Customers with PVPC tariffs (Voluntary Price to Small Consumers) belonging to the regulated market are affected by the regulatory changes contained in RDL 11/2022 published in the BOE (Official State Gazette) on June 25, 2022 and these tariffs are calculated every day and every hour based on the daily energy market.
How do these changes affect your electricity supply?
Taxes on your electricity bill:
Until December 31, 2023, it is expected that:
1. VAT is reduced to 5% under the following circumstances:
- The supply is for a contracted power equal to or less than 10 kW (the vast majority of households). You can check your contracted power in your client area.
- Always provided the market price for the previous calendar month is above €45/MWh. You can see developments in market prices here.
- Only applicable to bills issued after July 1, 2021.
This means the VAT on electricity goes from 10% to 5% for electricity supplies when the contracted power is equal to or less than 10 kW and provided that market prices remain above €45/MWh.
2. The general rate for the Special Tax on electricity was reduced to 0.5% (this tax previously exceeded 5%).
Furthermore, since March 31, 2022 the charges on the electricity bill have been reduced as follows:
- There has been a reduction in electricity charges. These amounts correspond to payment for regulated concepts which are passed on to consumers in their bills.
| Hired electricity power | Energy price > €45/MWh |
Energy price < €45/MWh |
|---|---|---|
| Electricity power ≤ 10 kW | VAT 5% | VAT 21% |
| Electricity power > 10 kW | VAT 21% | VAT 21% |
| Rate Subsidy Beneficiary | VAT 5% | VAT 5% |
The vast majority of Spanish households fall within this range (≤10kW).
If I qualify for the Social Rate, how do these changes affect me?
The holders of electricity supply contracts who qualify for Social Rate for electricity and whose status has been recognised as severely vulnerable or severely vulnerable at risk of social exclusion (in accordance with the provisions established in Royal Decree 897/2017) will benefit from the decrease in VAT.
For this category of client, the VAT on electricity will remain at 5% instead of 10%, regardless of the market price and the contracted power.
Which items on the bill are affected by the reduction of VAT to 5%?
If your contracted power is equal to or less than 10 kW and the criteria for market prices are met, the VAT that you will have to pay on the bills issued after July 1 will be 5% on the following items: access tariffs, 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 continue to apply.
Why is the price of electricity increasing?
The price of electricity is increasing mainly for two reasons:
- The rise in the price of gas.
- The rise in the prices of CO2 emission rights.
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.
How long will the new VAT rate last?
The new VAT rate on electricity is expected to last until December 31, 2023, providing market prices remain above €45/MWh.
Does it also affect other supplies such as gas and services?
No, these changes are only applicable to the electricity supply.
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.