The IVA reduction on 7,000 food items came into effect on Monday, January 1 and offers relief to Spanish consumers and businesses
The IVA (VAT in the UK) reduction for basic foodstuffs reached the shelves of more than 19,000 food stores that exist in Spain on January 1. Distributors were required by law to apply the measure aimed at reducing the final price of some 7,000 products.
According to calculations by Asedas, the employers’ association that includes chains such as Mercadona, Dia, Lidl, and Consum, the reductions have so far been implemented by 75% of the sector.
Royal Decree
The Royal Decree approved by the Government in late 2022 abolished IVA on legumes, potatoes, milk, cheese, eggs, vegetables and fruit, cereals, bread, and bread-making flour.
Until now, all of these were taxed at a reduced rate of 4%. They will now be sold without IVA for a maximum of six months or until core inflation drops below 5.5% – the advance CPI data for December leaves core inflation of 6 .9%, six-tenths more than in November and the highest figure for 2022–.
The IVA on Oil and pasta reductions of 10% to 5% and the rest of the foods, including meat or fish, keep the level of taxes intact and will not have any reduction, which has provoked criticism from their respective sectors.
By introducing this measure, the coalition government is trying to respond to an escalation in food prices that has not let up since the beginning of 2022 and that places a great burden on families with fewer resources.
Being careful and filling the shopping basket in an austere way, without luxuries, is 13% more expensive than a year ago. A family of four members spends about 315 euros more per year to buy ten categories of products.
However, some products have risen well above the general CPI. Olive oil, for example, marked inflation of 25.9% in November –using the latest available data–; eggs, 27.1; whole milk, 30.1%; and flour and other cereals, 37.6%.
Delays to the plastic tax
The food supply sector had asked the Government to delay the measure for one year, which will fall on the entire industry with a tax rate of 0.45 euros for each kilogram of this material that it manufactures or acquires. The FIAB employers estimate that the tax will have an impact of 690 million euros on companies in the industry just when production costs are most pressing. Its eventual repercussion on the shopping cart remains to be seen.
Food prices in Spain
Food prices in Spain can vary depending on where you are and what you are buying. In general, Spain is known for having relatively affordable prices for food compared to some other European countries. Basic items such as bread, milk, and eggs are usually inexpensive, and there are many markets and supermarkets where you can purchase fresh produce at reasonable prices.
Dining out can be more expensive, especially in tourist areas, but there are also many affordable options such as tapas bars and local restaurants that offer tasty meals at more reasonable prices. It’s always a good idea to shop around and compare prices to get the best deals.
