Government Removes Olive Oil VAT To Boost Sales
Spain is attempting to come to the aid of its beleaguered olive oil industry by removing all VAT on the product in an effort to boost domestic sales.
The move was approved by the Spanish Cabinet last week and came into force yesterday,1st July.
The move which followed a cut last year from 10% to 5% was announced by Luis Planas, Spain’s Minister of Agriculture, Fisheries and Food, as he revealed the country’s 2023 Food Consumption Report.
Andalucia is the largest olive oil-producing area in Spain, which produces around 50% of the world’s olive oil.
According to the International Olive Oil Council (IOC)’s weekly pricing statistics for May, refined oil prices in the Jaén area stood at €660 ($716) per 100kg, 37.2% higher than the same period in the previous crop year. Extra-virgin olive oil was up 36.1% to €710 per 100kg.
It would see olive oil included in a group of basic necessities that apply the ‘super-reduced’ rate permanently, such as bread, fruit and vegetables and eggs.
The elimination of the 5% VAT rate is likely to have a modest effect at the chek out reducing the price by around €0.50 per litre.
Spaniards use olive oil to cook and to garnish salads, vegetables and other dishes. Last year Spanish households consumed on average 6 litres of olive oil per person, compared to 0.4 litres for international consumers, according to the agriculture ministry. But the rise in prices has made some switch to cheaper cooking oils.
In a message posted on social media site X, Planas said the move “protects and encourages the consumption of this healthy food, a hallmark of the Mediterranean diet and the spearhead of the Spanish agri-food sector.”