate IVA

This rate is applied to items of a primary and basic need. This includes staple food items such as cheese, milk, beans, fruit and vegetables. It also applies to books and magazines and vehicles for  the disabled.

2. Reduced rate IVA

This includes foodstuffs in general (except those listed above). Soft drinks, contact lenses and glasses, house construction, passenger transport, refuse collection, health assistance services, social services and dental work.

3. General rate IVA

This rate is applied to all products and services that are not considered to be of a primary necessity. This includes for example, alcoholic drinks and tobacco, CDs and DVDs, petrol and diesel.

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Changes to IVA

September 2012 saw some adjustments between these categories with the result that some services and products have moved from the reduced rate IVA to the general rate. These include hairdressing, sports, cultural and recreational services, exhibitions and fairs and funeral services.

These are the services and manufacturers that will be hit most by the September 2012 increase to IVA with a substantial rise from 8% (the old reduced rate) to 21% (the new general rate).

The increase in IVA wasn’t across the board. The rate for the reduced band and general bands went up (2% and 3% respectively) but the rate for super reduced products and services stayed the same at 4%. In spite of the increase, Spain continues to have one of the lower rates of IVA, a point noted recently by Brussels.

To help navigate the bureaucracy of the Spanish tax system, our dedicated advisers are on hand to help at every step of the way. Contact us and we will offer you a free consultation without obligation.

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2 comments

Derek Hanratty

12 October, 2015 5:25 pm

Hi can you please advise me
Hi can you please advise me on the rate of IVA in Spain when selling property.
Thank you
Derek

Suzanne O'Connell

14 October, 2015 8:03 am

Hi Derek

Hi Derek

Thanks for your enquiry. If you buy a brand new property then you pay 10% IVA and stamp duty.