What impact will the VAT increase have on your bill? In 2024, there have been major changes to electricity bills and to VAT. We explain how they affect you and what will happen in 2025.
The VAT increase has been the most significant change. Since 1 January 2024, the VAT applied to electricity contracts and bills in 2024 went from 5% to 10%. Then, from 1 March, it increased again to 21%, as it was before the Government’s anti-inflation measures applied in 2022. In 2024, the tax has changed depending on the electricity price in the electricity market, being reviewed every month.
And in 2025? In January 2025, VAT returns to 21% until further notice, pending the new electricity charges and grid access tolls established by the Government or whether the current Royal Decree-Law is extended. This applies to contracts with power ratings equal to or below 10 kW.
The application of the reduced tax in 2024 was conditional on the megawatt-hour price exceeding €45 in the electricity market, and could vary month by month depending on this threshold. However, in 2025, electricity VAT in Spain, which changed several times in 2024, returns to 21%.
Therefore, each month in 2024, the current electricity VAT was reviewed based on this condition:
- If the energy price for the current month exceeds €45/MWh, a 10% VAT rate will be applied to the electricity bill for the following month, meaning a reduced VAT rate.
- If the energy price for the current month falls below €45/MWh, a 21% VAT rate will be applied to the electricity bill for the following month.
For all other contracts with a contracted power above 10 kW, VAT has remained at 21%, as usual.
These VAT changes have been subject to the evolution of the electricity market, adjusting month by month according to the price of energy. In addition, the VAT change has been accompanied by an increase in the Special Electricity Tax. From 1 January 2024 to 31 March 2024, the applicable tax rate was 2.5%, and from 1 April 2024 to 30 June 2024, it was 3.8%. From 1 July, the Special Electricity Tax became 5.11%, and it remained this way until the end of the year, adding to the impact of energy VAT on consumers’ bills.
It is worth noting that in 2025 there will be no changes for electricity tariffs outside mainland Spain: for electricity contracts in the Canary Islands, the IGIC will remain at 0% —for contracts with a contracted power of 10 kW or less, while contracts above 10 kW will remain at 7%—. In Ceuta and Melilla, the IPSI will continue to be charged at 1% for all electricity contracts —and at 4% for tariffs above 10 kW—. These taxes will continue to apply to electricity bills, with no changes expected in 2025 in these territories.
Other important changes to electricity bills in 2024
You should also know that, among the regulatory changes applied by the Government from January 2024, there has also been a slight modification to electricity grid access tolls. These are components within the electricity price used to cover system costs related to the “pure and simple” operation of the system, such as energy transport and distribution. At Holaluz, we will pass this change on to your bill in full, and we can already tell you that it will have a minimal impact on your fee.
Finally, the gas cap, the adjustment mechanism designed to bring stability to electricity prices, has disappeared, and the amount used to finance the social bonus, which we all pay to help protect the most vulnerable groups, has been slightly reduced.
It is important to remember that regulated changes affect all electricity tariffs, as they must be applied by all electricity companies. For Holaluz customers, these changes will mean, on average, an increase of between 16% and 18% in the fee compared to 2023 bills.
Tarifa Justa, Holaluz’s fixed tariff
In this situation, it is no surprise that most of us are wondering what we can do to mitigate the VAT increase.
One common option is to adapt your electricity consumption to off-peak hours, change household habits, replace appliances, make the most of lighting… All these practices are always recommended in favour of energy efficiency and sustainability, but at Holaluz we believe that electricity tariffs should adapt to you, not the other way around. If you do not want to worry about when to use the washing machine or dishwasher, and you want to secure a fixed monthly saving fee, we recommend a fixed tariff.
Tarifa Justa adapts to your consumption habits so that you always pay the same. Beyond regulatory changes, which we must pass on to your bill, we offer you a personalised “all-inclusive” tariff, protecting you from variations in the electricity price and possible cold spells or heatwaves. In addition, we review your fixed electricity price every 12 months to ensure it adapts to your needs, and we refund your money if you have overpaid.
Electricity tariff comparison
At this point, we already know that choosing the right tariff can make a considerable difference to the price of our bill. If you are thinking about switching electricity company and comparing electricity tariffs to make sure you make the right decision, you can check what your fixed tariff would be at Holaluz.
It is also important to consider how rising electricity prices affect businesses, as energy costs can have a direct impact on profitability. Having a predictable tariff adapted to consumption helps avoid surprises and makes financial planning easier.
In this scenario, we offer you an alternative that gives you stability and predictability in your electricity bills. We will take your consumption habits into account to create a fixed tariff, adapted to your needs, that protects you from variations in the electricity price.
Saving on electricity with the Rooftop Revolution
At Holaluz, our purpose is to increase the generation of renewable energy, with the goal of making the energy mix 100% green as soon as possible.
For this reason, we are building the largest green energy community in Europe, transitioning towards a new decentralised model based on distributed generation.
This type of generation is based on small renewable energy plants —rooftops— connected to nearby supply points. Thanks to this, we save on energy transport and help bring more and more green energy into the energy mix, which translates into cheaper energy for everyone.
So, if you are interested in installing solar panels to join the Revolution, now is the time. With your solar panels, you can achieve a €0 bill that will allow you to live free from market price changes forever.
en
