Spanish proposal to reduce VAT on culture
- 12 March 2015 | Richard Asquith
Spain is to propose a reclassification of the VAT rate on culture-related supplies from the standard Spanish VAT rate of 21% to the reduced rate of 10%.
The services under review include: cinema tickets; theatres; DVDs; music CDs; and e-books. They were subject to the reduced VAT rate of 8% (the prevailing VAT rate at the time) until September 2012. But Spain raised VAT 3% in 2012, taking the standard rate to 21% from 18%, and increased the reduced rate from 8% to 10%. At the time, the above cultural-related services were moved to the standard rate.
Spanish VAT reform
As the Spanish economy has begun to recover from the Euro currency crisis, the prospect for some tax relief for the cultural sector has been raised.
However, Spain will not be permitted to cut VAT on e-books following ECJ case in March 2015. The Court found that e-books constituted a service and not a supply of a physical book. It is only the latter than may benefit from Annex III of the EU VAT Directive which lists supplies which may have a reduced rate.