4. The tax over the value added

The income from the VAT grew by 7.9% in 2024, reaching 90.541 billion. ( Table 4.1 and Table 1.5 ). The final expense subject to VAT, the tax base, closed the year with a growth of 5.7%.

The difference between the two figures is explained by the fact that 2024 marked the end of the successive rate cuts that had been approved since 2021 to mitigate the effects of price increases in energy products (electricity and natural gas) and, subsequently, in 2023, in basic food products. In the case of electricity and gas, the gradual return to the standard rate resulted in additional revenue of 1.159 billion euros. In the food sector, however, the impact was still negative, given that the effect of the rate reduction in the final months of 2023 was carried over to the first months of the year, and the return to the original rates began in October, so there was only one cash month in which an increase in revenue was recorded for this reason.

In 2024 the final expenditure subject to VATgrew by 5.7%, 1.7 points less than in 2023 (Table 4.1). The slowdown in nominal spending was due both to the lower push in prices (the spending deflator increased by 2.8%, compared to 3.3% in 2023), and to the moderation of spending in real terms (2.9% compared to 4% in the previous year; Chart 4.1). This annual slowdown, however, conceals a clearly upward trend throughout the year, moving from an average increase of 4.9% in the first half of the year (the profile of the first two quarters is influenced by the different dates of Easter celebrations in 2023 and 2024) to a rate of 7.6% in the last three months (Chart 4.2).

Chart 4.3 shows the impact of the inflationary cycle that began in 2021 on expenditure subject to VAT. Taking 2015 as a base year, it can be seen that spending trends in current and constant terms followed the same pattern until 2020, given the moderate and stable prices at that time. However, since 2021, the trend in current expenditure has been distancing itself from that of volume expenditure. While the former will exceed the amount reached in 2015 by more than 63% in 2024, spending in volume has grown by 33.2% over the same period. However, this strong impact on current spending is not reflected in revenues because, on the one hand, some expenditure components are taxed at reduced rates, which cushions the effect on revenue collection, and, on the other hand, it was precisely the expenditure components that suffered most from the rise in prices that benefited from the rate cuts, so that their impact on revenues was reduced or even, as is the case with basic food, nullified.

From a component perspective, current and capital expenditure by public administrations registered the sharpest slowdown in the year (5.9% in 2024 compared to 9.4% in 2023), followed by household expenditure (5.6% compared to 7.2%), while expenditure on home purchases maintained the pace of the previous year (slightly above 7%; Chart 4.4 and Table 4.1 ).

It is estimated that the effective rate of the VAT increased by 1.4% (Chart 4.5 and Table 4.1) as a result of regulatory changes that affected the rate. Thus, the 21% rate on domestic electricity, natural gas, wood, and pellets was gradually restored, following the reductions that took place starting in June 2021, in the midst of the energy crisis. These goods and services were taxed at a rate of 5% since mid-2022, and increased to 10% in January 2024, subsequently rising to 21% for gas, wood, and pellets. Domestic electricity was taxed at only 21% between March and June, due to the drop in prices during that period. For basic food products, the rate went from 0% to 2.5%, and for pasta and oils from 5% to 7.5% (with the exception of olive oil, which remained at 2.5% in 2024). However, since these rates increased in October, the impact on accrued tax was reduced, and even more so on revenue collection (the October accrual was recorded in December's cash flow, and the November and December accruals were recorded in the first two months of 2025).

Table 8.7 shows the breakdown of the expenditure subject to types. The share of general-rate spending on total final taxable spending remained relatively stable, close to 57%, from 2015 to 2019. In 2020, it increased to 58.7%, and the share of super-reduced-rate spending also grew, albeit to a lesser extent. This came at the expense of reduced-rate spending, which was linked to the services most affected by lockdown measures and activity restrictions. In 2021, this situation was partially reversed, with general-rate spending returning to a similar weight to that prior to the pandemic, despite the reduction in the rate, from the general rate to the reduced rate, for electricity during half of the year and for gas since October. Since 2022, however, the percentage of spending at the standard rate has been below the previous level, as electricity and gas consumption continue to be taxed at rates below 21%.

He VAT accrued increased by 7.3%, around one and a half points more than the subject expenditure (Table 4.1), due to the increase in the average rate resulting from increases in electricity, gas and food. A similar rate is expected for the VAT net accrued (which differs from the previous one because it includes the variation in the balance that companies leave to offset from one year to the next).

Cash income grew by 7.9%, with gross income increasing by 5.2% and refunds decreasing by 0.8% ( Table 4.2 ).

As regards gross income, the increase in revenue from self-assessments was 4.6%, a growth lower than that VAT gross earned (5.8%). This is explained by the growing trend that followed the VAT gross accrued as the months progressed (it started with a rate of 2.1%, but from the second quarter onwards it rebounded to rates close to 7%), thanks to the improvement in subject expenditure and the greater impact of the rise in rates. The largest growth in the final 2024 accruals was seen in the 2025 cash flow, not the 2024 cash flow.

By type of taxpayer, the growth of VAT Gross cash flow was higher in quarterly returns, which increased by 6%, two points above the rate achieved by monthly returns. It should be remembered, however, that rate increases (previously decreases) also distort the breakdown between Large Companies (which, by having monthly declarations, are the first to notice the impact) and the SMEs (who generally notice the impact later and in the VAT supported).

The difference between the increase in total gross income and self-assessment income is due to the greater growth in income associated with deferrals. These increased by 16%, reflecting some of the larger deferrals requested in 2023.

Returns made from VAT fell 0.8% in 2024. Monthly returns decreased by 2.7%, for two reasons: the lower number of refunds requested in 2023 and the first part of 2024, and the slight decrease in the percentage of refunds requested in 2024. Regarding the latter, they increased by 2.9%, but varied very unevenly throughout the year. Until June, applications decreased, in parallel with the export situation in that first part of the year; In the second half of the year, however, exports improved and applications increased by 8.5%. However, due to the dynamics of management itself, the impact of this recovery was not fully reflected in the returns made and, as usual, weighed more heavily on the first half of the year.

In the case of annual refunds, they increased again for the fourth consecutive year, by 6.6% in 2024, as a result of the increase in applications corresponding to the 2023 financial year (submitted by the end of January 2024), of which, in addition, a higher percentage was made than the previous year.

Finally, refunds linked to tax adjustments also fell (-2.9%, including refunds associated with imports).