In a resolution dated 24 February 2025, the Spanish Directorate General for Taxation (GDT) stated that the VAT rate applicable to all types of bread is 4%, thus extending the super-reduced rate to both "common bread" and "special breads. Before this resolution, the 4% rate applied to common bread, including frozen common bread and dough, while special breads were taxed at a reduced rate of 10% according to old criterion followed by the GDT in several binding rulings. Based on Royal Decree 308/2019 (which establishes the quality standards for bread in Spain), common bread is made primarily from cereal flour, water and leavening agents, and is meant for consumption within 24 hours of baking; special bread includes products with additional ingredients or bread produced using specific technological processes, such as Vienna bread, toasted bread, biscotti, breadsticks, sandwich bread, pita bread, gluten-free bread, etc.
In a decision issued on 15 October 2024, the Spanish Supreme Court held that taxing special breads differently from common bread is not in alignment with the VAT neutrality principle established by the Court of Justice of the European Union. The Supreme Court determined that different VAT rates on similar goods distorts market competition and contradicts EU jurisprudence. Following the Supreme Court’s decision, the GDT’s resolution now mandates that:
The change is binding on the tax authorities and businesses, ensuring a uniform approach to VAT on bread products.
For bakeries, food retailers and importers, the VAT rate reduction could enhance the competitiveness of specialty breads, particularly gluten-free and seeded varieties, by lowering their prices. Consumers may benefit from broader access to diverse bread products at reduced costs.
The resolution marks a significant change in Spain's indirect tax policy, aligning the VAT treatment of bread with EU legal principles. By applying the super-reduced VAT rate to all bread types, Spain ensures fair competition in the bakery sector and enhances consumer affordability.
Alvaro Gomez-Elvira
Alberto Cousilla
BDO in Spain
In a decision issued on 15 October 2024, the Spanish Supreme Court held that taxing special breads differently from common bread is not in alignment with the VAT neutrality principle established by the Court of Justice of the European Union. The Supreme Court determined that different VAT rates on similar goods distorts market competition and contradicts EU jurisprudence. Following the Supreme Court’s decision, the GDT’s resolution now mandates that:
- The 4% VAT rate applies to all bread varieties outlined in Royal Decree 308/2019, covering both common and special breads; and
- Gluten-free breads and other specialty breads are explicitly included in the 4% VAT category.
The change is binding on the tax authorities and businesses, ensuring a uniform approach to VAT on bread products.
For bakeries, food retailers and importers, the VAT rate reduction could enhance the competitiveness of specialty breads, particularly gluten-free and seeded varieties, by lowering their prices. Consumers may benefit from broader access to diverse bread products at reduced costs.
The resolution marks a significant change in Spain's indirect tax policy, aligning the VAT treatment of bread with EU legal principles. By applying the super-reduced VAT rate to all bread types, Spain ensures fair competition in the bakery sector and enhances consumer affordability.
Alvaro Gomez-Elvira
Alberto Cousilla
BDO in Spain