In a special debate in parliament yesterday, the Spanish government has proposed and agreed to increase VAT (IVA) in Spain.
VAT currently at 18% will rise to 21%, the middle rate of 8% will change to 10%, but the super reduced rate of 4% will remain the same, which covers all products considered as basic needs including the purchase of a new property in Spain which many experts considered might increase again.
Although there was great pressure from Brussels on the Spanish government to increase the tax upon the purchase of a new property, the fact of the matter is that with such a huge stock of unsold property still in Spain, this would have had a very negative effect on the recuperation of the Spanish property market. Maintaining the VAT at 4% is good news indeed for Spanish and foreign buyers alike.
These measures are expected to be approved in parliament this Friday but as yet there is no firm date as to when they will take effect.
UPDATE: New rates of VAT in Spain to take effect as from 1st September 2012.
