Ricotta will be taxed at 4% VAT only if it meets the definition of cheese

The application of the reduced tax rate on dairy products generates frequent doubts in the agri-food sector. Recently, the Directorate General of Taxes (DGT) has clarified the tax treatment applicable to the product known as ricotta, conditioning its taxation on its technical nature and commercial denomination.

What the DGT has resolved

The query concerned the VAT rate applicable to ricotta. The Administration's criteria establish that this product may be taxed at the reduced rate of 4% only if, in accordance with food legislation, it corresponds to the definition of cheese established in Royal Decree 1113/2006 and is named following said regulation.

In the event that the product does not meet the technical requirements of food regulations to be considered cheese, or if its denomination does not comply with the provisions of the aforementioned Royal Decree, the operations will be subject to the general tax rate for food products, which is 10%.

What it means for you

For companies producing or marketing these types of dairy derivatives, the distinction between 4% and 10% VAT has a direct impact on their tax management and the final sale price. It is not enough to use the commercial name "ricotta" to apply the reduced rate; it is imperative that the product is technically a cheese according to the legal framework.

This binding ruling obliges companies to perform a technical check of their products to avoid errors in tax settlements that could lead to inspections or requests from the Tax Agency (AEAT).

What should be done

Companies in the sector should take the following actions:

• Verify that the composition and production process of their ricotta fit the definition of cheese in Royal Decree 1113/2006.
• Check that the label and commercial name of the product respect food regulations to avoid the application of an incorrect tax rate.
• Evaluate the status of their product catalog to ensure that the VAT rate applied corresponds to its technical nature.