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Spain cuts electricity VAT charges from 21% to 10%
- Reduction to cost the government €560 million till year-end
- The reduction to last until the end of the year
The government of Spain has agreed to cut Value Added Tax (VAT) charges on electricity consumption until the end of the year. The move by the government seeks to cushion the effect of rising energy costs and will last until the end of the year. The VAT charged will be reduced to 10% from 21% and will cost the government at least €560 million in lost revenues from now till December. The government will also suspend the tax on the value of electricity generation by 7% for the third quarter of the year.
The Minister of Environment, Teresa Ribera, speaking on the development, said, ”It is a complicated situation at a difficult moment of economic recovery. That is why we thought it was essential to relieve the electricity bill with fiscal measures”. Households with electricity consumption of up to 10kW will benefit from the VAT reduction as long as the average monthly electricity wholesale price exceeds €45 per kWh.
The move by the government is in response to the outrage by consumers on the new consumption methodology which was recently implemented.