What types of VAT are there and to which products and services do they apply?

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VAT, or Value Added Tax is one of the best known and common taxes we come across on a day-to-day basis. It is an indirect tax, since it subjects indirect manifestations of the taxpayer's economic capacity to taxation, taxing the consumption we make of any good or service.

The current general VAT tax rate is 21%, which means that for each product that we buy or hire, we will have to pay 21% VAT on its amount (the tax base).

Types of VAT

However, in addition to the general rate, which is the one applied to most goods and services, there are another two types of VAT:

Reduced rate: 10%. This percentage is the one that corresponds to deliveries, intra-community acquisitions or imports of, among others, the following goods:

Products used for human or animal nutrition, excluding tabacco and alcohol.
Animals, vegetables and other products intended for obtaining products for human or animal nutrition.
Goods used in agricultural, forestry or livestock activities, such as seeds or fertilisers.
Waters suitable for human or animal consumption or for irrigation.
Medicines for animal use.
Pharmaceutical products for direct use by the end consumer (such as gauze or bandages), feminine hygiene products and condoms.
Prescription glasses, contact lenses and products for their care.
Homes, garages and annexes that are transferred together with the home, except for business premises and buildings destined for demolition.
Seeds, bulbs, cuttings, flowers and live plants of an ornamental nature.
Imports of art objects, antiques and collectibles.

The reduced rate of 10% must also be paid on the following services:

Transportation of travellers and their baggage.
Hotels, campsites and spas, restaurants and the provision of food and beverages to consume on the spot.
Services performed for owners of agricultural, forestry or livestock farms.
Agricultural cooperatives services provided to their members.
Services provided by interpreters, artists, directors and technicians, to film producers and theatre organisers.
Cleaning of public roads, parks and public gardens.
Waste collection.
Tickets for the cinema, theaters, concerts, circuses, bullfighting festivals and other live cultural shows; museums and art galleries; amateur sports shows; and exhibitions and trade fairs.
Leases with option to buy homes, including garages and annexes.
The transfer of the rights of use per turn of buildings, when the property has at least ten accommodations
Renovation and repair works carried out in homes, meeting certain requirements.

Super reduced rate: 4%, which is the rate applied to primary need products. This section includes the following products:

Bread, milk, cheese, eggs, fruits, vegetables, legumes, tubers and cereals.
Books, newspapers and magazines.
Medicines for human use.
Vehicles for people with reduced mobility and wheelchairs, as well as prostheses, orthotics and internal implants for people with disabilities.
Subsidised housing with a special or public promotion regime, including garages and annexes.

We also pay a 4% super reduced VAT when we pay for any of the following services:

Repair of vehicles for people with reduced mobility and wheelchairs. Services to adapt taxis to transport people with disabilities.
Rental with the option to buy subsidised housing.
Telecare services, home help, day and night centres and residential care.

Services that do not pay VAT

Although we have to pay these three types of VAT on most of the goods we buy, some activities that are exempt from the payment of this tax. The Tax Agency's list includes:

Teaching in authorised public and private centres and private lessons.
Healthcare for people provided by medical professionals and healthcare services.
Certain professional services, including those whose consideration consists of copyrights provided by visual artists, writers, literary and graphic collaborators.
Insurance, reassurance and capitalisation services.
Ombudsman services provided to individuals in various financial operations.
Leasing of housing and transfer of rustic and non-building land, as well as second and subsequent transfers of buildings.Postage stamps.

The Tax Agency's website also shows the activities that are not subject to VAT.

It should be noted that VAT is a tax that is applied in all phases of a good or service's manufacturing and sales chain, although this is only borne by the end consumer, given that companies and self-employed persons can deduct the VAT applied in each phase.

Santander Impulsa Empresa, the bank's VAT calculator, makes it easier to calculate VAT. You just have to enter the figures you know and the rest is calculated immediately.

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