The 4% super-reduced rate
The 4% rate is reserved for food considered basic necessities. It is the shortest list and the one most people search for, because a mistake here shows up on every shopping receipt.
Key points
- Bread and bread-making flours
- Milk, cheese and eggs
- Fruit, vegetables, greens and pulses
- Cereals and tubers
- Olive oil (permanently at 4%)
The 10% reduced rate
The 10% rate is the default rate for most foods that do not fall under 4% or 21%. This includes meat, fish and commonly consumed processed products.
Key points
- Fresh or frozen meat and fish
- Pasta (returned to 10% in January 2025)
- Seed oils, such as sunflower oil
- Mineral water and non-sugary drinks
- Preserved foods and prepared foods
The general rate of 21%
The 21% rate applies to alcoholic drinks, sugary soft drinks and other products that are not considered basic foodstuffs. In hospitality, food served on the premises is taxed at 10%, but alcoholic drinks and sugary soft drinks are taxed at 21%.
This difference between product and service confuses many bars and restaurants: the same soft drink can carry one rate on the supermarket shelf and another at the table, depending on how it is invoiced.
What changed with the end of the tax cuts
Between 2023 and 2024 the Government applied temporary reductions to contain the shopping basket: basic foodstuffs at 0% and 2%, and pasta and seed oils at 5% and then 7.5%. Those reductions have ended.
Since January 2025 the situation is as follows: basic foodstuffs returned to the 4% super-reduced rate, pasta and seed oils to 10%, and olive oil was permanently consolidated at 4%. In 2026 there are no active temporary reductions.
How to apply it without mistakes in your business
The risk lies in invoicing at the wrong rate a product that has changed category. An invoice with VAT applied incorrectly requires a corrective invoice and, if Hacienda reviews it, can lead to a penalty.
Check the rate for each item when the catalogue or supplier changes, and rely on up-to-date invoicing software. If your business combines food, hospitality and drinks, the combination of rates is where most mistakes are made.
