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Royal Decree-Law 18/2026: Gradual Extension of Energy Tax Measures and Progressive Phase-Out of the Electricity Production Tax (IVPEE)

On 30 June 2026, Royal Decree-Law 18/2026 of 29 June was published in the Spanish Official Gazette (BOE), introducing a number of measures under the Comprehensive Response Plan to the Middle East Crisis.

This new legislation extends, on a gradual and conditional basis, certain measures previously introduced by Royal Decree-Law 7/2026 of 20 March, with the aim of mitigating the impact of the current geopolitical crisis on energy markets and avoiding an abrupt withdrawal of the tax relief measures benefiting households, businesses and sectors particularly exposed to rising energy costs.

In particular, Royal Decree-Law 18/2026 establishes a phased withdrawal of the temporary tax reductions applicable to certain energy products, introduces safeguard mechanisms allowing the temporary reinstatement of the reduced VAT and Electricity Excise Duty rates in the event of significant increases in the Consumer Price Index (CPI), and, most notably, amends the tax rate applicable to the Tax on the Value of Electricity Production (IVPEE), setting it at 3.5% for 2027 and 0% with effect from 1 January 2028 on an indefinite basis.

The main tax measures introduced by the Royal Decree-Law are summarised below:

  • Hydrocarbons Excise Duty: Gradual Reduction of Tax Rates

With respect to Hydrocarbons Excise Duty, the new legislation provides for a temporary reduction in the tax rates applicable to the most widely consumed fuel products, particularly diesel and unleaded petrol.

The reduction will apply progressively during July, August and September 2026 as follows:

  • EUR 0.15 per litre during July 2026.
  • EUR 0.10 per litre during August 2026.
  • EUR 0.05 per litre during September 2026.

The Royal Decree-Law also includes a safeguard mechanism should the CPI for petrol or diesel increase significantly. In such circumstances, the tax reductions could be increased to as much as EUR 0.20 per litre during August or September, depending on the evolution of the relevant CPI indices.

For the remaining energy products falling within the scope of Hydrocarbons Excise Duty, whose tax rates had already been reduced under Royal Decree-Law 7/2026, the new legislation provides for a gradual return to the standard tax rates, while also allowing for enhanced reductions should exceptional CPI increases occur.

  • VAT on Electricity, Natural Gas, Biomass and Firewood

Royal Decree-Law 7/2026 had temporarily reduced the VAT rate from 21% to 10% on certain supplies, imports and intra-Community acquisitions of energy products.

Royal Decree-Law 18/2026 does not automatically extend this reduced rate beyond June. Instead, it introduces a safeguard mechanism allowing the temporary reinstatement of the 10% VAT rate during August and September 2026 if the CPI for the relevant energy products shows an unfavourable evolution.

Where the relevant conditions are met, the 10% VAT rate may apply to:

  • Supplies, imports and intra-Community acquisitions of electricity made to customers with a contracted capacity of up to 10 kW.
  • Electricity supplies to recipients of the Spanish social electricity bonus qualifying as severely vulnerable consumers or consumers at risk of social exclusion.
  • Supplies, imports and intra-Community acquisitions of natural gas.
  • Biomass briquettes and pellets.

The application of the reduced VAT rate is conditional upon the CPI for the relevant category (electricity or natural gas, as applicable) exceeding by more than 15% the CPI recorded in the same month of the previous year.

  • Electricity Excise Duty

Royal Decree-Law 7/2026 had temporarily reduced the Electricity Excise Duty rate from 5.11269632% to 0.5%, while maintaining compliance with the minimum taxation levels required under EU legislation.

Royal Decree-Law 18/2026 introduces an equivalent safeguard mechanism for August and September 2026. Accordingly, where the CPI for electricity exceeds by more than 15% the CPI for the corresponding month of the previous year, the Electricity Excise Duty rate will be reduced to 0.5% for the relevant month.

However, the resulting tax liability may not fall below:

    • EUR 0.5 per MWh where electricity is used for industrial purposes, by vessels moored in port (other than private pleasure craft), or for railway transport.
    • EUR 1 per MWh in all other cases.
  • Electricity Production Tax (IVPEE): New Rules for 2026 and Progressive Reduction of the Tax Rate

One of the most significant developments introduced by the Royal Decree-Law concerns the Tax on the Value of Electricity Production (IVPEE).

For fiscal year 2026, the legislation introduces new rules for calculating both the taxable base and the advance payments of the tax. In particular, the following amounts will be excluded from the taxable base:

  • 30% of the remuneration received from electricity generation and injection into the grid during the third quarter of 2026.
  • 40% of the remuneration received during the fourth quarter of 2026.

These measures are in addition to those already applicable to the first and second quarters of 2026 under Royal Decree-Law 7/2026.

Furthermore, the Royal Decree-Law amends Law 15/2012 on Tax Measures for Energy Sustainability by introducing a progressive reduction of the IVPEE tax rate:

  • 5% for fiscal year 2027.
  • 0% from fiscal year 2028 onwards.

This amendment represents a structural change in the taxation of electricity generation by establishing a 3.5% tax rate for 2027 and a 0% rate with effect from 1 January 2028 on an indefinite basis. The legislation also provides for an update of the remuneration parameters applicable to renewable energy, cogeneration and waste-to-energy installations in order to reflect this amendment.

  • Public Information Requirements

The Royal Decree-Law also introduces obligations for fuel stations and other retail fuel suppliers to provide appropriate information to customers regarding the temporary energy tax measures.

These requirements aim to ensure that consumers are properly informed of the applicable tax reductions and to enhance transparency regarding the pass-through of those reductions into final retail prices.

  • Recommended Actions

In light of the new regulatory framework, businesses should consider taking the following actions:

  • Assess the impact of the gradual reduction in Hydrocarbons Excise Duty on supply costs and pricing policies.
  • Determine whether they may benefit from the conditional application of the reduced VAT and Electricity Excise Duty rates during August and September 2026.
  • Review the impact of the new IVPEE taxable base and advance payment calculation rules for fiscal year 2026.
  • Assess the implications of the reduction of the IVPEE rate to 3.5% in 2027 and to 0% from 2028 onwards.
  • Review energy supply agreements, hedging arrangements and forward pricing mechanisms in light of the IVPEE reform.
  • Ensure compliance with any applicable transparency and information obligations relating to the temporary energy tax measures.

 

How can we assist you?

We recommend reviewing the impact of these measures on your company’s energy tax position, including their effect on supply agreements, invoicing procedures and internal energy cost monitoring processes.

With more than 30 years’ experience in indirect taxation, Salinas & Partners remains at your disposal should you require any further information or assistance.

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Adjustment of tariffs on US products

On 30 June 2026, Regulations (EU) 2026/1455 and 2026/1461 of the European Parliament and of the Council of 25 June 2026 were published, adjusting the customs duties applicable to imports of certain goods originating in the United States of America and, furthermore, introduce a tariff quota and safeguard measures for certain goods.

The purpose of this regulation is to adjust customs duties within the EU, during the periods set out below, following the Joint Statement signed between the EU and the US on 21 August 2025.

Thus, from 1 July 2026 until 31 December 2029, Regulation (EU) 2026/1455, through its three Annexes, identifies the products for which the tariff will be 0% (Annex I), products subject to a mixed tariff, for which the ad valorem component is eliminated whilst the specific component is retained (Annex II); and products that will be subject to a tariff quota with preferential rates for a period of twelve months, commencing on 1 July 2026 (Annex III):

 

  • Annex I (0% tariff) covers most chapters of the Combined Nomenclature
  • Annex II (products for which the ad valorem component is eliminated) mainly identifies fruit and vegetables such as: fresh tomatoes, cucumbers, artichokes, oranges, mandarins, lemons, grapes and grape juice, apples, pears, cherries and plums, classified mainly under chapters 07, 08 and 20 of the Combined Nomenclature.
  • The temporary quotas (preferential tariffs until a certain import volume is reached) provided for in Annex III to EU Regulation 2026/1455 include pork, bison meat, dairy products, cheeses, nuts, soya oil, animal feed, squid, salmon, prawns, hake, cocoa powder, teas and syrups, water and non-alcoholic beverages, and dextrins.

 

Furthermore, from 1 August 2025 to 31 July 2030, in accordance with the provisions of EU Regulation 2026/1461, imports of lobsters, rock lobsters and canned lobster originating in the US will be exempt from import duties into the EU.

Importers who have cleared customs and paid import duties on lobsters, rock lobsters and canned lobster originating in the US between 1 August 2025 and 30 June 2026 may apply for a refund of the import duties paid.

 

How can we assist you?

The regulation set out in this note is of vital importance to companies trading with the United States, which will be able to benefit from the outcomes achieved through the EU-US Joint Declaration, both in terms of the application of tariff benefits (total or partial reductions) and the refund of duties paid, once these companies have verified compliance with the rules of origin for the goods traded, their tariff classification at both the point of origin (the US) and the point of destination (the EU), and the customs value of the goods.

Salinas & Partners, with over 30 years’ experience in international trade and customs, is at your disposal should you have any queries or comments.

 

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VAT on transfer pricing adjustments

On 13 May 2026, the Court of Justice of the European Union (CJEU) delivered its judgment in Case C-603/24, addressing a request for a preliminary ruling concerning the interpretation of Article 2(1) of the Sixth VAT Directive in relation to supplies of services for consideration.

The CJEU examined whether certain transfer pricing adjustments made between companies within the General Motors group, intended to ensure predetermined profit margins, could be regarded as consideration for vehicle repair services subject to VAT.

The dispute arose between Stellantis Portugal, S.A., the successor company to Opel Portugal (formerly General Motors Portugal – “GMP”), and the Portuguese Tax Authorities. GMP operated in Portugal as part of the General Motors group, which included, among others, companies engaged in the manufacture and supply of motor vehicles, parts and accessories to other group entities.

When vehicles presented manufacturing defects, issues covered by the manufacturer’s warranty, or roadside assistance-related problems, customers brought them to dealerships. The dealerships carried out the repairs and invoiced GMP for the related costs, charging the applicable VAT.

The dispute originated from a tax audit relating to the 2006 financial year, during which the Portuguese Tax Authorities took the view that certain transfer pricing adjustments made between GMP and the group’s manufacturing entities actually constituted remuneration for VATable vehicle repair services. This conclusion was reached even though the adjustments took into account not only repair costs but also other costs incurred by GMP in the course of its distribution activities, such as personnel, electricity and marketing expenses.

Under an intragroup agreement entered into in 2004, the transfer prices of vehicles, parts and accessories could be adjusted at the end of each period to ensure that the distribution entities achieved a predetermined profit margin. These adjustments were implemented through credit notes where GMP’s profit fell below the agreed margin and through debit notes where its profit exceeded the target margin.

The key issue was whether the inclusion of repair costs in the calculation of the transfer pricing adjustments was sufficient to conclude that GMP had supplied repair services to the group’s manufacturing entities and that such adjustments constituted consideration for those services.

Resolving this issue was crucial because the Portuguese Tax Authorities considered that repair costs arising from manufacturing defects, manufacturer warranties or roadside assistance obligations should ultimately be borne by the manufacturers. According to their interpretation, GMP initially incurred those costs and subsequently recharged them to the manufacturers through the transfer pricing adjustments. On that basis, the authorities concluded that GMP had supplied repair services subject to VAT and assessed additional VAT and compensatory interest amounting to EUR 1,504,215.49.

The CJEU recalled that, for a supply of services to be subject to VAT, there must be a legal relationship between the parties involving reciprocal performance, such that the remuneration received constitutes the actual consideration for a specific service supplied to the recipient.

In the case at hand, the intragroup agreement was intended to ensure that GMP achieved a predetermined profit margin through transfer pricing adjustments, but it did not establish any specific obligation on GMP to provide repair services to the manufacturers in exchange for remuneration. Furthermore, repair costs were only one of the elements taken into account in calculating the adjustment, alongside other general operating expenses. Accordingly, the CJEU held that the connection between the repairs and the transfer pricing adjustments was merely indirect and that those adjustments could not automatically be regarded as consideration for VATable repair services.

Nevertheless, the CJEU left the final assessment of the facts to the national court. It will be for the Portuguese court to determine whether, independently of the transfer pricing agreement, there existed a legal relationship allowing the identification of a specific supply of services directly linked to a corresponding remuneration, in which case the adjustment could be subject to VAT.

The judgment also leaves open an important practical issue. Where a transfer pricing adjustment does not constitute remuneration for an independent supply of services, it may be necessary to assess whether it should instead be treated as a subsequent adjustment to the purchase price of the vehicles, potentially affecting the taxable amount of the original supplies.

How can we assist you?

With more than 30 years of experience in indirect taxation, customs and international trade, Salinas & Partners is available to assist you in assessing the VAT and customs implications of transfer pricing adjustments, as well as in defending tax assessments arising from the characterization of such adjustments as VATable supplies of services.

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Regularisation of VAT incorrectly invoiced

On 3 June 2026, the General Court of the European Union delivered its judgment in Case T-198/25, G Kft., addressing a request for a preliminary ruling concerning the interpretation of Articles 167, 168, 179, 180, 183, 250 and 252 of the VAT Directive, as well as the principles of effectiveness, fiscal neutrality and proportionality, in the context of the regularisation of VAT incorrectly invoiced in respect of a period already closed by a tax audit.

The General Court examined whether EU law precludes national legislation that limits the possibility of regularising VAT incorrectly invoiced where the period concerned has already been subject to a tax audit, unless the taxable person provides a new element capable of altering the conclusions reached in that audit.

The dispute arose between G Kft., a Hungarian company engaged in the rental of reusable crates and pallets to fruit producers, retailers, wholesalers and food processing companies, and the Appeals Directorate of the Hungarian National Tax and Customs Administration.

The controversy arose because the company had invoiced VAT on certain deposits linked to the delivery of those goods, even though it was subsequently considered that those transactions did not fall within the scope of VAT. Specifically, G Kft. applied a deposit system under which, when delivering the crates and pallets to its customers, it invoiced certain amounts intended to encourage the return of the goods within the prescribed period. If the customer returned only part of the goods, the relevant invoices were adjusted; if all the goods were returned, the invoices were cancelled. However, those invoices included VAT, although the Hungarian authorities subsequently considered that those deposit transactions should not have been subject to that tax.

Following the opening and completion of a tax audit relating to the period from January 2015 to July 2017, the company requested, in November 2020, the opening of a new audit in order to regularise the VAT incorrectly invoiced. The Hungarian tax authority refused that request on two occasions, taking the view that there was no new fact or circumstance, as required under national law in order to reopen a period already closed by a tax audit.

A Hungarian court referred a question to the General Court for a preliminary ruling in order to determine whether the VAT Directive and the principles of effectiveness, fiscal neutrality and proportionality preclude national legislation that makes the regularisation of VAT incorrectly invoiced in respect of a period already audited conditional upon the existence of a new element capable of altering the conclusions of the previous audit.

For its part, G Kft. argued that the VAT had been incorrectly invoiced and paid, and that there was therefore no loss to the tax authority. However, the Hungarian authorities considered that the company had had the opportunity to correct its position earlier, whether before the tax audit began, during the audit procedure itself, or by challenging the decision that brought that procedure to an end in August 2018.

The Court concluded that the VAT Directive and the principles of effectiveness, fiscal neutrality and proportionality do not preclude national legislation of this kind, provided that the taxable person has been able effectively to exercise its right to regularisation within a reasonable period. In this regard, the Court considered it relevant that G Kft. had had more than three years in which to request the regularisation of the VAT: before the opening of the tax audit, during the audit procedure itself and, subsequently, through a possible appeal against the decision that brought that audit to an end. Accordingly, the Court held that the refusal to open a new tax audit did not amount to an absolute and disproportionate denial of the right to regularise the VAT, but rather to the application of a procedural rule that is permissible from the perspective of EU law.

Consequently, the General Court confirmed that a taxable person who has incorrectly invoiced VAT may request its regularisation, but that such right must be exercised in accordance with the procedural rules and time limits laid down by national law. Where the period has already been closed by a tax audit, the Member State may require the existence of a new element in order to reopen it, provided that the taxable person had previously had a genuine and reasonable opportunity to correct its position.

 

How can we assist you?

With more than 30 years of experience in tax advisory services, Salinas & Partners is available to assist you with the review of transactions subject to VAT, the regularisation of amounts incorrectly invoiced, the preparation of corrective invoices and the assessment of risks arising from tax audits that have already been closed.

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