On 21 March 2026, Royal Decree-Law 7/2026 of 20 March (ratified on 26 March) was published in the Official State Gazette, approving the Comprehensive Plan to Address the Crisis in the Middle East, which includes, amongst other measures, various tax measures aimed at mitigating the impact of rising prices for energy and electricity products resulting from the international energy crisis.
The main measures approved in this Royal Decree in relation to the Excise Duty on Hydrocarbons, the Excise Duty on Electricity and Value Added Tax are detailed below.
- Reduction of Hydrocarbon Excise Duty rates
The Hydrocarbon Excise Duty rates applicable to the main energy products are reduced, bringing them to the minimum levels permitted by Directive 2003/96/EC restructuring the EU Community framework for the taxation of energy products and electricity.
This reduction applies, amongst others, to products such as leaded and unleaded petrol, general-purpose diesel, fuel oil, LPG, natural gas, kerosene and biofuels.
- Reduction in the rates of the Excise Duty on Electricity
The Royal Decree-Law establishes a reduction in the rate of the Excise Duty on Electricity, which is lowered from the general rate of 5.11269632% to 0.5%. However, minimum rates of €0.50 per megawatt-hour are set for industrial uses, agricultural irrigation, rail transport and certain vessels, and €1.00 per megawatt-hour for all other cases.
In addition, reductions are introduced in the tax base for the Tax on the Value of Electricity Production for the 2026 financial year, to offset the costs being borne by companies. These reductions will be implemented by reducing the tax base by a percentage of the revenue corresponding to the electricity fed into the system during the first two quarters of the year, with the aim of reducing electricity generation costs and promoting more competitive prices in the wholesale market, which are expected to result in lower electricity prices for the end consumer.
- Reduction in VAT rates on certain energy products
In the area of Value Added Tax, the VAT rate applicable to supplies, imports and intra-Community acquisitions of goods relating to electricity supplied to contract holders with a contracted power of less than 10 kW, electricity supplied to beneficiaries of the social tariff who are classified as severely vulnerable or severely vulnerable at risk of social exclusion, natural gas, briquettes and pellets derived from biomass, firewood, petrol, diesel and biofuels intended for use as motor fuels.
All these measures are temporary in nature and come into force from their publication in the Official State Gazette (21 March 2026) until 30 June 2026. However, as these are exceptional measures, their application is subject to the change in the CPI during the month of April; therefore, if the change in the CPI for these products does not exceed that of the same month of the previous year by more than 15%, the reduction will cease to apply in June 2026.
How can we assist you?
Our team of specialists in indirect taxation and excise duties can advise you on analysing the impact of these measures, the correct application of the new tax rates and compliance with the tax obligations arising from the new regulations.
Salinas & Partners, with over 30 years’ experience in excise duties and VAT, is at your disposal to answer any queries you may have.
