The government confirms continued VAT relief on basic foods through the first half of next year
The policy keeps a 0 percent VAT rate on essential groceries for Spanish households and a 5 percent rate on pasta and edible oils. The Prime Minister, Pedro Sánchez, announced this extension after the Council of Ministers met. The decision comes despite a broader trend of easing energy costs that have helped lower agricultural production expenses in recent months.
When the policy was first laid out, the relief covered a wide range of everyday foods. To withdraw the deduction would require the base CPI to rise to 5.5 percent. The latest available data from November shows a CPI of 4.5 percent, which is a full point below the threshold. The administration has opted to keep the relief in place as food prices rose again last month. Extending the tax relief into the first half of 2024 could require nearly 900 million euros, with the overall budget impact projected to about 1.294 billion euros by September 2023.
The government has signaled gradual moves to adjust VAT on electricity over the next six months. The new plan aims to phase changes in electricity pricing in a careful, predictable way rather than rush any changes.
There was no explicit forecast from the Council of Ministers regarding changes to VAT on meat products, fish, and canned goods. Agricultural and livestock groups along with consumer organizations have repeatedly pressed for reforms. Opposition parties participated in the debate, highlighting that a portion of citizens benefits from the current VAT reliefs, while others worry about the potential impact of any future adjustments on household budgets.