The standard rate is 21% and applies to most supplies of goods and services. There is a reduced rate of 10% applicable to certain supplies of goods and services. There is also a “super-reduced” rate of 4% that applies, for instance, to essential food items, books, newspapers and magazines, or certain government-subsidized housing.
Certain transactions are exempt from VAT (for example, financial and insurance transactions, medical services or educational services).
Within Spain, VAT does not apply in the Canary Islands, Ceuta or Melilla.
The Canary Islands have had a VAT-based indirect tax, the Canary Islands general indirect tax (IGIC), in place since January 1, 1993. IGIC is charged on supplies of goods and services on the Canary Islands by traders and professionals, as well as on imports of goods. The standard IGIC rate is 7%. Another indirect tax applies in Ceuta and Melilla (the tax on production, services and imports).
In certain cases transactions with related entities must be valued for VAT purposes at their normal market value.
In addition, certain groups of companies may be taxed under a consolidated tax regime for VAT purposes. To qualify for the regime, the parent company must have effective control over the dependent companies, either by owning a holding (direct or indirect) in them of at least 50% or by holding the majority of the voting rights, and must maintain that control for the entire the calendar year.
Last updated: 19|06|2015