Impact of inflation on the VAT burden for Spanish households in 2021 and 2022
Fecha: septiembre 2023
Desiderio Romero-Jordán
VAT burden
SEFO, Spanish and International Economic & Financial Outlook, V. 12 N.º 5 (September 2023)
Value added tax (VAT) receipts soared in 2021 and 2022, by 14.9% and 13.4%, respectively, according to the Spanish tax authority (AEAT, 2023). This dynamic was buoyed by the tailwind provided by rampant inflation, which jumped from 3.1% in 2021 to 8.4% in 2022. An analysis of the increase in the VAT borne by households those years and how much of the increase is attributable exclusively to the inflation phenomenon shows that Spanish households’ total VAT burden increased by 263.6 euros on average in 2022, of which 138.2 euros (52.4%) is directly attributable to inflation. The VAT burden accumulated between 2021 and 2022 exclusively as a result of inflationary pressures averaged 297 euros. That sum increases to approximately 350 euros for a standard household with a level of spending similar to average household income in Spain in 2022 (32,200 euros).