The new food waste law in Spain obliges hospitality venues, legally, to provide a “doggy bag” to enable consumers to take their leftover food home, rather than it going to waste.
However, the Tax Agency, through the General Directorate of Taxes, has issued a binding response to a consultation made by an association that brings together businessmen from hostelry. This response obliges bars and restaurants to apply 21% IVA to the containers ordered by customers to take the leftover food paid for that they have not consumed. All this, taking into account that the hospitality industry has a reduced IVA of 10%.
For the most part, venues have been complying with the law, although the statute itself is also now being questioned, as the law was scheduled to become effective on January 2, 2023, but, currently, the Senate shows on its website that this Bill is “expired” and entered on May 12, 2023. It is in the Deadline for amendments and veto proposals, with a total of 112 amendments presented and had a deadline for processing in the Senate, September 12. 2023, but its situation, as cited by the Senate, is “expired.”
The General Directorate of Taxes begins by stating that Article 4, Section 1 of Law 37/1992, of December 28, on Value Added Tax (which was published in the BOE the following day), establishes that “deliveries of goods and services made within the scope of the tax will be subject to the tax by business or professionals for consideration, on a regular or occasional basis, in the development of their business or professional activity, even if they are carried out in favour of the partners, associates, members or participants of the entities that carry them out.”
Consequently, says the General Directorate of Taxes, “the associates of the consulting entity will be considered businesses or professionals for the purposes of the Value Added Tax and will be subject to the same the deliveries of goods and services that they carry out in the exercise of their business or professional activity in the territory of application of the Tax.” This despite the fact that the venue must provide the container to the consumer for free.
Moreover, the IVA applicable to the hospitality sector is currently 10%. But, after this binding response, bars and restaurants must apply 21% IVA for the packaging so that the customer can take the food home.
The Treasury has considered, therefore, that delivering the leftover food in a container to a customer represents a transfer of part of what would constitute the business assets of that bar or restaurant. Therefore, it is understood that “transmissions or assignments of use to third parties of all or part of any of the assets or rights that make up the business or professional assets of the taxable subjects”, that is, the collection and delivery of a container, by bars and restaurants to customers who wish to take the leftover food home, are subject to IVA. Which, furthermore, is an accessory service to the fact of eating in a bar or restaurant and which must be taxed independently of the provision of restaurant services.
With all this, we must remember that, in June 2022, the Government approved the Draft Law on the Prevention of Losses and Food Waste, to reduce the waste of unconsumed food and promote its use. If it is possible to overcome the corresponding parliamentary procedure.
This law establishes that all agents in the food chain – from primary producers to shops, bars and restaurants – will have the obligation to have a food prevention plan against losses and waste. This means that businesses in the sector must carry out a self-diagnosis of their production processes, identify where food losses occur and establish the necessary measures to minimise said waste. To do this, the law establishes a hierarchy of priorities, which includes the order of priority that self-employed workers must follow to avoid food waste. This decision by the Government would mean a before and after for small businesses, since those self-employed who do not have this prevention plan will have to face penalties of between 2,001 and 60,000 euro.
One of the obligations aimed at the hospitality sector would involve allowing, at no additional cost as we have said, consumers to take away surplus food. To do this, hoteliers must have the appropriate packaging, which will have to be reusable or easy to recycle. But, as has already been mentioned in the first lines, this Bill, today, is “expired”.
Moreover, it must also be remembered that this legislation applies to food which consumers begin to eat inside the restaurant and then choose to take home, and is different to food purchased exclusively for consumption off the premises.
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