Spanish VAT rate to rise from 18% to 21%

13 July 2012 update

Today, the Spanish Consejo de Ministros (Council of Ministers) approved a Spanish VAT increase from 18% to 21%.  It will come into effect on 1st September 2012.  The reduced VAT rate will rise from 8% to 10%, but the super reduced rate will remain unchanged at 4%.

Many goods on the reduced VAT rates, including 1st time home purchases, are to be recategorised at the higher, standard VAT rate.

The government had previously indicated that the Spanish VAT rate would have to rise to 20% in 2013.  Since then, there had been questions about the wisdom of the rise given the stagnant economy. However, the worsening economic position, and the recent request for a Euro 100 billion bank bail out from the European Central Bank, have forced a further increase.  You can read more about Spanish VAT compliance here.

Other measures announced today include cuts to unemployment benefits and changes to the company tax regime.  These will add up to Euro 65 billion in savings.

This rise follows similar VAT increases across Europe which you can read about here.

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