Average VAT could rise from 8% to 18%

The government’s plan to increase IVA (VAT) has been leaked – they don’t want to increase IVA across the board, they want to requalify a bunch of products from 8% into the 18% range.

Amongst items mooted are cinema tickets, hotels, transport, and drinks in bars -eek!- (all 8%) which would see an extra 10% slapped on them.

Spain has three IVA bands : Superreduced at 4% (bread, basic foodgoods, newspapers, certain health products, not much else), reduced at 8% (a heck of a lot of stuff) and normal at 18% (everything else).

It’s a novel approach to increase IVA, which the EU has demanded Spain does, and which the EU also reminded Spain today that it’s obliged to do under the terms of the bailout package (sorry, I mean the recapitalisation package for the banks).

Expect an announcement this summer, with the change taking effect early 2013 (it takes six months to update the computer programs).

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