VAT in Spain (IVA) 2026: Rates, What They Cover and How to Calculate
Spain's IVA (Impuesto sobre el Valor Añadido — VAT) has three main rates, all verified in the AEAT Tipos IVA 2026 document updated 2 June 2026: a 21% general rate covering most goods and services; a 10% reduced rate for most food, passenger transport, hospitality and new residential housing; and a 4% superreduced rate for basic staples such as bread, milk, eggs, fresh fruit and vegetables, and olive oil, plus physical books and human medicines. Peninsular IVA does not apply in the Canary Islands, Ceuta, or Melilla.
How Spanish IVA works and where it applies
IVA (Impuesto sobre el Valor Añadido) is an indirect consumption tax on supplies of goods and services in mainland Spain and the Balearic Islands. It is governed by Ley 37/1992 del IVA, harmonised with EU Directive 2006/112/EC. The Canary Islands are outside the peninsular IVA territory and instead apply the IGIC (Impuesto General Indirecto Canario) at different rates; Ceuta and Melilla apply the IPSI (Impuesto sobre la Producción, los Servicios y la Importación). Businesses and professionals whose activities are taxable and not exempt must charge IVA on invoices, file quarterly returns (Modelo 303), and remit the net difference between IVA charged and IVA paid on inputs to the tax authority.
The three IVA rates in force for 2026
The authoritative source is the AEAT document Tipos IVA 2026 (updated 2 June 2026), underpinned by Arts. 90 and 91 of Ley 37/1992. The general rate (tipo general) is 21% and applies by default to everything not expressly classified at a lower rate, including consumer electronics, clothing and footwear, alcohol, professional services such as legal and accounting fees, hairdressers, gyms, advertising, and most telecoms. The reduced rate (tipo reducido) is 10% and covers most food and non-alcoholic beverages (other than basic staples), passenger transport, hotel and restaurant services, the first supply of new residential construction, cultural and sporting event tickets, and certain consumer pharmaceutical products. The superreduced rate (tipo superreducido) is 4% and applies to basic staples (bread and milling flour, milk, cheese, eggs, fresh fruit, fresh vegetables and legumes, cereals, olive oil), physical books and newspapers, human medicines, and qualifying social housing (VPO).
How to calculate IVA
Adding IVA to a net price: gross price = net price x (1 + IVA rate). Examples: 100 EUR net at 21% gives 121 EUR gross; at 10%, 110 EUR; at 4%, 104 EUR. Extracting the net from a VAT-inclusive price: net price = gross price / (1 + IVA rate). Examples: 121 EUR gross at 21%: 121 / 1.21 = 100 EUR net; 110 EUR at 10%: 110 / 1.10 = 100 EUR net. The IVA component is always the difference between the gross and net amounts. These are the only two formulas needed; the paycalceu.com IVA calculator performs both directions for all three Spanish rates.
Exempt supplies versus zero-rated supplies
An exempt supply (operación exenta) is not the same as a zero-rated supply. Exempt supplies carry no IVA charge, but the supplier cannot reclaim input IVA on costs related to that supply. Common exempt activities include residential rental, regulated education, healthcare services, financial services, and insurance. A zero-rated supply (tipo 0%) is invoiced at 0% but the supplier retains full entitlement to reclaim input IVA on related expenses. In Spanish practice, the 0% rate applies to a very narrow and specific set of operations (certain qualifying charitable supplies). Misclassifying an exempt supply as zero-rated is a common compliance error with material cash-flow consequences.
Residential property, energy and recent rate changes
The first supply of newly built residential property is taxed at the 10% reduced IVA rate. Sales of second-hand residential property are exempt from IVA and instead attract Impuesto sobre Transmisiones Patrimoniales (ITP), a regional transfer tax whose rates vary by autonomous community. Commercial property transactions are generally subject to the 21% general rate. On energy: temporary reduced IVA rates that had been applied to electricity and natural gas supplies in earlier periods had expired by July 2026, meaning these supplies returned to the standard 21% general rate. Rate changes on energy products can be introduced at short notice through government measures; always verify the current position before processing an invoice. This guide is informational; verify your specific VAT treatment with a qualified professional.
FAQ
What VAT rate applies to food in Spain in 2026?
Most food and non-alcoholic beverages are taxed at the 10% reduced rate. Basic staples — bread and milling flour, milk, cheese, eggs, fresh fruit, fresh vegetables and legumes, cereals, and olive oil — are taxed at the 4% superreduced rate per the AEAT Tipos IVA 2026 classification. Alcohol (wine, beer, spirits) is taxed at the 21% general rate.
When does the 21% general VAT rate apply?
The general rate applies by default to all goods and services not expressly assigned to a reduced or superreduced category. This includes consumer electronics, clothing and footwear, alcohol, professional services such as legal and accounting fees, hairdressers, gyms, advertising, and most digital and telecommunication services.
Does the IVA calculator work for the Canary Islands?
No. The Canary Islands are outside the peninsular IVA territory and apply the IGIC (Impuesto General Indirecto Canario) at different rates and under different rules. The paycalceu.com IVA calculator is designed exclusively for mainland Spain and the Balearic Islands. For Ceuta and Melilla, the applicable tax is the IPSI, which operates under separate legislation.
Is new residential housing in Spain subject to 10% VAT?
Yes. The first supply of newly built residential property is subject to the 10% reduced IVA rate. Sales of second-hand residential property are exempt from IVA and instead subject to Impuesto sobre Transmisiones Patrimoniales (ITP), a regional tax with rates that vary by autonomous community. Commercial property transactions generally attract the 21% general rate.
⚠️ Informational estimate, not tax advice. Payroll software may differ in edge cases. Verify with a professional.