You are currently viewing How the VAT reduction from 10% to 5% affects your electricity bill with a PVPC contract

The energy crisis, the Russian war in Ukraine and the roller coaster oil and gas markets have pushed the Government to look for alternatives to further lower the electricity bill of the more than 10 million households covered by the regulated rate or PVPC . just a year ago reduced taxation, with a drop in VAT from 21% to 10% and electricity tax from 5.5% to 0.5%. And now it will close the circle again, with a reduction of up to 5% VAT.

“The reduction will mean between 4 or 5 euros less per month for households covered by the PVPC, or regulated rate,” he explains to EL ESPAÑOL-Invertia Francisco Valverde, energy expert and responsible for the development of the energy efficiency renewables area of ​​the Menta Energía group.

“If we take into account the average bill for a PVPC household in June, which was 102 euros, with even lower VAT it would be 97.6 euros. A lot or a little, it’s around 60 euros that I don’t have to pay, and that’s money in my pocket, so the news is positive for consumers,” adds the expert.

And this reduction will be approved in the cextraordinary council of ministers next Saturday, as confirmed by the President of the Executive, Pedro Sánchez.

Two of the existing measures are expected to be extended, the electricity tax until the end of the year for all consumers with contracted power up to 10 kWY the 7% of the Tax on the Value of Electric Energy Production (IVPEE) for electricity generators.

The VAT reduction is a long demanded claim by consumer associations such as Facua, which has even come to request Thatimpose” for at least six months a minimum discount of 50% on the electricity bill subject to the PVPC rate of the vast majority of families, excluding only those with higher incomes.

The ‘cap’ on gas and taxes

Along with fiscal measures to lower the price of electricity, what is known as the ‘Iberian exception’ or cap on the price of gas that participates in the electricity market is already underway. A measure that is not having the expected effect on the final price of electricity, since it has coincided with a heat wave, lack of renewables and a resurgence of the Russian war in Ukraine.

“It is difficult to calculate how much the electricity bill is going to cost in the coming months, there is a lot of uncertainty in the market and everything will depend on external factors, such as the crisis with Russia,” adds Valverde.

“In addition, we must take into account the new tax that the Government intends to put on electricity companies, because I have no doubt that they will transfer it to the final prices, and therefore the bill will go up again.”

On Monday, the Second Vice President and Minister of Labor and Social Economy, Yolanda Díaz proposed raise the corporate tax rate by 10 points for “big energy companies” with the aim of raising revenue by between 1,500 and 2,000 million euros.

FNSSE and CO2 dividends

They will not be the only surcharges that large energy companies have. Next week, except for last-minute surprises, two new rates will be approved in Congress, one will affect gas and oil companies more, and the other will affect electricity and large renewables.

[El Congreso aprobará el Fondo de Sostenibilidad eléctrico y el impuesto al CO2 a nucleares, hidráulicas y algunas eólicas]

As EL ESPAÑOL-Invertia has learned, both legislative proposals have had the majority of the parliamentary groups in the Commission for the Ecological Transition of the Congress of Deputies and will be approved, except for last minute surprises, the next June 28th. It is the icing on the cake of the war that the Government and the large electric, oil and gas companies have maintained for months.

Both of them warn that the market is being intervened, and announce that this will result in an increase in final energy prices for consumers.

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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