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Reduction of VAT on gas 21 to 5 per cent approved government

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The Council of Ministers definitively approved the reduction of VAT on natural gas from 21 to five per cent.

 

This Tuesday, September 20, the Council of Ministers definitively approved the reduction of VAT on gas. It will subsequently drop from 21 to 5 per cent. The decision comes two weeks after it was announced in the Senate by Pedro Sanchez, the President of the Government.

“In principle, until December 31, the same as the tax reductions in the field of energy”, explained Teresa Ribera, the Minister for Ecological Transition. She announced that there would be a saving of: “more than €10,000 million to consumers as a result of these tax cuts”. Ribera added: “We will be watching how things evolve, and in the new budget year, if necessary, it will be extended for next year”.

“It is about protecting the sectors most affected by the rise in energy prices resulting from the war, and cushioning the cost for companies and families”, stressed the Minister.

The Government considers that with the reduction of VAT on gas to the minimum allowed in the EU, consumers will save €190 million. Including the supply to boilers of neighbouring communities, the Ministry of Ecological Transition pointed out that this measure, however, does not include a tax reduction for liquefied petroleum gas.

Like natural gas, LPG is also used for cooking, heating water, and activating household appliances, as well as for transportation. “It is not possible for now”, said Ribera, who explained that the modification of the European directive that has allowed lowering VAT on energy products does not include this type of gas.

VAT will also be reduced to 5 per cent on pellets, firewood, and chips, with estimated savings for consumers of €19.4 million. The Government has lowered VAT to 5 per cent on electricity, the rate of Electricity Tax to 0.5 per cent, and has suspended the 7 per cent tax on generation. In total, a saving of €10,000 million has been calculated for consumers.

Ribera also announced the creation of a new mechanism called the ‘Rapid Demand Response Service’. This will allow industries to request a reduction in their electricity supply within a period of 15 minutes, for a maximum period of three hours.

This measure, she stated: “allows marketers and direct consumers to reduce their consumption in exchange for this economic redistribution”, as reported by 20minutos.es.

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