IVA/VAT
goes up in Spain from July 1. Here there are three rates of VAT
with the very basic items and foods charged at a 4% rate which
remains unchanged. The reduced rate of 7% today goes to 8% and
the normal rate of 16% goes to 18%.
The
4% rate – to be kept at 4%
This is applied to items considered to be of basic need. It includes
basic bread, frozen dough, eggs, cheese, milk, beans and fruit
and vegetables.
Books, magazines and newspapers.
School material with the exception of electronic items.
Medicines for human use.
Vehicles for the disabled, wheel chairs and collective transport
for the disabled.
Prosthesis and implants.
Official protection housing.
The
7% rate – to increase to 8%
Foodstuffs in general, with the exception of those in the 4% band,
soft drinks.
Animals destined for human consumption or breeding.
Items used in agricultural, farming and forestry activities, such
as seeds and fertilisers.
Contact lenses and glasses.
Disabled lifts and items for the diagnosis of illnesses.
Health assistance services, social services, and dental work.
Imported artworks and antiques.
Hairdressing.
The handing over of housing, including garages and annexes.
House construction (between promoter and contractor).
Services supplied by artists and technicians.
Sports, cultural and recreational services, exhibitions and fairs.
Funeral services.
Hotel and restaurants, cleaning of streets and public gardens.
Rubbish collection.
Transport of passengers and motorway tolls.
The
General Rate – now 16% to rise to 18%
All other products, including alcoholic drinks, tobacco, animals
used in bullfighting, agricultural machinery.
CD’s.
Devices for the diagnosis and monitoring of pregnancy.
Television and radio services.
There are only a few items in Spain which are exempt from IVA
– They include plane or holiday tickets when the destination
is outside the country, medical services, education services and
property rentals.
According
to the Spanish Consumers and Users Confederation, CEACCU, the
average impact of today’s changes will be 350 € a year,
which means that each family will have to spend some 30 €
more to reach the end of the month, and that does not include
the impact of any price rises from inflation.
The
higher rate increase in alcohol and tobacco will cost the average
family some 12 € a year more, and petrol and diesel costs
will be some 85 € per year more. Other transport costs will
be 43 € higher over the year.
It’s
calculated that the increases will bring the Spanish state 5.15
billion €, of which 1.9 billion will be collected in this
year.
The
good news is that 70% of shops say that they will absorb part
of the increases to keep their sales, already damaged by the recession.
Eroski will discount the equivalent amount of the VAT increase
on a second purchase.
Lidl has registered ‘before the notary’ the freezing
of their current prices.
Carrefour is also absorbing the increases as are Inditex, H&M
and Cortefiel, for now at least.
Ford has carried out an advertising campaign which compares its
dealerships to financial havens.
In
addition the IVA increase comes at the same time as the start
of the summer sales in much of the country, so many won’t
really note the price hike for a couple of months.
That
said the Confederation of Consumers and Users warn that some will
try and use the date as an excuse to put prices up. A coffee which
cost 1€ 10 should not cost 1€ 15 from today for example.
Services
which are linked to caring are unchanged as part of the 4% band,
and VAT on reform work on property is being reduced from the 16%
band to the 8% band from today.