In January the Spanish government recalibrated some of its anti-crisis measures.

Though it maintained 0 percent VAT rates on essential foodstuffs, it cut some aid on energy bills. Prime Minister Pedro Sánchez at the time announced that VAT on gas and electricity would go from the reduced rate of 5 percent to the (increased but still reduced) rate of 10 percent.

The measures had originally been brought in to give Spanish consumers a little respite during the energy crisis sparked by war in Ukraine.

However, due to unexpected falls in electricity prices (below €45/MWh) in February ,VAT on electricity bills will now rise again to the standard 21 percent, as in keeping with the legislation.

Why is it going up?

Essentially because electricity prices have fallen faster than the government anticipated. According to the anti-crisis law, if the price of electricity falls below €45/MWh, VAT would return to 21 percent. The government argues this is positive for customers, because prices are falling.

However, this was not expected to happen until late-2024 if not early-2025, so the rise has come rather unexpectedly and ahead of schedule.

If the average price breaks the €45/MWh threshold again, the government has said it will reintroduce the 10 percent VAT cap.

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When does it go up?

This increase in the tax will be applied from Friday 1st March, coinciding with billing cycles.

What does it mean for my bills?

Basically, that your next electricity bill will include an 11 percent increase in VAT.

This rise applies to all consumers with electricity contracts with power of less than 10kW, both in the free and regulated market.

How much will my next bill be?

To get an estimate of how this will add to your bill, take a look at your last one.

Assuming that your consumption is stable and doesn’t fluctuate massively (if you went away on holiday, for example), the itemised electricity usage cost (terminology for this varies by company) should be stated, plus equipment, and the separate electricity tax, known as IEE in Spain.

Say all that adds up to €100. With the previous 10 percent VAT cap you would’ve paid €110, and with 21 percent the amount will now be €121.

Reporting from Europa Press estimates that the average annual bill is expected to increase the average annual bill of a “typical customer” by 15 percent, “from €467 to €539 per year”.