The second difference in taxes is that in the U.S. consumer prices are listed without the tax, so that you generally get a receipt that shows the price of the item and the amount of the tax imposed on it, which adds up to a price that is probably higher than you thought and certainly higher than you wanted. In Spain, and everywhere that I know that uses the VAT, the displayed price of the item includes the tax. From the price you pay, the merchant presumably computes and sends the appropriate amount to the tax authorities. You don't have to think about it and you may not even know what it is. It makes it much more tolerable to pay a higher tax if the amount you are paying is not constantly thrown in your face.
Still, I noticed awhile ago that some grocery stores that I frequent include information on the receipt showing how much tax was charged. So I have been saving my receipts and trying to figure out the Spanish IVA taxation. Underneath the cumulated purchase total (the total), the amount you tender (the efectivo) and the change you get (the cambio) is a little chart like the one below.
BASE IVA CUOTA IMPORTE
2,76 8 0,23 2,99
2,53 18 0,45 2,98
3,25 4 0,14 3,39
Looking at charts like this were probably what first made me aware that not everything was charged at the 18 percent rate. Some items were apparently charged at 8 percent; others at 4 percent. Of course I wondered which items belonged in which group.
It is not as easy to find out as one would think. Remember, the displayed price includes the IVA, and the real item price (the base, as I learned) is never shown--except on this receipt. When I had accumulated enough of these little receipts and finally remembered to examine them at home--and got out my calculator and magnifying glass--I confirmed that the cuota is the amount of the tax on its corresponding base, charged at the appropriate IVA rate. The importe is the sum of the base and cuota and would be the amount shown as the price of the item, if I had only bought one item in this category. Of course that seldom happens, so the game on the way home from the grocery store has become figuring out which items purchased add up to the amount of each importe, because if that can be determined I will know which items are taxed at which rates.
One day this week we went out just to buy water, and we came out of the store with only 11 items. That's a workable number, especially since there were five bottles of gaseosa (1,5 liter bottles of flavored water) at 26 centimos each and two cartons of milk at 1,22 euros each. Add to that a bottle of white wine at 1 euro exactly and one of red at 1,98. Then the fresh mushrooms at 95 centimos and the luxury purchase of Caesar salad dressing at 1,69. So I was able to figure out which items added up to the importe in the three categories above.
This is the point where, if you are so inclined, you should do the math before scrolling down for the answer.
Here is a review and a clue:
18 percent. The normal or default amount, applied to every consumer purchase unless specifically exempted.
8 percent. Applied to alimentary and sanitary products, for animals as well as humans. Specifically excluded from this category are alcoholic beverages, soft drinks, tobacco, cosmetics, and products of personal hygiene.
4 percent. For items of "basic necessity," specifically
- Bread and "cereals" for making it.
- Milk, cheese and eggs.
- Fruits, vegetables, legumes and natural root vegetables.
The answer:
- The wine was charged at the default rate of 18 percent. Not a surprise.
- The gaseosa was charged at 8 percent. This is where I learned that gaseosa is apparently considered water (even though carbonated and with some flavoring) rather than a soft drink (refresco), which would have been charged at 18%. Also charged at 8% was the bottled ready-made salad dressing, which surprised me, because I consider this a luxury rather than a regular food item (you can probably tell that this is not my salad dressing).
- Both milk and mushrooms were charged at 4 percent, as basic necessities.
I had accumulated lots of other receipts, so I took this opportunity to look through them to see if I could learn any more about the differences between basic necessity 4 percent items and the normal food rate items at 8 percent. The "cereals" for making bread do not include oatmeal or corn flakes--I guess they mean that "flour" is 4 percent. But cat food is charged at the same rate as general people food--I'm sure that Goldie approves. And fresh fruits and vegetables--of which I buy many--are 4 percent, though canned corn is 8 percent. The store where I buy most of my frozen vegetables doesn't provide this nice little accounting, so I don't yet know whether frozen is better (taxwise) than canned. On the other hand, that store tells me how much I would have spent in the old currency of pesetas! I hope that is information I never need to use.
The good news is that some eye drops I bought at the pharmacy also are just 4 percent and that food and drink consumed at a cafe, bar, or restaurant seem to be just 8 percent, regardless of whether alcohol is involved or not, though it may take a little more research to verify that. I was pleasantly surprised to see that my 4 percent purchases were a substantial part of my grocery basket, and now I can create a little game to try to keep those high, because they obviously are applied to foodstuffs that are not only basic but nutritious. By the time I went through most of my receipts, however, I had a headache and had consumed most of the afternoon. It's now almost dinner time, and I'm going downstairs for an 18 percent beverage.
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