The reduction of VAT rates on food is coming to an end
VAT is a very important tax for the government and a very strong source of income. That is why the Treasury can play with the VAT rates when things are going badly or well.
The war in Ukraine has not yet taken place, but as the economic indicators are going well, the Treasury is putting things back to the way they were.
That is why the VAT rates on basic foodstuffs and certain oils and pastas will gradually return to normal.
Reduction in VAT rate in 2023
To mitigate the effects of the economic crisis, VAT rates on certain foodstuffs were temporarily reduced at the beginning of 2023:
- VAT on olive and seed oils and pastawas reduced from 10% to 5%.
- The equivalence surcharge was also reduced from 1.4% to 0.62%.
- VAT on staple foods (bread, flour, cereals, milk, cheese, eggs, fruit, pulses, vegetables, etc.) was reduced from 4 to 0%.
- The equivalence surcharge was reduced from 0.5 to 0%.
Return to normal VAT rates in 2024
However, VAT rates will be progressively reintroduced according to the following timetable:
| Products | Until 30-09-2024 | From 01-10-2024 to 31-12-2024 | From 01-01-2025 | |||
| VAT | Surcharge | VAT | Surcharge | VAT Surcharge | ||
| First necessity | 0% | 0% | 2% | 0,26% | 4% | 0,5% |
| Oils and pastes (1) | 5% | 0,62% | 7,5% | 1% | 10% | 1,4% |
Since July 2024, these products only include seed oils and pasta. Olive oil is now considered a staple product.
Be careful with the VAT rate of your corrective invoices
Well, if your company sells these types of products and has to issue corrective invoices for any of your sales, when making this correction you must apply the VAT rate of the accrual date (i.e. the date on which the sale took place), and not the rate at the time of the correction.
This can happen, for example, if a customer defaults on payment and your company wants to recover the VAT charged, if you correct an error in the price initially stated on an invoice or if merchandise is returned to you.
Or the VAT rates for the return of products.
If a customer returns goods to you and at the time of the return the VAT has changed with respect to the date of sale, you must issue a specific corrective invoice for said returns (with the original VAT), and you cannot wait to deduct its price from other deliveries you make later.
The latter is only possible if both the goods you sell and those returned to you are subject to the same VAT rate.
If your company sells any of these products and must rectify an invoice, apply the VAT rate existing on the accrual date of the initial transaction.
