The CEOE (Spanish Confederation of Business Organizations) is opposed to the challenge launched by the European Commission to Spain to increase VAT on Tourism from ten to 21%.
According to a report by the Institute of Economic Studies (IEE), released by the organization, the measure would reduce the competitiveness of the tourism sector, one of the main engines of the Spanish economy.
The study argues that the tax increase would make hotels and restaurants more expensive, forcing companies to raise prices or reduce margins, which could divert tourists to competing destinations such as Greece, Italy, Croatia or Turkey.
As an example, the report recalls the case of Portugal, which increased VAT on restaurants in 2012 and ended up reversing the decision a few years later due to the negative impact on the sector.
The IEE also points out that Spain already has a lower tax competitiveness than the average of OECD countries, arguing that an increase in the tax burden would further aggravate this situation.
