What is VAT (IVA)?
VAT (IVA in Spanish) is a tax included in the price of almost everything you buy. It is paid by whoever consumes, although businesses collect it and hand it over.
How it works
When a shop sells you something, it adds VAT to the price and keeps it to pay to the tax authority. The shop has already paid VAT to its suppliers and can deduct it. So in the end the tax is borne by the final consumer, and businesses only pay over the difference.
VAT rates in Spain
- 21% (standard): most goods and services.
- 10% (reduced): for example, some foods, passenger transport or hospitality.
- 4% (super-reduced): basic goods such as bread, milk, fruit or books.
- Exempt: some services, such as healthcare or education.
The exact rates and what each includes can change, so it is worth checking them with the Spanish Tax Agency.
How it is calculated
With 21% VAT: price with VAT = price without VAT × 1.21. To remove it, divide by 1.21. A €100 product without VAT costs €121 with VAT. You can do it instantly with the VAT calculator.
Canary Islands, Ceuta and Melilla
In the Canary Islands the IGIC applies instead of VAT, and in Ceuta and Melilla, the IPSI. They are similar taxes with different rates.
VAT and income tax are not the same
VAT taxes what you spend; income tax (IRPF) taxes what you earn.
VAT is a consumption tax included in the price. Spain has three rates: 21%, 10% and 4%.
Informational and educational content. Not financial advice.