There's good news and not so good news for consumers in Ibiza. The sales start next week on the 7th July – they start on the 1st in the rest of Spain – though retail experts are predicting the lowest spending for the last 5 years. They think the average Balearic resident will splash out a mere €70 in the sales this year, 22% less than a year ago when they spent €90. This is still €5 higher than the national average, though this could be influenced by the generally higher prices on the islands.
Next month also sees an increase in the rates of Value Added Tax (IVA) from 7% to 8% and 16% to 18%. Experts have calculated that the average household will have to pay an extra €405 a year on general living expenses – especially electricity where the higher rate of IVA applies. The housing market will also be affected as IVA is payable on the cost of a new house, for example a new apartment costing €200,000 will now have IVA at €16,000 (an extra €2000) as well as purchase tax.
Still, at least interest rates on mortgages are low!
