Adapting billing proces due to increase of Spanish VAT

By: Transfer Business Administration Services Spain

The Spanish government has recently approved an increase of VAT rates, effective from  July 2010. The increase in VAT is an unpopular measure and forms a burden for Spanish consumption. The increase is needed to finance the increased debt of the Spanish government during the past two years.

Tax rates are standardized at a European level. Therefore Spain is only allowed to increase their tax rates with a modest percentage each year. The current rates are set at 16, 7 and 4 percent. The Spanish government will increase these rates this year to 18 and 8 percent. The lowest rate of 4 percent remains unchanged.

The increase in tax rates causes companies to adapt their way of billing. This process requires an investment for companies in time and money. Companies that sell directly to the market will be the ones most negatively affected because they are forced to pass along higher costs to the consumer. Thus, as a result of the increased tax burden, the higher costs for companies have a downward pressure on the consumption level, which is contrary to the government policy to stimulate the consumption in times of crisis.

Transfer BASE offers your company support in the billing process, facilitates (online) invoicing and provides fiscal advice in Spain. Do you want more information about our services? Please feel free to contact us!