Currently, the value added tax (VAT) on electricity is 10%. At the end of this month, the price per megawatt/hour in the Spanish state seems almost 42 euros. Therefore, below the price limit set by the Spanish Government, the VAT on electricity will rise again to 21%.

In January, the average megawatts per hour was EUR 74. A year ago (February 2023), for almost EUR 133. This month will be the lowest price recorded since February 2021, which the government considers to be sufficient reason to re-raise VAT. In February 2021, the hourly megawatt cost €28.5, and since then prices have increased uninterruptedly from month to month. Electricity prices surpassed the historic barrier in March 2022, with a cost of EUR 209.4 megawatts/hour.

In 2021, as part of the alleged inflation relief measures, the Spanish Government reduced the price of light: It dropped from 21% to 10%. Prices remained very high, but VAT fell from 10% to 5%. Last January the tax was raised again to 10%. However, it established a condition for maintaining this reduction: that the megawatt hour should be over EUR 45 on average. This month the cost will be below the maximum price (around EUR 42) and the government is therefore advocating a further increase in VAT.

On the contrary, what has no limitation is the performance accumulated by energy companies. Iberdrola, for example, has again beaten historical records in 2023: It has earned EUR 4.803 million, 10.7% more than in 2022 and more than ever before.