Lower VAT on electricity and urgent energy measures

Automatic summary, not yet reviewed

1. The VAT on electricity drops from 21% to 10% until December 31, 2021 for supply contracts under 10 kW of power, but only if the average monthly wholesale market price exceeds €45/MWh. The 10% rate also applies to severe-vulnerability households receiving the electricity social bonus, regardless of price.
2. During the third quarter of 2021, electricity producers are exempt from the tax on the value of electricity production. The 2021 tax base and installment payments are calculated by deducting the revenues from that quarter.
3. New applications for zone reservations and authorizations for offshore wind installations in territorial waters are not accepted until the Government approves a new regulatory framework. Applications already filed continue to be processed.
4. The regime requiring prior authorization for foreign direct investments in Spanish listed companies, or unlisted ones if the investment exceeds €500 million, is extended until December 31, 2021 for investors from the European Union and the EFTA.
5. Capacity auctions for access to the electricity grid may weigh the socioeconomic and environmental impact on the areas where the installations are located, such as jobs created or the participation of local investors.
6. A problem with the settlement of the water regulation fee and water use tariff is fixed: they can be collected from the start of the year they apply to until June 30 of the following year. For 2021, collection runs from the entry into force of the rule until June 30, 2022.

Who it affects

• Households and self-employed workers with electricity contracts under 10 kW: Pay 10% VAT on the electricity bill when the monthly wholesale price exceeds €45/MWh.
• Severe-vulnerability consumers with the social bonus: Pay 10% VAT on the electricity bill for as long as the rule is in force, regardless of price.
• Electricity producers: Are exempt from the tax on the value of electricity production in the third quarter of 2021.
• Offshore wind developers: Cannot file new zone reservation or authorization applications until a new regulatory framework exists.
• Foreign investors from the EU and EFTA: Must comply with the prior authorization regime to invest in Spanish listed companies, or unlisted ones above €500 million, until December 31, 2021.

Words worth knowing

Mercado mayorista

Wholesale market where electricity companies buy and sell energy before it reaches the final consumer.

Bono social

Electricity social bonus: a discount on the power bill for low-income or vulnerable households.

Canon de regulación

Water regulation fee paid by users for the services provided by river basin authorities.

Capacidad de acceso

Grid access capacity: the right to connect a power generation installation to the grid to feed in the energy it produces.

AELC

EFTA, the European Free Trade Association, made up of European countries that do not belong to the European Union.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries