The value-added tax on electricity returns to 21% as of Friday

Value added tax on electricity It will not be reduced to 10% It will be 21% again as of this FridayMarch 1, after the arithmetic average of electricity prices for February did not exceed 45 euros/MWh. In principle, the discount should have been maintained throughout the year, but one of the articles of Royal Decree No. 8/2023 at the end of last year stipulated that if the price was below this limit, the bonus would disappear, as its passage had ended. In fact, last Tuesday, Economy Minister Carlos Cuerbo announced that this percentage had been raised to 21%. In a statement, the Consumers Association “Vaqua” considered it “essential” that the value-added tax reduction be strengthened and compensated for by increasing direct taxes on large companies.

The 21% VAT return will, for the time being, be applied to This March bill Waiting to see how the market develops during the third month of the year to find out what tax rate will be applied in April and whether it will return to 10%.

The Royal Decree of the Spanish Government also stipulated that the 10% rate would always be applied to beneficiaries of the social bonus for electricity who are recognized as extremely vulnerable or at high risk of social exclusion.

The decrease in electricity prices during the month of February was due to weather conditions, which led to an increase in wind energy production.

The Consumers Association “Vacua” urged the Spanish government to implement the reduction in value-added tax “permanently”, and that this measure is not applied temporarily and depends on the development of the market. Also remember that between June 2022 and January of this year, VAT was 5%.

Although he positively appreciates the VAT reduction because it succeeded in containing VAT prices on electricity, he stresses that this measure cannot have a “situational character” and must be “detached” from the development of the market. For this reason it is proposed that the reduction in revenues that would mean the state would keep VAT low would be offset by applying direct taxes on large companies.