From March 1, VAT on electricity bills will increase to 21%.

The legislation states that if the price on the wholesale market at the end of the month is below 45 euros, the tax increases from 10% to 21%, as happened in February.

He VAT on electricity bill will increase from 10% to 21% in March as a result of a fall electricity price. The law states that if the wholesale market closes the month below 45 euros per megawatt-hour, the tax rate will automatically increase, as happened in February. He The government does not have any plan or measures to avoid this rebound..

Storm Louis Wind energy production has increased dramatically, and the availability of solar energy is also important. As a result, the average wholesale price electricity By February it was at a price of 42.43 EUR/MWh in the last week of the month and, although prices increased on Wednesday and Thursday, on average they did not exceed 45 euros.

The legislation, for its part, formulates this issue very clearly. A rate of 10% will apply “to holders of contracts for the supply of electricity whose contracted capacity (fixed power term) is less than or equal to 10 kW, regardless of the level of supply voltage and the method of concluding the contract, when the arithmetic average price of the daily market corresponding to the last calendar month preceding last day of the billing period exceeded ¤45/MWh“.

This was stated in the norm according to which initially VAT reduced to 5% in full price crisis, and it remained so when it was raised to 10% on January 1 this year. This second measure applies until 31 December 2024, so if the wholesale price falls below this level of 45 euros per megawatt-hour in subsequent billing periods, the VAT that will be applied again will be 10%.

But for now, if the forecasts come true, households will experience average income growth. 7.48 euros compared with receipt a year ago, that is, when the 5% rate was applied. If the same exercise is performed with Receipts for January or FebruaryAccording to energy consultancy Selectra, the increase will be €4.56. In annual terms, an increase in VAT to 21% represents 90 euros more for households.

But even with such rises There is no doubt that the executive branch has implemented important tax reduction measures., especially in indirect taxes. “The highest figure in history,” according to the Ministry of Finance. Data obtained from the Department of Maria Jesús Montero show that from 2021 the overall tax reduction will reach “25 billion for citizens and companies”.

On the other hand, where mitigation measures have been much less pronounced is in Income tax. The executive branch has submitted an application discounts for low income people, but in no case for average incomes. The Treasury’s refusal to adapt income tax to inflation has forced the working middle class, who are the main payers of this tax, to register double punishment. Firstly, because the salary increase they received was by no means at the level of inflation. And secondly, because, in addition to the loss of purchasing power, they had to pay more in Income tax.

In supplies natural gasVAT will remain at 10% throughout the year for biomass fuels and only in the first quarter for conventional gas. Heat supplies will follow the same pattern, depending on whether it is of fossil or renewable origin.

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