Brussels encourages Spain to review the reduced VAT on hotels and restaurants
The European Commission recommends that Spain limit the use of the reduced VAT and specifically points to hotels and restaurants, as, in its view, these preferential rates have a “very limited redistributive effect” on society despite their high cost to the State. That is, they benefit higher incomes more than lower ones because they consume it the most, according to community sources. Meanwhile, the impact of this tax that is not collected is enormous: the 10% VAT for hospitality is costing Spain 0.4% of GDP, or the equivalent of almost 7 billion euros each year.