VAT on electricity bills will rise to 21% this Friday

Electricity price this month February in his lowest month Since three years ago. In fact, the average price of electricity on the wholesale market this Thursday was 4.80 euros per megawatt hour (MWh), thereby adding seven days of consecutive falls and ending February with an average below 40 euros.

This price reduction has a direct impact on the VAT that applies to consumers’ bills because, from this Friday, will increase from 10% to 21%. This increase is a response to the fact that the measure approved by the Government in June 2021, according to which it was decided to apply a reduced VAT of 10% to mitigate rising prices on the market, is no longer in effect. However, this measure was conditioned by the fact that the price of electricity would be higher than the established level.45 euros per MWh.

The government approved the VAT reduction as a result of war in Ukrainebonus, which was later expanded to 5% and which remained until January of this year 2024, when it was decided to raise it again to 10%.

So from this March 1The general regime returns to all electricity bills that include at least one day of the current month in the billing period. The increase, which is approx. 7 euros extra per month for consumers.

Why has the price of electricity fallen so much?

The main reason for the decline in electricity prices is due to temporary what we have experienced in our country in recent weeks, which has led to the production wind energy, which led to a decrease in energy demand. Something that caused electricity prices to fall throughout February.

OCU has already demanded that this VAT be kept reduced to 10% on electricity and gives examples of measures taken in other European Union countries, such as Belgium or Portugal where ultra-reduced VAT applies 6%.

Meanwhile, the Minister of Economy, Trade and Business Carlos Bodiealready made it clear this week that measures that were driven by the price of energy, as in the case of the increase in VAT on electricity bills, “They must stay the course“, excluding the continuation of the reduction applied so far.