The Spanish government cancels VAT on olive oil from July 1
Since July 1, the Spanish government has abolished VAT on olive oil, equating it with essential products such as bread, eggs, fruits and vegetables. This change has been proposed by the Ministry of Finance and will be approved at a meeting of the Council of Ministers next Tuesday.
Olive oil becomes a product with zero VAT
Olive oil is now included in the list of goods and services with super-low VAT, which is usually 4%. Previously, this product was subject to a reduced VAT of 10%.
This new VAT reduction continues the government's policy of reducing the tax burden on olive oil, which began in 2023 with a tax reduction from 10% to 5%. According to the Institute for National Statistics (INE), the price of olive oil in April was 68.1% higher than a year ago, and since January 2021 it has increased by 204.8%, which means that the cost of oil has tripled in the last three years.
Improving conditions for producers and consumers
The decision to cancel VAT is being made against the background of the expected improvement in conditions for olive oil producers due to recent rains, which, according to forecasts, will lead to an increase in production. This should have a positive effect on prices for consumers after the end of the summer season.
Political agreement to reduce VAT
In March, the PSOE party and the Sumar coalition officially supported the reduction of taxes on olive oil and seeds to 0% in Congress, in accordance with an agreement with the Junts party, which provided support for the adoption of a number of decrees. These changes were made to the draft law approved in January as part of anti-crisis measures.