The government is being asked by several supermarket chains for more time to prove that they are not using the VAT reduction on food to increase their profit margins. This practice is prohibited by the anti-crisis decree that was put in place to curb inflation. Initially, the Ministry of Consumer Affairs had given them a deadline to submit accounts showing that they were passing on the tax discount to customers.
The investigation into major retail distributors in the country has not yet been completed as some chains have requested extensions to the deadline. All required information has been submitted and is currently being reviewed. In addition, consumer authorities are monitoring supermarkets to ensure they are correctly transferring the VAT reduction to consumers. The National Commission of Markets and Competition (CNMC) is also conducting oversight and published a report in 2023 confirming that distribution chains were correctly transferring the reduced VAT to final prices.
The food industry is planning to ask the government for an extension of the VAT reduction on basic products beyond June 30th, with potential expansion of the list of affected products including essential items like meat or fish. The processing of a bill including a VAT reduction on olive oil to 0% is also being monitored. Meanwhile, an observatory by the Bank of Spain indicates that corporate margins in the agri-food chain increased slightly in the second half of 2023, with margins in agriculture increasing while those in the food trade declined since 2021. Government agencies and industry stakeholders are working together to ensure fair pricing for consumers and support for
