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Guide summary
- In Spain, the VAT rate for hospitality is 10% for all restaurant services consumed on the spot, regardless of the type of food or drink served.
- Alcoholic beverages sold outside the restaurant service are taxed at 21%.
- Restaurateurs must file VAT quarterly using Form 303 and submit an annual summary using Form 390.
Table of contents
The European Commission is calling on Spain to raise the VAT on hospitality from 10% to 21%. The debate is open, although the recommendation is not binding. In the meantime, Law 37/1992 sets a reduced rate of 10% for all restaurant services consumed on the spot. However, there are several particular cases that restaurateurs need to know. Discover how VAT works in restaurants and how to file it without errors.
Key figures
- The restaurant sector in Spain generates revenue of €116.193 billion, representing 4.7% of national GDP. (1)
- The hospitality sector as a whole employs 1.85 million workers (1)
- The European Commission recommends raising the VAT on hospitality from 10% to 21%. This would represent additional revenue of €7 billion per year, equivalent to 0.4% of GDP. (2)
What is the VAT rate for hospitality in Spain?
In Spain there are three VAT rates: the standard rate (21%), the reduced rate (10%), and the super-reduced rate (4%). In the hospitality sector, the rate that applies in the vast majority of cases is the reduced rate of 10%, under Article 91 of Law 37/1992.
The reduced VAT rate of 10%
Everything that forms part of a restaurant service consumed on the spot is subject to 10% VAT (3). This includes meals, non-alcoholic beverages, and also alcoholic drinks when served within the establishment. It does not matter if the same product carries a different VAT rate outside the premises. A glass of wine is taxed at 21% in a shop, but at 10% in your restaurant when consumed on the spot. The same applies to a cheese tapa (4% outside, 10% in hospitality). The criterion is not the product, but the service. If a hospitality service is provided for on-the-spot consumption, the 10% rate applies.
Law 44/2006 also requires that prices shown on the menu include VAT. Unless clearly stated otherwise, the displayed price is understood to be the final price.
Special cases
There are situations where the 10% rate does not apply:
- Alcoholic beverages to take away: outside the restaurant service, they are taxed at 21%.
- Delivery: food retains the 10% rate, but the delivery service itself may be subject to 21% depending on how the commercial offer is structured.
- Mixed services (karaoke bars, live entertainment venues): if the main activity is not restaurant service, the 21% rate applies.
- Canary Islands: the standard VAT does not apply; instead, the Canary Islands General Indirect Tax (IGIC) is levied, at a rate of 7% for hospitality.
| Situation | VAT Rate |
|---|---|
| Meals and beverages consumed on the premises | 10% |
| Alcoholic beverages consumed on the premises | 10% |
| Alcoholic beverages to take away | 21% |
| Food to take away | 10% |
| Delivery service (food) | 10% |
| Delivery service (shipment) | 21% |
| Mixed services (entertainment + restaurant) | 21% |
| Canary Islands (IGIC) | 6.5% |
What impact does VAT have on your restaurant?
As an indirect tax, the ultimate payer of VAT is the consumer, not the restaurateur. Your role is to collect it on each sale and pay it to the tax authority. In that sense, VAT is not a cost for the business, but it does affect two key aspects of your management.
- The prices your customers see: Law 44/2006 requires menus to show VAT-inclusive prices. Beyond the legal requirement, it is important to set your prices taking into account the final amount the customer pays. A dish at €29 ex-VAT becomes €31.90 with 10% VAT applied. It is that final price that customers compare against the competition.
- Business cash flow: although input VAT is recoverable through deduction, there is a time lag. You pay VAT to your suppliers immediately, but you do not recover it until the next quarterly return. During periods of heavy purchasing, this gap can create liquidity pressures that are worth anticipating.
How to file VAT for your restaurant?
Output VAT and input VAT
As a restaurateur, you are involved in VAT in two different ways.
On one hand, you charge VAT to your customers on every purchase. This is the output VAT: the amount you include in the price of each dish or drink and collect on behalf of the tax authority.
On the other hand, you pay VAT to your suppliers when you purchase raw materials, drinks, equipment, or any other expense related to the business. This is the input VAT.
And since there are several VAT rates, the VAT on the products you buy from suppliers does not always match the VAT you charge your customers.
For example:
| Product | Purchase VAT (input VAT) | Sale VAT (output VAT) | Purchase price (€) | Sale price (€) |
| Bread | 4% | 10% | 0.96 | 1.10 |
| Alcoholic beverage | 21% | 10% | 0.83 | 1.00 |
| Full menu | 10% | 10% | 9.09 | 10.00 |
At the end of each quarter, you subtract input VAT from output VAT. If the difference is positive, you pay that amount to the tax authority. If it is negative, you can carry it forward to the next return or claim a refund.
Example: if in a quarter you have collected €10,000 in VAT from your customers and paid €4,000 in VAT to your suppliers, you will owe €6,000 to the Tax Agency.
Filing your VAT return
The quarterly VAT return is filed using Form 303. At year-end, this is supplemented by an annual summary via Form 390. The deadlines are:
- 1st quarter: 1 to 20 April
- 2nd quarter: 1 to 20 July
- 3rd quarter: 1 to 20 October
- 4th quarter: 1 to 30 January
With the rollout of Verifactu, the mandatory electronic invoicing system regulated by Royal Decree of March 2026, billing data will be transmitted in real time to the AEAT. It is advisable to update your POS systems as soon as possible to comply with this obligation.
And good news: the Covermanager restaurant management software features numerous integrations with the leading POS systems on the market.
What VAT can you deduct as a restaurateur?
The input VAT on purchases necessary for the business activity is deductible. This includes raw materials, beverages, kitchen equipment, renovation works, furniture, and premises rental.
To be able to deduct it, invoices must be correctly issued and relate to expenses directly linked to the business. Without a valid invoice, no deduction is possible.
There are expenses that frequently raise questions. Hospitality and restaurant services consumed by the business itself (such as a working lunch with suppliers) are not deductible for VAT purposes unless the expense is deductible under Personal Income Tax (IRPF) or Corporate Tax. The same applies to food, beverages, and tobacco acquired outside the scope of the business activity.
Keeping an organised record of all invoices received is essential to avoid missing deductions and prevent issues with the quarterly return. When in doubt, a specialist advisor in hospitality is your best ally for optimising the tax burden of the business. They can advise you not only on accounting, but also on all the procedures required for opening your restaurant, such as drafting your business plan or market study, seeking financing, taking over a premises,…
You might also be interested in:
- What licence do I need to open a restaurant?
- What are the mandatory training requirements in hospitality?
FAQ
How is VAT charged in a restaurant?
The restaurant includes VAT in the final price of each item. When settling the bill, the customer pays the total amount with VAT already included. The restaurateur collects that VAT on behalf of the tax authority and declares it quarterly using Form 303.
Is VAT the same across all of Spain?
No. In the Canary Islands, the standard VAT does not apply; instead, the Canary Islands General Indirect Tax (IGIC) is levied at a rate of 6.5% for hospitality services. Ceuta and Melilla are also not subject to VAT. They apply the Tax on Production, Services and Imports (IPSI).
What VAT applies to alcohol in a restaurant?
It depends on the context. When an alcoholic drink is served within the restaurant service for consumption on the premises, the reduced rate of 10% applies. If it is sold outside the restaurant service, it is taxed at the standard rate of 21%.
Sources:
2 - El Mundo
