The Government reduces VAT on natural gas. Council of Ministers has approved a reduction in the Value Added Tax (VAT) on natural gas from 21% to 5% until next January and is studying to extend the measure for next year “if necessary.”
“The purpose of the measure is to support domestic consumers and industry in light of the energy crisis caused by the tension generated by Putin”, declared Teresa Ribera, Minister of Ecological Transition and the Demographic Challenge. According to government estimates, the reduction will provide savings to 19.4 million consumers.
The Ministry has estimated that the measure will be implemented until January will mean total savings of 210 million euros. Likewise, the tax reduction of up to 5% will also apply to pellets, briquettes and firewood, ecological substitutes for natural gas for heating systems.
The measure will mean total savings of 210 million euros until January
With this new measure, the Government seeks to reduce the electricity bill for the coming autumn and winter. At the same time, the Council of Ministers approved that producers of electricity from cogeneration can benefit from the so-called “Iberian exception”a measure approved by the European Commission that seeks to limit the price of gas in the wholesale market, addressing the economic consequences of the increase in the price of energy.
In June, the Government also approved a reduction in VAT on electricity, which went from 10% to 5%. The electricity tax has already been reduced from 21% to 5%, to moderate the increase in prices caused by the invasion of Ukraine.
“In the case of both electricity and natural gas, we have to be careful to see how things develop,” Ribera announced. To date, the Executive has already reduced the taxes associated with the electricity bill by 80%.which left taxpayers with savings of around 10,000 million euros.
Before this latest decision, the Government had approved other measures to cooperate with the electro-intensive and gas-intensive industry, such as the 80% exemption for the payment of tolls, public guarantees for the signing of energy supply contracts or direct payments to. companies, among others. In total, the aid to the sector amounts to more than one billion euros in 2022.
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