Central Government is a analysing the list of products which benefit from “reduced IVA” (VAT), such as tourism and basic food products with a view to collecting more tax.
IVA in Spain stands at 18% but tourism only attracts 8% and a list of basic food products, including bread, eggs and milk, only pay 4%. Generally food products attract 8% IVA and buying your own home carries a reduced charge of 4%.
As part of the austerity package aimed at reducing the country’s deficit central government is considering widening the base of products which attract the full 18% IVA charge.
There are also plans to fight fraud and the submerged economy here in Spain including moves to limit cash payments for goods and services to 2,500 euros. Ne party involved in a transaction will be able to “denounce” the other party for offering false invoices and will be given immunity.
