Implications of VAT Rate Changes in Italy and Spain for Businesses

Businesses aiming to remain compliant with VAT regulations should be vigilant about rate adjustments, which come about regularly. Notably, Italy and Spain have implemented changes to their reduced VAT rates in 2024. Even companies with experienced in-house tax teams should take advantage of the best possible expertise and technology to ensure they remain aware of developments across the world.

How are VAT rates changing in Spain?

Spanish authorities have introduced VAT rate changes with significant implications for businesses operating in the relevant sectors. Foodstuffs and energy products are two categories subject to change in 2024. Common bread (and flour), milk, eggs, cheese, fruits, vegetables, and other natural products are subject to a new temporary 0% rate. The previous reduced VAT rate of 5% on electricity, natural gas and wood for energy has increased to 10%. The initial reduced rate on these products came into effect due to geopolitical instability, which caused immense strain on consumers. Businesses can expect further VAT rate changes in future, making access to professional advice and guidance essential.

How are VAT rates changing in Italy?

In 2023, Italy reduced rates for feminine hygiene and baby products, including diapers, car seats and age-appropriate foods for infants and young children. Previously, the rate was 5% and this has increased to 10%. As a result, businesses in these sectors should be making the required adjustments to their commercial practices to reflect these changes.

What are the compliance implications for your business?

The VAT rate changes in Italy and Spain are among several others that have come into force recently, or will come into force in the near future. Companies that fail to consider any change in VAT rates are potentially liable for taxes they are not passing onto clients, or at risk of overcharging clients where VAT rates decrease. Even the most experienced in-house tax teams may struggle to keep track of global developments in this respect. Our experts are dedicated to helping you keep track of your global obligations and opportunities. VAT IT Compliance uses the latest technology and expertise to help businesses navigate their compliance journeys. If you believe you can benefit from our assistance, please reach out using the form below.
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