What are VAT Rates and how many are there in Spain
General VAT, reduced VAT, super-reduced VAT—is it all a mystery to you? We’ve got everything you need to know about VAT rates in Spain.
5 min read
Computers, rent, transport and even drinks in bars are all subject to different VAT rates in Spain. Read on to find everything you need to know about the difference between general VAT, reduced VAT, and super-reduced VAT.
VAT rates in Spain
VAT—Value Added Tax—is a type of consumption tax applied on the sale of goods and services. In Spain, the percentage of VAT you pay depends on the kind of product or service you’re acquiring. While the general VAT rate is 21%, the reduced VAT rate is 10%, and the super-reduced VAT rate is 4%. Read on to see how these rates are applied.
VAT Rates in Spain: A Comprehensive Guide
General VAT
21%
Appliances, cars, cinema tickets, smartphones, etc.
Reduced VAT
10%
Cultural activities, transport and electricity
Super-reduced VAT
4%
Necessities like essential foodstuffs and subsidized housing
VAT free
0%
Masks and hand sanitizer, financial products and healthcare products
General VAT
This is the most common of the three VAT rates and is applied by default to all goods and services not subject to reduced or super-reduced VAT rates. In little more than a decade, this rate has gradually risen from 16% to 21%. It applies to products and services such as:
Footwear and clothing
Fuel—including natural gas, gasoline, fuel-oil and diesel
Beauty and cosmetic services—such as hairdressing, manicures and pedicures, hair removal, make-up, massages, body treatments, sunbed sessions, and tattoos
Communication and telephone services and goods—like laptops, cell phones, phone bills, and internet access fees
Alcoholic drinks and tobacco
Furniture, furnishings, appliances and other house-related expenses
DIY products
Professional sports events
Intermediate goods—materials and products used for manufacturing final products that will later be sold on the market,such as wood, steel, plastic, cement, bricks, commodities, coal, latex, oil, etc.
Intermediate products for the manufacture of drugs, medical equipment, medical devices and instruments, and pharmaceutical products
New and used cars
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Just like general VAT, the reduced value-added tax is levied on the consumption of goods and services—albeit at a lower rate, 10%, than the general one. The reduced rate applies to the following products and services:
Products used for producing human food and animal feed
Hospitality and catering services—such as hotels, bars and restaurants, spas, etc.
Cultural activities—like entrance fees for museums, exhibitions, libraries, reference archives, and so on
Public transportation—including domestic flights, and subway or train tickets
Electricity—until recently, general VAT was levied on this energy source, but the recent rise in electricity prices has led the government to include it in the 10% bracket
Farming and livestock products—animal feed, seeds, fertilizers, and herbicides
Pharmaceuticals and feminine hygiene products—gauze, bandages, tampons, sanitary towels, and condoms
Eye care products—including prescription glasses and contact lenses, eye drops, and spectacle frames
Houses, garages, and outbuildings
Funeral services
Super-reduced VAT
At 4%, the super-reduced VAT rate is the lowest value-added tax charged on products. It’s mainly used to tax goods considered by law as basic necessities:
Essential foods—including bread and bread flours, eggs, fruits and vegetables, grains, cereals, and dairy products such as milk and cheese
Sheltered housing projects, publicly-funded developments, and right-to-buy rental homes
Prosthetic aids and implants, as well as wheelchairs and vehicles for disabled people and people with reduced mobility
Pharmaceutical drugs for human use
Telecare and homecare services for dependent adults
Books, newspapers, and magazines that don’t mainly contain adverts (sales of the publication must account for 75% of its revenue)
VAT-exempt products
Certain services and products are not subject to value-added taxes in Spain. Under special circumstances, like the current health emergency, some items may be exempt from VAT, including:
Rental of sheltered housing used as a primary residence
Education in public schools and authorized private schools, vocational training, private tutoring and language classes
Healthcare services provided by medical professionals
VAT in Spain and Europe
Value-added tax is levied only in the Spanish mainland and the Balearic Islands. The Canary Islands has IGIC—Canary Islands General Indirect Tax—which is the equivalent of VAT, taxed on sales of goods and services by companies and self-employed people that reside in the Canary Islands. While the reduced IGIC rate is 3%, the general rate is 7% and the increased rate is 9.5%. Residents and tourists in the autonomous cities of Ceuta and Melilla are taxed at a general rate of 4% and a special rate of 0.5% on the consumption of goods and services subject to the IPSI (Tax on Production, Services and Imports).Because value-added tax is a regressive indirect tax levied on the consumption of goods and services by the final consumer, it doesn’t make allowance for the income of the person paying it. Meaning everyone pays the same amount of VAT, regardless of income level. For this reason, one way many governments have tried to mitigate against certain social inequalities is by introducing multiple VAT rates.Until the European Union achieves fiscal unity, there will continue to be differences in the taxes of EU member countries. In the table below, we’ve categorized the different VAT rates used in a sample of EU member countries to give you an insight into the differences present in this form of indirect tax:
VAT in Spain and Europe
Spain
21%
10%
4%
France
20%
5.5%
2.1%
Slovakia
20%
10%
6%
Belgium
21%
12%
6%
Lithuania
21%
9%
5%
Czech Republic
21%
15%
10%
Portugal
23%
13%
6%
Finland
24%
14%
10%
Sweden
25%
12%
6%
Croatia
25%
13%
5%
Source: globalvatcompliance.com
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Following the VAT law reform and after the 2012 increase in VAT rates, there are now three VAT rates in Spain: General VAT at 21%, Reduced VAT at 10% and Super-Reduced VAT at 4%.
Following the VAT law reform and after the 2012 increase in VAT rates, there are now three VAT rates in Spain: General VAT at 21%, Reduced VAT at 10% and Super-Reduced VAT at 4%.
