VAT rise impact

[richardk]

Hi; Only a couple of weeks now before we hit PP again and have just picked up about the big 10% hike in VAT in Spain from this Septemeber. On a "Google" trawl, also picked up that for the Balearic Islands the rise has been pegged back this year to 2% for "Hotels; food; restaurants" etc and 3% for Beer and Wine to protect the tourist trade this year. Are you pickinmg up any vibes about the impact of this on holiday costs in PP and in particular car hire which tends to come in with a pretty hefty bill over a two week hire. Did a search through your posts and couldn't pick up anything on this topic - but it could of course be me! Richard

 

[Chocaholic]

Hi richardk

The vat raise is not 10% all round, mainly it's going up from 18% to 21% or from 8% to 11%, however there are some categories, like for example hairdressing, gyms, and others ( I only mention these because they are the ones I know for sure) that at the moment were classified at a lower level-8%- but have been reclassified and will now go up to 21%, so it's actually 12% higher, these are the ones that will suffer the most as there is no way they can be expected to cover the difference, unlike someone who has just gone up 3%. As I say, I don't know all the businesses which will fall in this category, so we shall have to wait and see how much we are all affected.

 

[Sparky]

Hi Richard i guess we will not know until it actually comes into force. I did read somewhere on-line that some hotels/restaurants/bars are going to try to absorb the increase at least until the end of the season but have not heard anything else. Sorry i can't give you any more info atm but as sonn as i hear more i will post on the forum .

 

[andrew711]

Car hire goes up to 21% from 18%. Taxis to 10% from 8% as with other transport. All bars and restaurants, including price of drinks in bars and restaurants, from 8 to 10%. Attractions etc go up from 8 to 21%. Basic foodstuffs in supermarkets stay at 4%. Alcohol from supermarkets rises from 18 to 21%.

Not sure where the 11% comes in. There will be three rates - 4% super-reduced, 10% (commonly referred to as the tourist rate) and 21%.

Many businesses are planning on absorbing the rise, including the likes of Mercadona supermarkets, though many started adjusting prices upwards a couple of months ago in anticipation of the 1 September introduction, so it was less obvious.

 

[Sparky]

Thanks Andrew that is very helpful .

 

[richardk]

Thanks

Thanks for the information folks - it could be worse and at least our good old UK £££ is 15% fatter this year than last so I guess we brits need to spread our holiday money around and help to keep PP going in its time of need. However, "Spain" in general needs to make sure it stays competitive for tourists else it will be in a really big hole. I read Greece has actually reduced its VAT for tourists to attract them...

 

[andrew711]

Not only Greece, Richard. Portugal, France, even Germany have all reduced their "tourist" rates. I guess a line of thinking is that Spanish supply of holidays is that much greater that more competitive rates of VAT elsewhere won't matter. From the point of view of someone who lives here, while I am in favour of anything which stimulates tourism, I am not in favour of being penalised by having to shoulder the burden of rising prices if certain business sectors do not also assume some responsibility. Your point remains perfectly valid though.

As an addition to this, I note that the Spanish Government is saying today that it is "confident" there will not be further rises in VAT next year. Which probably means there will be. Ho hum.