Spanish VAT rates: 21%, 10% and 4%, and what falls under each

Three rates, and only one of them is the general one

Spanish VAT has three rates. The general one is set by article 90 of Law 37/1992¹ and the two reduced ones by article 91¹:

Article 90 is worth reading in full, because it settles the odd cases: "The tax shall be charged at the rate of 21 per cent, save as provided in the following article." The 21% is not the rate of a list of products, it is what applies when article 91 says nothing else. That is why no official list of goods at 21% exists: the list is everything else.

The rate that applies is the one in force at the chargeable event

The second paragraph of that same article 90 adds a rule almost nobody quotes, and it settles the question for any building work or supply that straddles a rate change: "The rate applicable to each transaction shall be the one in force at the time of the chargeable event"¹.

Not the invoice date, not the contract date, not the payment date: the devengo. It is not an idle rule, because the three rates have changed before and will change again. The same sentence, word for word, appears in article 51.4 of the Canary Islands law³ and in article 18.3 of the Ceuta and Melilla law⁴: all three Spanish indirect taxes answer that question the same way.

Three taxes, three different legislatures

This is the part no page about Spanish VAT rates covers, and it is what really explains why the Canaries, Ceuta and Melilla are another world.

It is true that VAT rates do not vary by autonomous community: the three are identical across the peninsula and the Balearics, because a state law sets them. But that does not mean the rate of an indirect tax in Spain is always set by the state. It is set by whoever the law says in each territory, and that is three different levels of government:

And the reason for the exclusion is not the same for all three either. Article 3 of Law 37/1992¹ takes them out of the scope of the tax in two separate paragraphs for two separate reasons: point a) excludes Ceuta and Melilla as territories outside the customs union, and point b) excludes the Canaries as a territory excluded from the harmonisation of turnover taxes. The Canaries are inside the customs union; Ceuta and Melilla are not. That is why a sale from the peninsula to the Canaries and one to Melilla are not documented the same way, even though both fall outside VAT.

The Canaries are not "tax free": they have seven rates

Article 27 of Law 20/1991, the state law governing IGIC, no longer sets any rate. What it does today is refer onwards: the rates "are governed by articles 51 to 61 of Law 4/2012 of the Autonomous Community of the Canary Islands"², under the legislative competence that the eighth additional provision of Law 22/2009 confers on that community.

Put another way: the IGIC rate is decided by a regional parliament, and it is the only general consumption-tax rate in Spain the state does not decide. Article 51 of that Canarian law³ sets seven of them, and what IGIC is and how it works has a page of its own:

The 7% general rate is one third of the peninsular 21%, and there is a genuine zero rate, which is not the same as an exemption: a zero rate leaves the transaction taxed at 0% and preserves the right to deduct input tax, while an exemption does not. So "there is no VAT in the Canaries" is true and misleading at the same time: there is a tax with more rates than VAT and a far lower general one.

Ceuta and Melilla: the rate is set by the city

IPSI is more local still. Article 18 of Law 8/1991⁴ says the rates "shall be set in the by-laws by the respective Cities and shall fall between 0.5 per 100 and 10 per 100".

So there is no such thing as "the IPSI rate": there is Ceuta's and there is Melilla's, each in its own fiscal by-law, revisable every year, inside a band the state law fixes and neither city may exceed. The same article adds a restriction worth knowing if you import goods: no distinction may be drawn between the rate applied to production and the rate applied to importation.

What falls under 4%, article in hand

Paragraph Dos.1 of article 91¹ is a closed list, and it is worth reading literally rather than in summary:

• ordinary bread, including frozen dough and frozen bread used exclusively to make it, and bread-making flours
• milk of any animal species: natural, certified, pasteurised, concentrated, skimmed, sterilised, UHT, evaporated, powdered and fermented
• cheese and eggs
• fruit, vegetables, pulses, tubers and cereals that are natural products under the Spanish Food Code
• olive oils
• books, newspapers and magazines, including in electronic form
• medicines for human use, magistral formulas and officinal preparations
• prostheses, orthoses and internal implants for people with disabilities
• wheelchairs and vehicles for people with reduced mobility
• social housing of the special or public-promotion category, when delivered by its developer
• sanitary towels, tampons, panty liners, condoms and other non-medicinal contraceptives

Two conditions the summary version drops, and they change the answer. Books leave the 4% rate if more than 90% of the revenue they give their publisher comes from advertising, or if they consist wholly or predominantly of video or audible music. And the 4% on vehicles for people with reduced mobility requires a certified disability of 33% or more and prior recognition of the buyer's entitlement: buying the car is not enough.

Yogurt has been at 4% since December 2024

That single trailing word in the milk list, "and fermented", is the change almost no published guide has picked up, and it is worth money in every weekly shop.

It was added by the first final provision, paragraph 2, of Law 7/2024 of 20 December⁵, and the law came into force the day after publication, that is 22 December 2024. Fermented milks, which is what the Spanish Food Code calls yogurt, kefir and curd, went from 10% like any other food to 4% like milk.

Before that date there was a hard-to-justify asymmetry on the same shelf: milk at 4% and plain yogurt, which is fermented milk, at 10%. Since December 2024 both are at 4%. A flavoured yogurt with added sugar is still a food, though, and added sugars only take drinks out of the reduced rate, not solids.

Olive oil did not go back to 10% when the temporary cut ended

Between 2022 and 2024 there were temporary VAT cuts on basic foods and on energy. Those cuts have ended and are no longer in the text of the law: anyone looking for a 5% or 0% rate on the weekly shop today will not find one.

What did survive is a permanent change. Article 2 of Royal Decree-Law 4/2024⁶ added olive oils as point g) of the 4% list, with effect from 1 January 2025. This is not an extension of the temporary cut: it is a permanent reclassification. Olive oil was taxed at 10% like any other food until 2022, was temporarily reduced, and instead of going back up it stayed down.

The two are worth separating because they age differently. A temporary cut expires on its own and you have to check the date; a permanent reclassification only changes if another law changes it.

Two bottles on the same shelf, two different rates

The 10% food rate in article 91.Uno.1.1º¹ carries two express exclusions, and the second one is the surprise:

a) Alcoholic drinks. [...] b) Soft drinks, juices and fizzy drinks with added sugars or sweeteners.

It was introduced by article 69 of Law 11/2020⁷ and is still in force. The practical consequence: a soft drink leaves the 10% rate and lands on 21% by the general rule in article 90.

And the conjunction has to be read in full, because it says "sugars or sweeteners". A zero-sugar soft drink with added sweeteners is excluded exactly like the sugared one: both go to 21%. A freshly squeezed juice with nothing added stays at 10%, and mineral water is at 10% too, because article 91.Uno.1.4º expressly covers "water fit for human or animal consumption or for irrigation".

Three bottles from the same fridge, three possible rates: water at 10%, juice with nothing added at 10%, soft drink with or without sugar at 21%, beer at 21%.

What falls under 10%

Article 91.Uno¹ is the broadest category, and it splits into goods and services:

Goods: food generally (with the two exclusions above); animals and plants used to obtain it; seeds, fertilisers, herbicides and pesticides for agricultural or livestock use; water fit for consumption or irrigation; veterinary medicines; pharmaceutical products under chapter 30 of the Combined Nomenclature for direct use by the final consumer; buildings fit for use as dwellings; and cut flowers and live ornamental plants.

Services: passenger transport and luggage; hospitality, restaurants, campsites and spas; the agricultural, forestry and livestock services the law lists one by one; cleaning of public streets, parks and gardens; waste collection and treatment and waste water; admission to libraries, museums, cinemas, theatres, circuses, bullfighting events and concerts; amateur sporting events; commercial fairs and exhibitions; certain renovation works on dwellings; lease with purchase option of dwellings; and services by performers, artists and technicians supplied to film producers and to organisers of theatrical and musical works.

Home renovation: three conditions, and the one that fails is the 40%

This is the most frequent question about the reduced rate and the one most often answered wrongly, because people remember the first condition and forget the third. Article 91.Uno.2.10º¹ requires all three at once:

1. the recipient is a private individual not acting as a business or professional, using the dwelling privately, or else a commonhold association;
2. construction or refurbishment of the dwelling finished at least two years before the works start;
3. the person doing the work supplies no materials or, if they do, their cost does not exceed 40% of the taxable base of the transaction.

The third is what decides it in practice. Replacing a boiler or a set of windows is mostly material rather than labour, so many refurbishments people assume are at 10% cross that 40% line and go to 21% in full. The invoice is not split: once the threshold is crossed, the whole transaction is taxed at the general rate.

Housing: two parking spaces, and no commercial premises

Article 91.Uno.1.7º¹ applies 10% to buildings fit for use as dwellings "including parking spaces, up to a maximum of two units, and annexes located in them transferred together with the dwelling".

Two limits, both literal. A third parking space bought in the same transaction does not get the 10%. And the article says it in plain words: commercial premises are not annexes to a dwelling, even when transferred together with it. A storage room goes with the flat; the shop on the ground floor does not.

Do not confuse this 10% with the 4% on protected housing, which does not reach all of it: article 91.Dos.1.6º reserves it to housing classified as special-regime or public-promotion and delivered by its developer. The rest of protected housing is at 10%, like open-market housing.

Five pairs that look alike and do not pay the same

Not one of these five lines follows from common sense: all five are read off article 91.

A worked example with real numbers

An ordinary shop, with the taxable base of each product and the rate that applies to it today:

The basket costs 28.10 € and carries 2.75 € of VAT, which is 10.85% on average: a rate that appears nowhere in the law. When somebody asks "how much VAT do I pay", that is the honest answer, and it is none of the three percentages.

And the effect of the two permanent changes of the last two years is visible right here. With yogurt and olive oil still at 10%, as they were, this same basket would carry 3.50 € of VAT and cost 28.85 €. That is 0.75 € on a small shop, every week.

What this page does not calculate

This page decides which rate applies. The arithmetic lives next door: how to separate the base from the tax on a till receipt, what goes into the taxable base, how to apportion the price of a mixed bundle and why the equivalence surcharge in article 161¹ means dividing by 1.262 rather than 1.21 is explained in how to calculate Spanish VAT, and the VAT calculator does the sum.

And a note on method that holds for any doubtful product: classification is the part that ages, and what settles the borderline cases is not a list on the internet but the Agencia Tributaria's own criterion⁸ on that specific product. The percentages have been stable since 2012; what moves is what falls into each.