Spain increases VAT rates as of 1 September 2012

By: Transfer Business Administration Services Spain

The Spanish Prime Minister Rajoy has announced an overall increase in VAT rates (IVA), coming into force as of September 1, 2012 (Real Decreto-Ley 20/2012, 13 July 2012).

The general VAT rate will increase from 18% to 21%, and the reduced VAT rate will rise from 8% to 10%. The super reduced rate will remain unchanged at 4%.

Furthermore, a number of services and products will be recategorized from the reduced rate of 8% to the general VAT rate of 21%. Some examples of this recategorization are:

• Plants and flowers
• Entrance tickets for theaters, cinemas, zoos, theme parks, concerts, exhibitions etc. (with the exception of for example museums, libraries and art galleries)
• Healthcare and dental services (unless exempt)
• Veterinarian services
• Mixed services from hotels, shows, nightclubs or similar services
• Hairdressers
• Services in the field of sports delivered to persons, including for example fitness centers and pools
• Funeral and related services and products
• …..

Also, school materials, such as textbooks and school supplies (with exceptions), will no longer be subject to the reduced rate of 4%, but subject to the new general VAT rate of 21%.

Companies will have to adapt their accounting systems to the new tax rates on a timely basis, to ensure that invoices are sent with the correct VAT rate as from 1 September 2012.

For questions or more information, do not hesitate to contact us.