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What taxes are there?

About VAT

  • Deductions: In Value Added Tax, the deduction mechanism is an essential feature of the tax. As a result, businesses can deduct the taxes incurred on their purchases, so that only the value added or incorporated into the chain is taxed at each stage of the production-marketing chain. However, final consumers cannot deduct VAT, so they are the ones who actually pay it in the price of the goods and services they purchase.

  • Exemptions : They consist of the fact that, in certain cases, even though the events that give rise to the payment of a tax occur, the obligation to pay tax does not arise because the law has established it as such. In the case of Value Added Tax, exemptions include, for example, public health services, child and youth education provided by authorized public or private entities, or services provided by dentists.

  • Canary Islands General Indirect Tax (IGIC): It is an indirect tax levied on the consumption of goods and services in the Canary Islands. It is therefore very similar to VAT. In the Canary Islands, VAT is not applied, but IGIC is applied.

  • Value Added Tax (VAT): It is an indirect tax levied on the consumption of goods and services produced or marketed in the course of business or professional activities, as consumption is considered an indirect manifestation of a person's economic capacity.

  • Repercussion: It consists of transferring the tax rate to the price of the good or service in question. It is a characteristic mechanism of the Value Added Tax: The entrepreneur involved in each phase of the production-marketing chain transfers the tax to the entrepreneur involved in the following phase in the invoice he issues, who can deduct the tax charged, and so on.

  • Tax rate: It is the percentage applied to obtain the tax rate that must be paid. There are three tax rates for Value Added Tax: the general rate of 21%, the reduced rate of 10% and the super-reduced rate of 4%. Reduced and super-reduced rates apply only in cases established by law.

  • Added value: It is the increase in value that goods and services experience as a result of their passage through each of the phases of the production and marketing process until they reach the final consumer.