LOWER VAT rates on electricity and natural gas in Spain to counter the effects of the Iran war will be scrapped on June 1.
The reduced tax of 10% launched in April will return to 21%, the Ministry of Economy said on Thursday, but fuel tax cuts will continue until at least the end of June.
A Ministry statement said: “The fall in the prices of electricity and natural gas allows the deactivation of the measures on the special tax on electricity and VAT to begin.”
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The package will also see the reversal of the reduction in electricity tax, which will go from 0.5% to 5% on June 1, but the suspension of the tax on the value of electricity production will continue until 30 June.
That also applies to other targeted measures for farmers and transporters, as well as discounts on the electricity social bonus, of 42.5% for vulnerable consumers and 57.5% for severely vulnerable consumers.
“The effect of the measures of the response plan on headline inflation is a moderation of close to one percentage point,” says the Economy Ministry, while stressing the government will continue to monitor inflation during a period of high uncertainty.
The cut to 10% of VAT on fuels (petrol, diesel and biofuels and a partial refund of professional diesel), as well as the reduced rates of the tax on hydrocarbons, will remain in force until 30 June, since inflation in April for those items remained above the 15% threshold set by the government.
The Ministry of Economy said that fuel prices continue to be pressured upwards by the war in Iran.
It insisted however that the response plan was meeting its objective of cushioning the impact, because it has countered fuel inflation which would have seen prices hiked still further by over 16%.
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