VAT on electricity will rise again to 21% in Spain
- The reduction entered into force by the Spanish Government in 2021, but last January began to be praised. The increase in VAT means an average increase in the annual cost of 15%. In 2023, Iberdrola achieved the best results in its history.
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.
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