VAT in Spain is known as IVA (Impuesto de Valor Añadido) applies to all purchases made in Spain except for those transactions which are exempt and, as in other countries, there are various rates or bands. In Spain there are in fact three rates:
- Standard Rate: 21%
- Reduced Rate: 10%
- Super Reduced Rate: 4%
The Reduced Rate of 8% applies to foodstuffs in general, home purchases, hotel stays, tickets to shows and other forms of entertainment, glasses and contact lenses, public transport and funeral services.
The Super Reduced rate of 4% is applied to bread, milk, eggs, fruit, vegetables, cereals, cheeses, books, newspapers and medicines.
So the reduced rates are typically applied to those products which are considered as vital.