Modifications VAT Spain

Changes in the VAT rules included with the Spanish budget for 2021

On 3 December 2020, the Spanish Parliament voted the budget for 2021. The budget incorporates changes to the VAT legislation regarding the location rule for certain services that are used in Spain and the VAT rates for sugary beverages.

There are certain services that, if they are not located in the EU Community and are used in Spain, are subject to Spanish VAT. The 2021 budget specifies that the Canary Islands, Ceuta, and Melilla, all of which are considered non-VAT territories, will be deemed to be within the EU Community. The result of this is that services that, under the general rules, are located in such territories and are used in Spain, will not be taxed in Spain.

Regarding the VAT rate on sugary beverages, the budget increased the rate from the reduced rate of 10% to the general rate of 21%. The increase does not apply to certain products, however, such as dairy products (yoghurts or fermented milks).

Other recent VAT modifications

The government recently announced the following further COVID-19 VAT relief measures:

The VAT rate applicable to face masks has been reduced from the 21% general VAT regime to the reduced VAT rate of 4%.
The zero VAT rate applicable for intra-community deliveries, imports, and acquisitions of prescribed goods necessary to combat the COVID-19 pandemic has been extended to 30 April 2021.

Rosario Estella
rosario.estella@bdo.es

Álvaro Gómez-Elvira
alvaro.gomez@bdo.es