The Spanish Government has announced it will cut value-added tax (VAT) on gas to 5% from 21% from October 2022 in order to reduce the effect of rising international price on household utility bills. The cut is expected to last at least until December 2022. Spain has already cut the VAT on electricity twice over the past year; however, this is the country’s first VAT reduction on gas.
In June 2022, Spain halved the VAT charged on electricity bills to 5% from 10%. In March 2022, The Spanish government had already approved measures to limit the surge in energy prices, extending until 30 June 2022 the reduction of VAT to 10% for consumers below 10 kW. In 2021, the country slashed the VAT rate on electricity to 10% from the original rate of 21% to ease the impact of wholesale electricity price rises on consumers. Spain has also suspended a 7% tax on the value of electricity generation, which utilities ultimately pass on to the retail market price.