How much is VAT on electricity in 2026

VAT stands for Value Added Tax. It is a tax burden on consumption that exists in many countries, including Spain. It constitutes the basis of the Spanish indirect taxation system. It began to be applied in 1986 and was reformed in 1992 to adapt to the European single market.

The different types of VAT

VAT in our country is structured into four tax rates, applying one or the other depending on the product or service being invoiced:

• General VAT: this is a 21% tax rate. Most products and services fall into this category.

• Reduced VAT: 10%.

• Super-reduced VAT: 4%.

• 0% VAT.

This 21% percentage to be applied to electricity consumption places Spain among the European Union countries with the highest VAT on electricity consumption, only below Hungary (27%), Denmark (25%), Croatia (25%), and Sweden (25%). At the other extreme, we find Greece (6%), the United Kingdom (5% for domestic consumers), Malta (5%), Italy (10%), Ireland (13.5%), and Luxembourg (8%). Portugal, for its part, applies 6% for the first 100 kWh of consumption and raises the tax to 23% beyond that threshold. In France, two rates apply: the reduced 5.5% for the fixed part of bills (connection and subscription fee) and the general 20% for the variable part (consumption).

In the European Union, comparing VAT on electricity requires distinguishing between the general VAT rate and the rate applied specifically to the electricity bill. Spain has a general rate of 21%, but since March 2026 it has temporarily applied a reduced VAT of 10% to certain domestic electricity contracts, so it cannot currently be placed among the countries with the highest electricity VAT without clarifying the period and the type of contract. Among the highest general rates in the EU are Hungary (27%), Finland (25.5%), Denmark, Sweden, and Croatia (25%), although in Croatia electricity is taxed at 13%. At the low end are countries with reduced rates applicable to electricity such as Malta (5%), Greece (6%), Italy (10%), or Ireland (9%). Portugal applies 6% to the first 200 kWh of monthly consumption (300 kWh for large families) in contracts up to 6.9 kVA, and 23% to the rest. France, on its part, eliminated the reduced rate of 5.5% on the fixed part of the bill as of August 2025, moving to apply 20% to the subscription as well.

What has changed in the VAT on electricity in recent years (2021–2026)

• 2021: In the middle of this year, the Government temporarily reduced the VAT on electricity from 21% to 10% as an emergency measure to ease the impact of the sharp increase in energy prices.

• 2022: In the middle of this year, the tax rate was reduced again to 5%.

• 2023: The VAT reduction at 5% was maintained.

• 2024: VAT rises to 10%.

• 2025: Since January 1, 2025, the VAT applied to electricity returned to the general rate of 21%, following the end of the extraordinary reduction measures.

• 2026: In March, the Government approved a new temporary reduction to 10% within the Comprehensive Response Plan to the Middle East Crisis, which also included the reduction of the general rate of the Special Tax on Electricity from 5.11269632% to 0.5% and the temporary suspension of the tax on electricity production. The decree included an automatic review clause: if in April the electricity CPI did not exceed that of the same month of the previous year by more than 15%, the tax cuts would cease to apply in June. That condition has been met, and as of June 1, 2026, VAT returns to 21%. And the general rate of the special tax on electricity returns to 5.1126962%.

How VAT is calculated on an electricity bill (real example)

• Step 1: Taxable base – The taxable base is calculated by adding the cost of the power and the cost of the energy consumed. The costs of the regulated concepts are included within those prices. This amount is what serves as a reference to apply taxes.

• Step 2: Application of the electricity tax – The special tax on electricity, which is 5.11269632% (the general rate since June 1, 2026), is first applied to that taxable base. This tax is added to the gross amount before calculating VAT.

• Step 3: Application of VAT – Once the electricity tax has been added, VAT at 21% is applied (the general rate in force since June 1, 2026). VAT is calculated on the previous total, meaning it includes power, energy, tolls, charges, and the electricity tax.

• Step 4: Final total – The result is the total amount of the bill, which corresponds to the sum of the taxable base, the electricity tax, and the VAT.

   

To which parts of the bill is VAT applied?

Let's look at a practical example of a domestic consumer with a monthly bill of €50 before taxes who has a contracted service with a monthly cost of €2.70 before taxes:

• Gross amount (power + energy + tolls + charges): €50

• Electricity tax at 5.11269632%: €2.56

• Service: €2.70

• VAT at 21%: €11.61

• Total bill with VAT: €66.87

In this way, VAT directly increases the final cost paid by the consumer. This calculation is guidelines-based and may vary depending on consumption, the contracted tariff, and the regulated concepts applicable in each case.

Can VAT on electricity be reduced?

The VAT on electricity is set by law and, as of June 1, 2026, the general rate of 21% applies. Electricity companies do not have the capacity to modify it, as it is a state tax. In the past, the Government has resorted to temporary reductions on several occasions to ease the impact of rising prices, as happened in 2021 or in March 2026. These reductions are always exceptional measures that depend exclusively on a political decision. Looking ahead to the second half of 2026, VAT returns to 21% and there are no announced measures to reduce it.

What is in your hands is to take advantage of benefits such as Endesa's Bring a Friend program, with which you can earn up to €500 for recommending the company to your contacts.

VAT on gas bills

As of June 1, 2026, natural gas consumption will return to being taxed at a 21% VAT rate, following the end of the temporary reductions approved in March.

• Natural gas: it is also taxed at 21%, applied to consumption and regulated costs.

• Regional exceptions: VAT is not applied in the Canary Islands; instead, the IGIC is applied with reduced rates: 3% on the variable term of gas and 7% on other items of the bill.

The impact on the bill depends on each case: in electricity, VAT is applied to all components of the receipt, whereas in gas, it directly affects consumption and regulated costs.