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From 1 January 2024, the following is envisaged:
Value Added Tax (VAT) changes to 10% for contracted power equal to or less than 10 kW, provided that the average wholesale market price in the calendar month prior to the last day of the billing period is above €45/MWh*. This reduction is expected to last until 31 December 2024. The average price of electricity in February was €40/MWh* and therefore invoices for which the billing period ends on a day in March 2024 will be subject to 21% VAT.
The VAT rate to be applied, whether reduced (10%) or general (21%), may change again in the course of 2024, depending on whether the price of electricity in the wholesale market remains above or below the threshold set by the government.
Only in the case of consumers considered severely vulnerable and severely vulnerable at risk of social exclusion (supplied by a reference marketer and covered by the corresponding social bonus), the VAT of 2024 will always be 10%, regardless of the wholesale market price.
*Megawatt hour: the energy consumed in households is measured in kilowatt hours (kWh) and on the electricity wholesale market in megawatt hours (MWh). You can see developments in market prices here.
Holders of electricity contracts who are beneficiaries of the Social Rate and have the status of severely vulnerable or severely vulnerable at risk of social exclusion as established in RD 897/2017, will be invoiced with VAT at 10% throughout 2024, regardless of the market prices.
For beneficiaries of the Social Rate who are considered vulnerable, as well as for beneficiaries of the Social Rate established for low-income working households, VAT will be applied depending on the average market price, as discussed previously.
| Hired electricity power | Energy price > €45/MWh |
Energy price ≤ €45/MWh |
|---|---|---|
| Electricity power ≤ 10 kW | VAT 10% | VAT 21% |
| Electricity power > 10 kW | VAT 21% | VAT 21% |
| Severely Vulnerable and Severely Vulnerable at Risk of Social Exclusion |
VAT 10% | VAT 10% |
The vast majority of Spanish households fall within this range (≤10kW).
If your power is equal to or less than 10 kW and the established average market price criterion is met, the VAT that you will have to pay on bills issued in 2024 will be 10% on tariffs and charges, energy consumption and meter rental.
There are other items on the bill such as services, connection charges, grid connection charges, etc., to which the 21% VAT rate will always apply.
The price of electricity is increasing mainly for two reasons:
For customers who are in the regulated market, the price of electricity is calculated in accordance with the PVPC (Voluntary Price to the Small Consumer) that is calculated according to the price registered by the market every day and every hour, so it is affected by variations in this market.
The new VAT on electricity is expected to last until 31 December 2024, as long as market prices remain above €45/MWh and the contracted capacity is equal to or less than 10 kW.
In February 2024, prices fell below the established amount, so VAT has been increased from 10% to the original 21%. The VAT rate to be applied, whether reduced (10%) or general (21%), may change again in the course of 2024 depending on the price of electricity on the wholesale market.
VAT on gas, which was previously at 5%, also changes to 10%, but only until 31 March, 2024. Following this date, VAT on gas is expected to return to the normal rate of 21%.
Our network of channels is at your disposal if you need further information. If you prefer, any query you may have can be answered without you leaving your home via our Video Support Service, on which specialised agents will be delighted to answer your questions.