The VAT on electricity falls from 21% to 10% and the regulated gas rate remains the same for homes and businesses and rises by 0.26% in the communities
Electricity VAT drops from 21% to 10% this Monday because in June it became more expensive and ended with a monthly average of 55.9 euros/Mwh, above the threshold of 45 euros which was set by the Government in December to determine how to tax it throughout this year. Electricity will have a 10% VAT at least throughout the month of July and its evolution will continue to depend on the monthly evolution of the price of electricity in the wholesale market. On the other hand, also this Monday, July 1, the review that is made every three months of the price of the variable term of the electricity comes into force. Natural gas in the regulated tariff (TUR)which remains the same as this past quarter in the case of TUR 1, TUR 2 and TUR 3. If the TUR 4 or neighborhood TUR increases, which can be used by neighborhood communities with a centralized boiler, it will be n until September 30 will be 4.09 cents Euro per kilowatt/hour
As indicated, the daily price of electricity from mid-June due to the Increased demand due to the arrival of heat, The average price last month was above the threshold of 45 euros on which VAT depends on whether it remains at 10% or rises to 21%, before returning to this standard rate definitively on 1 January 2025.
This was stipulated by the Government in the decree that in December of last year began to withdraw some measures to compensate for inflation. According to this rule, on January 1, the VAT on electricity went from 5% to 10% and would remain at this rate until December 31, provided that electricity It does not become so cheap as to fall below 45 euros/Mwh. This is what happened in February, so that in March electricity was taxed at 21% VAT. This was the case until now, when the rise in prices in June, above the same threshold of 45 euros, caused an automatic reduction in VAT and brought it back to the 10% planned, in theory for the whole of this year.
This will be your VAT rate at least throughout July. At the end of the month, the average will be taken again to see if it falls below 45 euros/MWh again, in which case it would rise again to 21%. This Monday, the month of July began with a wholesale electricity price of 53.22 euros/MWh.
The regulated gas rate goes up/down
This July 1st marks the beginning of a new quarter during which the Ministry of Ecological Transition has just reviewed the price of the variable cost of natural gas that will be paid by the clients with regulated tariff (TUR).
In the case of the three lowest consumption rates, starting with the TUR1, For consumption equal to or less than 5,000 kilowatts/hour per year and for homes and small businesses, the variable term will continue to be 4.39 euro cents per kilowatt hour. TUR 2 -consumption between 5,000 kWh/year- and TUR 3 -consumption between 15,000 and 50,000 kWh/year- will remain at 4.09 euro cents and 3.82 euro cents.
The reason there is no change in the variable term is that the variation in the price of gas in the daily market is that the variation does not exceed 2% below which the law establishes that variable prices are not modified. Since the last review of the variable term, The price of gas has increased by 0.95% due to the rise in the price of a barrel of Brent oil and the depreciation of the euro against the dollar, the elements that are taken into account in the calculation of the TUR.
“The prices without taxes of the last resort tariff for natural gas for TUR.1, TUR.2 and TUR.3 in force from midnight on July 1, 2024 will be the same published in the Resolution of March 26, 2024, of the General Directorate of Energy Policy and Mines, which publishes the last resort rate for natural gas, due to the fact that There has not been an upward or downward variation greater than 2% in the cost of raw materials“, said the resolution published in the BOE this Saturday.
In the case of the TUR 4 -for consumption of 50,000 to 300,000 kWh/year and the other seven regulated rates above this threshold, the variable rate does increase in price in the quarter that is now beginning. In the case of the rate that can be used by the communities of neighbours – its validity extended indefinitely last week – it will go up from 4.07 euro cents per kWh to 4.09 cents.
VAT on natural gas -both for clients with TUR and contracts in the free market- had already risen definitively on April 1, also as a consequence of the gradual withdrawal of anti-inflation measures, which maintained the reduced rate of 10% until the end of the heating season to raise it to the regular rate of 21% thereafter.
Another novelty comes into effect on July 1, as it will be the first quarter in which the limit will not be in force which prevented the upward variation in the price of natural gas from the TUR exceeded 15% compared to the previous quarterThe Government set it up to deal with the energy crisis of 2022 and rising inflation, but in the decree at the end of December it stated that it would expire on June 30.
