In light of the recent changes brought about by Royal Decree-Law 4/2024, dated 26 June 2024, the Spanish government has extended the VAT rate reduction for specific food products. These changes are important for consumers and businesses alike, as they affect the pricing of various essential goods. Below is a detailed overview of the new VAT rates, effective from 1 July 2024.
Reduction in VAT Rates for Select Food Products
Effective January 1 - June 30, 2024
- Olive and Seed Oils, Pasta: These will now be taxed at a reduced rate of 5%.
- Zero VAT Rate on Essential Food Items: This includes common bread (and related frozen dough), various types of milk, cheeses, eggs, and natural products like fruits, vegetables, legumes, tubers, and cereals.
VAT Rates from 1 July 2024 to
30 September 2024
Seed oils and pasta: The VAT rate remains at 5%.
0% VAT rate applies to:
- Common bread, frozen common bread dough, and bread flours.
- Milk in various forms, including natural, certified, pasteurised, concentrated, skimmed, sterilised, UHT, evaporated, and powdered, produced by any animal species.
- Cheeses and eggs.
- Fruits, vegetables, legumes, tubers, and cereals in their natural state.
- Olive oils (reduced from 5% to 0%).
VAT Rates from 1 October 2024 to
31 December 2024
Seed oils and pasta: The VAT rate increases to 7.5%.
2% VAT rate applies to:
- Common bread, frozen common bread dough, and bread flours.
- Various types of milk produced by any animal species.
- Cheeses and eggs.
- Fruits, vegetables, legumes, tubers, and cereals in their natural state.
- Olive oils.
VAT Rates from 1 January 2025 onwards
Seed oils and pasta: The VAT rate further increases to 10%.
4% VAT rate applies to:
- Common bread, frozen common bread dough, and bread flours.
- Various types of milk produced by any animal species.
- Cheeses and eggs.
- Fruits, vegetables, legumes, tubers, and cereals in their natural state.
- Olive oils.
Product | VAT Rate | VAT Rate | VAT Rate | VAT Rate |
Seed oils, pasta | 5% | 5% | 7.5% | 10% |
Common bread and related items | 0% | 0% | 2% | 4% |
Milk (various types) | 0% | 0% | 2% | 4% |
Cheeses and eggs | 0% | 0% | 2% | 4% |
Fruits, vegetables, legumes, tubers, cereals | 0% | 0% | 2% | 4% |
Olive oils | 5% | 0% | 2% | 4% |
Changes in VAT for Energy Products
- Electricity Supplies
For contracted power ≤ 10 kW and social bonus recipients, VAT is set at 10% for the entire year of 2024.
- Natural Gas
A VAT rate of 10% applies from January 1 to March 31, 2024.
- Biomass Energy Products
Pellets, briquettes, and firewood, as ecological substitutes for natural gas, will also see a VAT rate of 10% until June 30, 2024.
The latest Royal-Decree introduces amendments to the VAT Regulations, primarily stemming from the Budget Law 31/2022. This includes a notable change in the refund procedure for non-EU companies, effective July 1, 2024:
- Power of Attorney Requirement: The first refund request must be accompanied by a power of attorney.
- Invoice Documentation: Electronic copies of invoices are required for refund requests exceeding 1,000 euros (or 250 euros for fuel).
These changes indicate a strategic shift in tax policy, focusing on sustainability and cost-of-living considerations. Businesses, particularly those involved in energy and food supply, should review their strategies to align with these new regulations.
