VAT on olive oil will be eliminated from this Monday until September and will rise to 2% until December

June 30 () –

The value added tax (VAT) on olive oil will drop from this Monday, July 1, to 0% and will remain abolished until September 30, and then rise to 2% between October and December.

Similarly, the Government has also decided to maintain the VAT reduction to 0% on basic foods, such as bread, eggs, vegetables or fruit, until September 30 and raise the rate to 2% between October and December of this year. year, coinciding with the fact that the forecast for food inflation during the last quarter will be moderated downwards.

The Royal Decree-Law approved by the Council of Ministers and published in the Official State Gazette (BOE) on measures to address the economic, and also social, consequences derived from the conflicts in Ukraine and the Middle East includes important new developments regarding VAT. olive oil.

This tax, which had already been reduced from 10 to 5%, will go to 0% from July 1 and will remain that way until September 30. Then it will be at 2% between October 1 and December 31.

In addition, the Royal Decree-Law includes the modification of the VAT Law so that this product becomes part of the basket of basic products and foods, so it will always have a super-reduced rate, once the extraordinary tax reductions conclude.

The super-reduced rate in Spain is 4%. This means that when rates return to normal, the VAT on olive oil will be 4% instead of the 10% that it had been bearing throughout this previous period.

The 5% VAT rate on pasta and seed oils is also being extended until 30 September. From 1 October to 31 December, the rate will be 7.5%.

According to the Government’s advances in the rule published in the BOE, December 31 will be the moment in which the price reduction will allow the suppression of these exceptional and temporary measures, “without affecting the purchasing power of families.”

“In this way, reasonable final prices for these foods are guaranteed until the market is fully normalized, which is expected to occur during the last quarter of this year and continue into 2025,” the text argues.

However, the First Vice President and Minister of Finance, María Jesús Montero, explained during the presentation of the Royal Decree-Law that the Executive will support families and the product network “for as long as necessary to return to normality.”

PERSONAL INCOME TAX REDUCTION FOR 5.2 MILLION PEOPLE: SAVINGS OF 1.385 MILLION

Another measure included in the Royal Decree-Law is the reduction of personal income tax, which will prevent people who earn the minimum wage from paying income tax.

The Government previously modified the Personal Income Tax regulations to prevent these workers from having withholdings on their monthly payrolls starting this year, 2024, and what the Executive is doing now is including the measure in the Personal Income Tax law itself.

Last year, this minimum threshold for making withholdings was raised from 14,000 to 15,000 euros. Now it is increased again to 15,876 euros, that is, the equivalent of the minimum interprofessional salary in annual calculation.

However, the groups that benefit from this measure are broader, given the progressive nature of the tax, with the improvement reaching incomes of up to 22,000 euros.

However, according to Montero, this reduction in personal income tax benefits 5.2 million taxpayers, especially employees and pensioners with low and medium incomes who will achieve savings of 1.385 billion euros.

Thus, the sum of the fiscal measures included in this royal decree, both VAT and personal income tax, represent savings of 3,000 million euros per year for families.

INCREASE SALARIES OF OFFICIALS AND MEASURES FOR VULNERABLE GROUPS

The law also includes a 2% salary increase for the more than three million public employees planned for this year, which will be paid immediately, in the first possible paycheck, and with retroactive effect from January 1. To this 2% will be added an additional 0.5% depending on the evolution of inflation, which will be approved in January 2025, but referring to the 2024 financial year.

In relation to vulnerable groups, the Government has extended the validity of the social shield, which includes until the end of the year a prohibition on cutting off water and energy supplies to vulnerable consumers and the extension of discounts on the electricity bonus until June 30 of the year. 2025. Furthermore, in the area of ​​the last resort rate of the TUR for natural gas, the decree grants indefinite character.

PROHIBITION OF FIRE IF PUBLIC AID IS RECEIVED

Likewise, the Government has decided to extend until December 31 of this year the prohibition of laying off companies that benefit from public aid due to increased costs. Failure to comply with this obligation will lead to the refund of the aid received.

“For those companies that benefit from the direct aid provided for in this royal decree-law, the increase in energy costs may not constitute an objective cause for dismissal until December 31, 2024,” it is detailed in the BOE.

Furthermore, companies that take advantage of the measures to reduce working hours or suspend contracts regulated in article 47 of the Workers’ Statute for reasons related to the invasion of Ukraine and that benefit from public support will not be able to use these reasons to carry out dismissals.