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Supermarket shelf with bottles of olive oil. Esther Vázquez
This is the date Spain will scrap IVA sales tax on olive oil after price triples in three years
Consumer affairs

This is the date Spain will scrap IVA sales tax on olive oil after price triples in three years

The measure will be approved at the government's next cabinet meeting, with the 'liquid gold' being considered a basic necessity

Edurne Martínez

Madrid

Friday, 21 June 2024, 11:46

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With the price of olive oil rocketing in Spain, the government has decided to approve the elimination of IVA sales tax on the product at the next cabinet meeting, as confirmed to SUR by treasury sources. The price of olive oil has tripled since January 2021, with average prices now around 9 euros per litre.

However, it has now been confirmed that olive oil will be considered a basic necessity (like bread, eggs, vegetables and fruits) and, therefore, will be subject to the super-reduced IVA rate - usually 4% but currently stands at 0% due to the anti-crisis measures package. The exemption for basic foods had been set to expire on 30 June, but the prime minister recently announced a proposal will be presented to congress to extend it for the rest of the year, as food inflation remains high.

As reported by Cadena Ser, the new measure will come into effect from 1 July. The government previously reduced the IVA on olive oil from 10% to 5% in 2023, "a measure that is now being intensified," according to sources from the treasury. Up until now, olive oil had been subject to a reduced VAT rate of 10% under normal conditions, which will decrease to 4% once the government's food subsidies expire. "This measure aims to protect and encourage the consumption of olive oil, a healthy product whose price has recently increased due to drought, among other reasons," the same sources said.

Political agreement

According to data from Spain's national institute of statistics (INE), in April, olive oil was 68% more expensive than a year earlier and has seen a cumulative increase of 205% since January 2021, meaning its cost has tripled over the past three years.

In March, political parties PSOE and Sumar formalised in congress the reduction of IVA on olive and seed oils to 0%. The coalition government parties introduced this measure as an amendment to the bill derived from the crisis response decree validated in a January plenary session, which was approved for processing as a project to introduce possible changes.

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