VAT increase on sugar added products

Blog 4 - Subida de IVA

What is the reason for the VAT increase?

The VAT increase on drinks with added sugar is sold as a tool to promote a life with healthier habits and combat childhood obesity. However, the government also benefits as it will raise more treasury.
Some data:
- In 2018 the treasury collected was 68,866 million euros in VAT
- That is 33% of the total collected by taxes 208,685 million euros

How much is the VAT increase on sugar added drinks?

After years of preparing and studying the subject throughout Europe, the rise is from the 10% rate to the maximum rate of 21% of VAT.
The Government of Spain estimates that the increase will raise about 400 million euros of taxes, most of it (340 million) in 2021.

For who is the VAT increase?

Normally a VAT increase on a product or type of products is global, affecting the entire economy of the country. In this specific case its different, in which the hospitality sector is left out and has a different treatment. That is, this measure affects end consumers in all sectors (such as distribution and Vending) but does not affect the hospitality industry to the same extent, which can deduct 21% as it had been doing so far and continue billing without changes.
In other words, the final consumer will not pay the same VAT for a Coca Cola if they buy it in a restaurant or if they buy it in a vending machine or a 24-hour store, which seriously hurts our beloved VENDING sector.
However, the impact on the public will mean a reduction in purchasing power that will lead to a reduction in consumption either in a bar or restaurant or in a vending machine, so in the end all sectors lose while tax collection will be higher.

When is the change made?

In the midst of the crisis with all measures against COVID 19, but on a logical date for most companies due to the closing of the books, it took place on January 1, 2021.

What products are affected?

All beverages in which sugars and sweeteners are added, except dairy.
Some examples of drinks that you can find in our vending machines in Valencia are::
- Sparkling soft drinks (Coca Cola, Fanta, Aquarius, Nestea)
- Coca Cola Zero, which does not contain sugars, also rises
- Soft drinks without gas, like the ones we offer in our vending machines: Enjoy and Upgrade
- Juices with fruits like those of the brand Don Simón
- Energy drinks like Monster, Red Bull and Blackside

Not included for example are:
- Pascual chocolate shake
- Water
- Landesa ICE Coffee (Capucino, Late Machiato, Espresso)

Let’s hope that this new measure finally is not as aggressive as it seems and allows us to continue selling in the vending sector as up to now. The consumers will decide.