Electricity bills power ahead in Spain as goverment slaps heavy tax on bills

IVA rate has increased

More expensive electricty.

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The Spanish government has refused to bow to pressure from the European Union and will continue to slap 21 percent Valued Added Tax on energy bills. Until recently is was just five percent. Householders will notice a big increase in their bills. The European Union, alarmed at the sudden surge in electricity bills in some member countries, had been calling for action but so far it has fallen on deaf ears.

A spokesperson for the electricity company ENDESA said: "From 1 January 2025, VAT on electricity returned to the general rate of 21 percent, after having been temporarily reduced to ease the burden on consumers' bills. All bills issued after 1 January 2025 will be subject to 21% VAT, even if the consumption is for 2024."

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"This percentage places Spain among the European Union (EU) countries with the highest VAT on electricity consumption, only below Hungary (27%), Denmark (25%), Croatia (25%) and Sweden (25%).

"At the other end of the list are Greece (6%), the United Kingdom (5% for domestic consumers), Malta (5%), Italy (10%), Ireland (13.5%) and Luxembourg (8%). Portugal, for its part, imposes a 6% VAT for the first 100 kW/h of consumption and from that milestone, it raises the applicable tax to 23%," thes spokesperson added. A major part of what you pay for your electricity is tax according to ENDESA.

Record profits

ENDESA's net profit more than doubled in 2024, it said last week helped by recovery in its gas business. Endesa, owned by Italian energy giant Enel booked a net profit of 1.89 billion euros ($1.98 billion), up from 742 million euros a year earlier, when results were hit by settlement of a supply contract dispute. The average forecast from analysts polled by LSEG was a net profit of 1.86 billion euros.