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Spain raises VAT from 18% to 21% 1 September 2012

  • Jul 13, 2012 | Richard Asquith

Spain raises VAT from 18% to 21% 1 September 2012

Yesterday, the government announced a new Spanish VAT increase, raising the standard VAT rate from 18% to 21% from 1 September 2012.  The rate was last raised from 16% to 18% in July 2010.

The reduced VAT rates will also rise from 8% to 10%.  The super reduced rate will not change from 4%.  Some items previously levied at the lower rates will now be moved to the higher, standard rate.  For example, new house purchases.  There will also be a range on other fiscal measures, including increasing pension contributions and reductions to unemployment benefits.

Spain has been facing increasing pressure from the nervous financial markets that it is not able to sustain its rising debt, and that additional cost cutting and tax rises were required.  The previous VAT rise in 2010 had not proved enough.

Spain joins many other Euro currency countries in raising vat, including: the UK, Netherlands, Germany, Italy, Greece, Hungary, Portugal and Finland.  VAT rises are seen as a less painful way of raising funds compared to corporation tax rises which hurt job-creating industry.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.