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.
