This change in the VAT rates on food has a direct impact on the hospitality industry, so in Gstock we have carried out the necessary actions to adapt the tool to the new rates, thus facilitating the adaptation to our customers and users so that they can have their profitability under control also in this aspect, with the necessary changes already introduced.
Transitional modification of VAT on food: What are the changes?
The Royal Decree-Law establishes that as of September 30 "a significant reduction in inflation is already estimated", so that "tax rates will be increased to 7.5 and 2 percent, respectively, until December 31, at which time the reduction in prices will allow the suppression of this exceptional and transitory measure without affecting the purchasing power of families. In this way, reasonable final prices for these foods are guaranteed until the market is fully normalized, which is expected to take place during the last quarter of this year and will continue in 2025".
However, "the tax rate applicable to deliveries of olive oil, a basic and essential foodstuff of a healthy diet, is reduced from the previous 5 percent to 0 percent until September 30, being taxed at the rate of 2 percent from October 1 until the end of the year, and, more importantly, it is consolidated as a staple foodstuff at the super-reduced rate of 4 percent as from January 1 , 2025, which requires a modification of Law 37/1992, December 30, more importantly, it is consolidated as a staple food at the super reduced rate of 4 percent as of January 1, 2025, which requires an amendment to Law 37/1992, of December 28, 1992, on Value Added Tax, indefinitely for these purposes".
On the other hand, "the rates of the equivalence surcharge applicable to these products are maintained at 0.6 and 0 percent in relation to the application of the VAT rates of 5 and 0 percent, which are increased to 1 and 0.26 percent, when the referred foods are taxed at the tax rates of 7.5 and 2 percent, respectively".
The amendments approved in the Royal Decree-Law entail a change in VAT on the following categories of foodstuffs:
ALL staple foods (including olive oil) go from 0% to 2% VAT . The following products fall into this category:
- Olive oil.
- Plainbread, frozen plain bread dough and frozen plain bread intended exclusively for the production of plain bread.
- Baking flours.
- Milk of any animal species and of any type: natural, certified, pasteurized, concentrated, skimmed, sterilized, UHT, evaporated and powdered.
- Cheeses.
- Eggs.
- Fruits, vegetables, legumes, tubers and cereals (provided they are recognized as natural products, in accordance with the Food Code and the provisions issued for its development).
As for the rate, which increases from 5% to 7.5% from October 1 to December 31, 2024, it concerns seed oils and pasta.
Modification of 2 VAT rates on foodstuffs: How does it affect the hotel and catering industry?
When does it become effective and how long will it last?
The purpose of these measures is, according to the Royal Decree-Law, "to face the economic and social consequences derived from the conflicts in Ukraine and the Middle East and urgent measures are adopted in fiscal, energy and social matters" and to recover normality in terms of rates. Thus, this new amendment will be in force during the following dates.
- Start date: October 1, 2024.
- Completion date: December 31, 2024.
- As of January 1, 2025, this "exceptional and transitory measure" will be abolished, as established in the text of the Royal Decree-Law .
Transitional modification of VAT on food: How does it affect the use of Gstock?
We have implemented the necessary adaptations in Gstock so that you can easily manage the new VAT rates. This will allow you to:
- Apply the new VAT rates to all the products in your catalog from 0% to 2% and from 5% to 7.5% on a massive scale.
- Export delivery notes and invoices correctly for integrations with other ERPs or accounting systems.
- Control the stock and cost of products without the VAT change affecting your daily operations, as Gstock continues to work with the taxable base (without VAT).
What changes should I make in Gstock?
For products that go from 0% to 2%.
This change affects all products with 0% VAT. Gstock allows you to make this change in bulk.
Steps to follow
Go to the tax settings and simply edit the tax rate from 0% and change it to 2%.
2. When you make this change, Gstock will ask you if you want to "Edit and replace the purchase catalog". Confirm this option so that the VAT for all products will be updated automatically.
3. If necessary for historical or exception products, add 0% to be able to use it.
For products from 5% to 7.5%.
This change affects products in the seed oil and pasta categories.
Steps to follow
Go to the tax settings and simply edit the tax rate from 5% and change it to 7.5%. Change the VAT on the affected products in two ways:
2. When you make this change, Gstock will ask you if you want to "Edit and replace the purchase catalog". Confirm this option so that the VAT for all products will be updated automatically.
3. If necessary for historical or exception products, add 5% to be able to use it.
It is essential that this configuration is supervised and validated by the tax or accounting department. The correct application of VAT rates must be aligned with current tax regulations and any error could have legal or financial consequences. We recommend that all VAT-related decisions be confirmed with the company's tax experts.
We hope you have found this information useful and that it will help you to apply the corresponding changes in the tool, in view of the changes in the VAT. You can also consult it in our Confluence channel. If you have any doubts about the application of the changes or any question related to the operation of the tool, please contact our SUPPORT department. We will be happy to help you get the most out of the tool, so that you have your profitability under control.