The increase in electricity prices in June leads to a reduction in VAT from 21% to 10%.

It’s official now. VAT on electricity bills will return to 10% in July after rising electricity priceswhat led to the average power outage in June 56.08 euros on the wholesale market, up 84% from the previous month and four times more expensive than April, the cheapest month on record. At the same time, the special tax and the electricity generation tax are increased, returning to the original rates of 5.11% and 7% respectively.

Late last year, the government decided to introduce a VAT rate reduced to 10% on electricity bills, subject to the price per megawatt hour on the wholesale market being reduced to 10%. above 45 euros. If it remains below this level of 45 euros, Initial VAT 21% next month, and if it remains below this level, a reduced VAT rate of 10% will apply.

After four months with VAT at 21% (as electricity in February, March, April and May cost less than 30 euros), in June the average wholesale price rose to 56.08 euros per megawatt hourwhich is 84% ​​more than the previous month, according to data released by the Iberian market operator (OMI). This therefore exceeds the control threshold of 45 euros, which means reduction of VAT on July electricity bills from 21% to 10%.

The change will affect the majority 28 million small consumers that in Spain there are both those with a free rate (19.6 million) and those with a regulated rate, known as the voluntary price for small consumers or PVPC (8.5 million). In addition, this Sunday the reduction of the remaining taxes that affect the electricity bill ends. This means that special tax on electricity will increase from 3.8% to 5.11%; Meanwhile he tax on the cost of electricity producedwhich affects electricity companies, but they return to users through the bill, will go away from 5.25% to 7%.

This tax change could mean decrease in income electricity from consumers 4 euros per monthin case of a user with monthly consumption 190 kilowatt-hours and a fixed tariff of 0.14 euros. per kilowatt-hour, according to home service comparator Selectra’s offers. The user in this example will go from paying €50.89 in June (21% VAT and 3.8% electricity tax) to paying €46.84 (10% VAT and 5.11% VAT).

The rest of the year

The reason for the rise in electricity prices in June is due to no wind And increase in water production costsa common occurrence at this time of year when there is a lot of water stored but no urgent need to release it, which drives down prices. And although it Sunwhich is typical for summer, reduces prices at certain times – for example, this Sunday at 3 o’clock in the afternoon it is zero euro – insufficient installed capacity solar panels to meet demand.

And it will be trend of the coming monthsbased on electricity prices in futures market (where “traders” buy electricity that is supplied in another period and which serves as a reflection of the cost of electricity in this period), which are located from 76 to 86 euros from July to DecemberAccording to Omip. If so, VAT on the invoice will remain at the reduced rate for a year.since these prices are higher than the reference 45 euros.