EU warns Spain on regional taxes and language labeling, urges VAT rise for hospitality

The European Commission warned Spain that the proliferation of autonomous‑region taxes, such as Catalonia’s soda tax, and the requirement to label products in regional languages are fragmenting the EU single market and increasing compliance costs for companies. The Commission also noted Spain’s poor record in transposing EU directives and highlighted that a high share of public contracts are awarded without competition.

Brussels’ latest European Semester report also recommended that Spain raise the Value‑Added Tax on bars, restaurants and hotels from the current 10 % to 21 %. The recommendation comes as Spain’s new finance minister reports record VAT and personal‑income‑tax collections for the first four months of the year, while maintaining that tax cuts for low‑income households have been preserved.