IVA in Spain: All you need to know about Spanish VAT

Last updated on April 28th, 2020 at 10:59 am.

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 (IVA in Spain). Spain followed suit in September 2012.

In this article we will go through some relevant information regarding Spanish VAT or IVA in Spain. However, we would like to remind you that there are other taxes to be paid in Spain. Taxation in Spain can be complicated and you could be subject to fines or penalties if you miss a deadline or don’t do your taxes properly. Advisably, you should seek fiscal advice from an expert to avoid possible complications.

Types of IVA in Spain

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

1. Super reduced rate IVA – 4%
2. Reduced rate IVA – 10%
3. General rate IVA – 21%

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.

Changes to IVA in Spain

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
• 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 in Spain 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.

If you would like more information about all the taxes you need to pay in Spain, you can visit this article: Taxes in Spain. As we said, we recommend seeking fiscal advice from an expert to avoid possible complications.

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