Several supermarket chains have asked the government for more time to demonstrate that they are not using the VAT reduction on food to increase their profit margins. This practice is prohibited by the anti-crisis decree that regulates the temporary measure implemented to curb inflation. The Ministry of Consumer Affairs had initially given them a deadline to submit accounts proving that they are passing on the tax discount to customers.
Consumer authorities have been investigating the main retail distributors in the country, requesting information from supermarket chains to ensure they are correctly transferring the VAT reduction to consumers. The investigation has not yet been concluded as some chains have requested extensions to the deadline. All required information has been submitted and is currently being reviewed.
In addition to oversight by the Ministry of Economy and Consumer Affairs, the National Commission of Markets and Competition (CNMC) is monitoring supermarkets to ensure they are passing on the tax discount to consumers. The CNMC published a report in 2023 confirming that distribution chains were correctly transferring the reduced VAT to final prices.
The food industry is preparing to ask the government to extend the VAT reduction on basic products beyond the June 30 expiration date. They plan to request an extension until the end of the year and may propose expanding the list of affected products to include essential items like meat or fish. The processing of a bill including a VAT reduction on olive oil to 0% is also being monitored.
Meanwhile, an observatory by the Bank of Spain indicates that corporate margins in the agri-food chain increased slightly in the second half of 2023. Margins in agriculture increased while those in the food trade declined since 2021. Government agencies and industry stakeholders are working to ensure fair pricing for consumers and support the food industry during economic uncertainty.