Spanish Government announced an increase in IVA/VAT rates in September 2009. Finally, it came into effect on July 1st. IVA/VAT rates increase in Spain from today, July 1. Public debt forced Spain to hike VAT rates from 16 to 18 percent.

The basic items and foods charged at a 4 percent rate remain unchanged. The reduced rate of 7 percent today goes to 8 percent and the normal rate of 16 percent goes to 18 percent.

There are just a few items in Spain which are exempt from IVA. They include plane or holiday tickets when the destination is outside the country, medical services, education services and property rentals.

According to the Spanish Consumers and Users Confederation, CEACCU, the average impact of today’s changes will be 350 euros a year, which means that each family will have to spend some 30 euros more to reach the end of the month, and that does not include the impact of any price rises from inflation.