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Reduction of VAT rate to 10% on electricity supplies

Reduction of VAT rate to 10% on electricity supplies

To respond to the situation generated by the increase in electricity prices, within the limits of Directive 2006/112/EC, of November 28, it is established on an exceptional and transitional basis until December 31, 2021, for electric energy contracts whose fixed term power does not exceed 10 kW, a reduction from 21 to 10 percent in the VAT tax rate that falls on all components of the electricity bill, when the average monthly market price wholesaler in the month prior to billing has exceeded €45/MWh.

The objective is to reduce the amount of the electricity bill.

For these purposes, it must be taken into account that this threshold of €45/MWh is related to the average price during the month of December 2020 of the term delivery contracts of electricity in Spain for the year 2021, which for the second half of 2021 is set at €83.32/MWh, therefore placing said threshold below the market's future price expectations.

It should also be noted that this measure applies to all electricity supply contracts, provided that the contracted power does not exceed 10 kW, which in reality means its application to practically all final consumer households, since the average power contracted by domestic consumers is approximately 4.1 kW.

Likewise, the measure will allow a large number of self-employed workers to benefit.

On the other hand, to alleviate situations of energy poverty among the most vulnerable consumers, the VAT tax rate applicable to the electricity bill of holders of electricity supply contracts who are recipients of the social bonus is also reduced to 10 percent, and In addition, they have recognized the status of severely vulnerable or severely vulnerable at risk of social exclusion, during the period of validity of this royal decree-law, regardless of the price of electricity in the wholesale market.

This measure will benefit approximately 612,000 households with this condition, which represent approximately 50 percent of the total beneficiary households of the social electricity bonus.

Its entry into force occurs on June 26, 2021.

Royal Decree-Law 12/2021 also modifies the limits of the deductions for investments in cinematographic productions, audiovisual series and live shows of scenic and musical arts carried out in the Canary Islands

With effect for tax periods beginning in 2020, the amount of the deduction for investments or expenditure on Spanish productions of feature films and short films and fiction, animation or documentary audiovisual series referred to in sections 1 and 2 of Article 36 of Law 27/2014, of 27 November, on Corporation Tax, may not exceed 12.4 million euros in the case of productions or expenditure made in the Canary Islands.

The amount of the deduction for expenses incurred in the production and exhibition of live performances of performing arts and music referred to in section 3 of article 36 of Law 27/2014 may not exceed 900,000 euros in the case of expenses incurred in the Canary Islands.

Real Decreto-ley 12/2021, de 24 de junio,

por el que se adoptan medidas urgentes en el ámbito de la fiscalidad energética y en materia de generación de energía, y sobre gestión del canon de regulación y de la tarifa de utilización del agua.