Spain cuts olive oil sales tax as droughts cause price surge

Written By
Maximilian Schwerdtfeger
Reviewed By
Published on 3 July 2024
  • The Spanish government has temporarily cut sales tax on olive oil
  • Olive oil prices have increased 272% since September 2020
  • Spanish households consumed an average of 6 litres of olive oil per person in 2023
Olive oil being drizzled on bread

Spanish households consumed an average of 6 litres of olive oil per person in 2023

The Spanish government has removed sales tax on olive oil to protect consumers and producers after droughts caused prices to grow by 272% in just four years. 

Weak harvests have meant global olive oil output is 28% down on the five-year rolling average projected by the EU commission.

Spain is the world’s biggest olive oil producer and its output is taken as a sign of how healthy the global market is.

Madrid-based Deoleo, the largest olive oil producer in the world, has reported a net loss of €34 million for 2023, citing poor olive harvests for the surge in prices. 

To protect the sector, Spain has also cut VAT to 0% as it tries to fight back against the Europe-wide cost increase.

Currently, a 5 litre bottle of olive oil can cost €50 in Spanish supermarkets. As a result, Greece and Spain have both had olive oil sales plummet by one-third over the last year. Furthermore, one-third of Italians have reportedly reduced consumption of extra virgin olive oil due to prices.

According to a survey by the Piepoli independent research institute, consumers have cut back consumption of extra virgin olive oil by 30% – 50% as average supermarket prices have more than doubled from €4 to €9 per 1 litre bottle. 

As part of an anti-inflation initiative, Spain originally slashed sales tax on olive oil from 10% to 5%. But following failed attempts to reduce price, it has now been reduced further.

No sales tax will be levied until September and then at 2% until the end of the year. From 2025 it will be considered a basic foodstuff and taxed at the standard 4% super reduced VAT rather than 10%.

Staple foods such as milk, bread, eggs, cheese, cereals, and fruit are also included in the 0% sales tax. 

Spain’s Finance minister María Jesús Montero said the government expects inflation to stabilise in the last quarter of the year. As a result, tax reduction measures will be phased out next year. 

In addition to the extension of the inflation-relief measure, the Spanish government has also approved an increase in the personal income tax threshold from €15,000 – €15,876.

Spanish households consumed an average of 6 litres per person in 2023 compared to international consumers who used a mere 0.4 litres.

Montero also said the decision to permanently lower sales tax reflects “the importance of olive oil in the Mediterranean diet and a healthy lifestyle.”

Minister of agriculture Luis Planas said: “We want to be consistent with our policy of supporting all citizens, their ability to consume, families and also, obviously, a product that is a basic necessity and also of obvious health, such as olive oil.”

However, an increase in rainfall in early 2024 in olive producing regions of Spain, particularly Andalusia, and the actions taken by the state have raised hopes that output will increase and prices will fall in 2025.

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Joining Expert Reviews in 2023 as product assistant, Louise doubles as a freelance artist and has countless hours of experience specialising in pencil-based portraiture. As such, she now writes for our art pages and is always trying out the latest creative mediums. Louise also manages the circulation of products amongst the team, ensuring a smooth daily running of the office.

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Reviewed By

Maximilian Schwerdtfeger

Max joined The Eco Experts as content manager in February 2024. He has written about sustainability issues across numerous industries, including maritime, supply chain, finance, mining, and retail. He has also written extensively for consumer titles like City AM, The Morning Star, and The Daily Express.

In 2020, he covered in detail the International Maritime Organisation’s (IMO) legislation on sulphur emissions and its effects on the global container shipping market as online editor of Port Technology International.

He also explored the initiatives major container ports and terminals have launched in order to ship vital goods across the world without polluting the environment.

Since then, he has reported heavily on the impact made by environmental, social, and governance (ESG) practices on the supply chain of minerals, with a particular focus on rare earth mining in Africa.

As part of this, in 2022 Max visited mines and ports in Angola to hone in on the challenges being faced by one of the world’s biggest producers of rare earth minerals.

His most recent sustainability-related work came much closer to home, as he investigated the eco-challenges faced by independent retailers in the UK, specifically looking at how they can cut emissions and continue to thrive.

Max lives in South London and is an avid reader of books on modern history and ghost stories. He has also recently learned to play the game Mahjong and takes every opportunity to do so. He is also yet to find a sport he doesn’t enjoy watching.

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