The government extends the VAT rebate on foodstuffs, the cap on the price of butane and the support for La Palma until the end of the year.

Jun 28, 2023 | Current affairs, Featured, Revista Lloseta, Thursday Daily Bulletin, Tradition

 Basic foodstuffs will maintain a VAT rate of 0%, as will those that were reduced from 10% to 5%, including pasta and pasta products.
from 10% to 5%, including pasta and edible oils.
 The maximum price of the butane cylinder will continue to be limited to that established by current legislation.
 Those who buy an electric vehicle will be eligible for a 15% deduction on their personal income tax.
 Residents on the island of La Palma will continue to benefit from a deferment of Social Security contributions along with other fiscal measures.
 Other measures extended will be the 30% discount on transport season tickets and those aimed at transport companies.

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Extends the VAT rebate on foodstuffs

VAT rebate on foodstuffs
The Council of Ministers has approved the Royal Decree-Law to extend certain measures to respond to the economic and social consequences of the
economic and social consequences of the war in Ukraine, support for the reconstruction of the island of La Palma and other situations of vulnerability, in which it
vulnerability, extending until 31 December 2023 a number of measures that began to be implemented in mid-2022 in order to reduce the cost of living and to reduce the cost of living.
to lower the cost of living and reinforce the fight against inflation.

This package of measures mobilises an additional 3.8 billion euros, including tax reductions, direct aid and subsidies. Thus
8.9 billion euros in the second part of the year. In total, more than 47 billion euros have been mobilised to respond to the war in Ukraine and its aftermath.

Some of these measures, which have helped to reduce households’ recurrent expenditure bills, are part of the government’s strategy of making the development of the
Some of these measures, which have helped reduce household bills, are part of the government’s strategy to make everyday life compatible with the fight against the climate crisis and to mitigate the tensions generated by Russia’s illegal invasion of Ukrainian territory.

For this reason, most of the measures envisaged in Royal Decree-Law 20/2022 of 27 December are maintained. These include, in addition to the VAT reductions on the final price of foodstuffs and the limitation of the final cost of butane bottles, the subsidies for transport subscriptions of the autonomous communities and aid to transport companies.

The Royal Decree-Law does not include other decisions that already appeared in the one approved at the end of 2022, such as the VAT reductions on electricity and gas or the suspension of the Special Tax on electricity.
suspension of the Special Tax on electricity, as it was already foreseen in the regulation that its application would be in force until 31 December 2023.

VAT reductions
In order to continue helping citizens to cope better with the cost of the shopping basket, VAT reductions are maintained from 4% to 0% on basic necessities and from 10% to 5% on other basic products. These two tax cuts have proved to be effective in the fight against inflation, as shown by the successive falls in inflation so far this year.

In the case of VAT, which is going from 4% to 0%, the staple products affected will continue to be:

Common bread, as well as frozen common bread dough and frozen common bread, is intended exclusively for the production of common bread.
common bread.
Bread-making flour.
Milk produced by any animal species: natural, certified, pasteurised, concentrated, skimmed, sterilised, UHT, evaporated and powdered,
evaporated and powdered.
Fruits, vegetables, legumes, tubers and cereals, which have the status of natural products in accordance with the Food Code and the provisions dictated for
Code and the provisions issued for its development.
The list of those that will maintain the 10% to 5% VAT reduction will also remain unchanged. As a result, pasta and oils, including olive oil, will continue to be taxed at this rate. This, as is already the case, will be extended to all foodstuffs that were initially taxed at this rate.

All these tax reductions will remain in force until 31 December 2023, provided that the year-on-year rate of core inflation is above 5.5%.
the inflation rate is above 5.5%. If it falls below this rate in September, which will be known in October, the usual tax rate of 5.5% would be restored.
the usual VAT rate on the above-mentioned foodstuffs would be recovered in the last two months foreseen for the application of the measure.
the last two months foresaw for the application of the measure. In other words, from 1 November.