Value Added Tax (VAT) is an indirect tax applicable to the consumption of goods and services produced both domestically and abroad.
What is VAT?
- General rate: this is 21% and applies to all commercial transactions that are not subject to a special VAT rate, which in practice is the vast majority.
- Reduced rate: this is 10% and applies to a large number of products and services that are considered basic but are not considered basic necessities. It is applied to tickets for means of transport, food in general, hotel and catering services and house sales, among other commercial transactions.
- Super-reduced rate: this is 4% and affects products that are considered basic necessities such as bread, milk, fruit, equipment for the disabled, medicines, books, subsidised housing, etc.
The VAT Law details the rate to be applied to each product or service, so that all those on the market are taxed accordingly.