Date Published: 22/12/2021
ARCHIVED - Spain extends electricity tax cuts until spring
December is set to be the most expensive month for electricity in Spanish history
The Council of Ministers in Spain announced on Tuesday December 21 that it would be extending the tax breaks on electricity in an effort to ease the burden on customers amid record-breaking energy prices.
The government admitted that “the prospects in the wholesale market are not promising” and, therefore, confirmed that VAT will continue at a reduced rate of 10% until April 30 2022 (it was originally 21%) and that electricity tax will remain at 0.5% (initially it was 5.1%). In addition, the 7% tax on electricity production will be suspended until March 31 of next year.
These measures have been in place since the autumn and the extension is expected to reduce the government coffers by around 2 billion euros.
However, fixed charge electricity bills are about to go up: from January 1, the reduction will be approximately 30% throughout the year, which will result in customers forking out an additional 7 euros per month.
The president of the government, Pedro Sánchez, insisted that he is taking “extraordinary measures” to ensure that the brunt of the increase in the wholesale price of electricity is not passed on to consumers.
Meanwhile, the average price of electricity has set yet another new record on Wednesday December 22, shooting up to 360.02 euros per megawatt hour, compared to the 339.84 euros which set the last historical record on Monday.
In just seven days, all previous records have been broken consecutively, indicating that December will be the most expensive month in Spanish history.
The government has also given the green light to a number of proposals aimed at reaching 100,000 electric vehicle charging points by 2023, whereby all shopping centres, public buildings and government car parks must have a charging point for every 40 parking spaces.
Finally, a number of tax breaks will be available for homes and businesses installing solar power systems. The Ministry for Ecological Transition highlighted that fact that, since 2018, when the ‘sun tax’ was abolished in Spain, self-consumption has more than doubled.
Image: Iberdrola
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