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Spain electricity and gas bills set to rise again as VAT returns to 21% in June
The end of temporary tax reductions is expected to push up household bills across Spain again from next month
Households across Spain are set to feel another hit to their finances from June after the government confirmed temporary VAT cuts on electricity and natural gas will come to an end earlier than expected.
The change means VAT on electricity, gas, pellets, briquettes and firewood will return to the standard 21% rate from Sunday June 1, pushing up energy bills again at a time when many families are already struggling with the cost of living.
The decision comes after the National Statistics Institute confirmed inflation slowed slightly to 3.2% in April, down from 3.4% in March.
When the government introduced emergency tax relief measures to help households cope with soaring prices, it included a clause allowing the reductions to end early if energy inflation dropped below 15%. According to the latest figures, that threshold has now been met.
Data released alongside the Consumer Price Index showed electricity prices fell by 4.3% over the past year, while natural gas prices dropped by 9.6%.
As a result, the reduced VAT rates will disappear at the end of May and the Special Electricity Tax will also return to 5%.
The government has confirmed that the tax on electricity generation will remain suspended until at least Monday June 30, although consumers are still expected to see a noticeable rise in bills once the VAT increase takes effect.
Fuel-related support measures will continue for now after petrol and diesel prices remained high. According to the latest figures, fuel prices were 12.9% higher than the same period in 2015, although the government pointed out the increase would have been much steeper without the current tax reductions.
The VAT cut on fuel, lower hydrocarbon taxes and partial refunds for professional diesel users are therefore expected to remain in place at least until the end of May.
Other financial support measures are also staying for the moment, including aid for farmers and transport workers and enhanced discounts under Spain’s social electricity tariff scheme.
Under the current system, vulnerable households can receive electricity bill discounts of 42.5%, rising to 57.5% for those considered severely vulnerable.
Even though inflation has eased slightly overall, many everyday costs in Spain are still climbing sharply.
Transport prices recorded some of the biggest increases last month, rising by 6.5%. Diesel prices jumped by 28.2% compared with the previous year, while petrol increased by 2.2%.
Public transport has also become more expensive, with combined passenger transport fares rising by 26.6% and metro prices up 9.2% following reductions in travel discounts earlier this year.
Restaurant and hotel prices rose by 4.7%, while alcoholic drinks and tobacco increased by 4.6%. Insurance and financial services also became more expensive, climbing by 4.4%.
Food inflation slowed slightly to 2.6%, but several products are still seeing major price rises. Vegetables grown for their fruit, including items such as tomatoes and peppers, were 23% more expensive than a year ago. Green legumes rose by 17.5%, eggs by 14.7% and fish by 8.7%.
Image: Freepik
