Bakeries may request a refund of the IABD if alcohol content is below 5%

Companies dedicated to food manufacturing that incorporate alcohol or alcoholic beverages into their production processes face specific tax management regarding the Tax on Alcohol and Derived Beverages (IABD). A recent resolution from the tax authority clarifies the way to recover this tax in cases of industrial use.

What the DGT has ruled

The inquiry analyzes whether the use of alcohol in bakery products allows access to tax exemptions. The Dirección General de Tributos (DGT) has determined that the exemptions provided for in Articles 21 and 42 of Law 38/1992 on Excise Duties (LIE) are not applicable.

However, the body confirms that there is a way to recover the amounts paid. According to Article 22.2.b) of the LIE, it is possible to request a refund of the tax provided that two fundamental requirements are met:

• The pure alcohol content must not exceed 5 liters per 100 kilograms of manufactured product.
• Prior authorization must be obtained from the corresponding managing office.

For this request to be effective, the company must strictly comply with the requirements established in the Excise Duties Regulations (Royal Decree 1165/1995).

What this means for you

If your company manufactures food products containing alcohol, such as certain types of bakery or pastry goods, you should not assume the cost of the IABD as a definitive expense if it remains within the permitted technical limits. The key lies in the concentration of pure alcohol in the final product.

This criterion ensures that the tax does not weigh down the competitiveness of food products that use alcohol as a technical or flavoring ingredient, provided that its presence is minimal and controlled.

What should be done

To access this benefit, it is necessary to carry out precise control of the product composition. It is recommended to:

• Verify that the amount of pure alcohol in the final mixture is less than 5 liters per 100 kg of product.
• Manage the prior authorization with the managing office before proceeding with the refund request.
• Ensure that all technical documentation complies with the requirements of the Excise Duties Regulations.

Given the technical specificity of this procedure, it is necessary to assess the particular situation of each production process.