The VAT: what it is and how it is calculated

The value added tax (IVA) is a tax on consumption of goods and services.

Its tax base is the price of the goods or services. The price is multiplied by the taxrate in force to obtain the amount of VAT.

Currently, there are four taxation rates:

  • 4%    (minimum rate);
  • 5%    (reduced rate);
  • 10%  (reduced rate);
  • 22%  (ordinary rate).

E.g.: The price of a desk is 100 euros: VAT is calculated by multiplying the price by the rate (in this case 22%). In the example, the tax amounts to 22 euros.

Except for a few cases of exemption or exclusions, all VAT-registered companies are required to apply the Value Added Tax to their goods and services.

For further information on this topic, please refer to the In-depth guide to VAT. 

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