VAT on flour and cereal preparations for bread: application of the 4% rate

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the treatment of Value Added Tax (IVA) in the commercialization of products intended for bread making. The issue arises from the need to determine the correct tax rate following the Supreme Court ruling of October 15, 2024.

What the DGT has resolved

The inquiry focuses on determining whether products consisting of preparations or mixes of flours, cereals, and seeds for bread making should be taxed at the reduced rate or the general rate. After analyzing current regulations, specifically Law 37/1992 and Royal Decree 308/2019, the application of the 4% tax rate for these products is established.

The ruling confirms that these preparations fall within the category of products that benefit from the reduced tax rate, aligning with the legal interpretation that recognizes their essential nature for bread production.

What it means for you

This ruling has a direct impact on entities that commercialize preparations or mixes of flours, cereals, and seeds. The application of the 4% rate provides a clear definition of the fiscal scenario for these products, eliminating the uncertainty that the recent Supreme Court ruling had generated in the sector.

For companies in the agri-food sector, this criterion establishes the basis upon which they must carry out their VAT invoicing and settlements, ensuring that the tax treatment of these mixes corresponds to the reduced rate.

What should be done

In this scenario, it is necessary for companies operating with these types of products to verify their current tax treatment. It is fundamental to ensure that the classification of their products in invoicing coincides with the provisions of the DGT and the cited regulations.

Each commercial situation may present technical nuances regarding the composition of the mixes, so it is recommended to assess the exact nature of each product to guarantee compliance with VAT regulations.