Spain ends tax relief on gas and electricity bills

Goodbye to war tax relief. On 1 June, Spain cut the IVA reduction applicable to electricity, natural gas, briquettes, pellets, firewood and the Impuesto Especial sobre la Electricidad.

With this, the government has begun the gradual deactivation of some of the measures in the plan it approved in March to address the economic impact of the war in the Middle East.

The drop in electricity and natural gas prices in April made it possible to begin phasing out measures related to the Impuesto Especial sobre la Electricidad, which dropped from 5.11% to 0.5%, and the IVA applicable to electricity and natural gas, briquettes, pellets and firewood, which dropped from 21% to 10%.

In the specific case of electricity and gas, prices in April fell sufficiently to deactivate the measures. However, the measures concerning the Impuesto sobre el Valor de la Producción de la Energía Eléctrica will remain in effect until 30 June.

The tax measures concerning fuels (reduced rates of the hydrocarbon tax, 10% IVA on petrol, diesel and biofuels and a partial refund on commercial diesel) will remain in force until 30 June.

Sector-specific measures will also remain in force: aid for farmers and hauliers, as well as enhanced discounts under the social electricity tariff (42.5% for vulnerable consumers and 57.5% for severely vulnerable consumers).

The government will keep monitoring prices and meeting with social partners and the sectors most affected to assess whether it is necessary to maintain certain measures beyond 30 June.