Spain’s temporary VAT (IVA) reductions on electricity and natural gas will come to an end on 1 June after energy prices eased, meaning households will once again pay the standard 21% rate on electricity, gas, pellets, briquettes and firewood.
The tax relief measures had been introduced by royal decree in March as part of the government’s anti-crisis response to fears that the escalating conflict in Iran could trigger a fresh surge in inflation. The package included around 80 measures aimed at cushioning the impact of rising energy and fuel costs on households and businesses. ALSO READ: Spain unveils €5bn emergency package to offset energy shock from Middle East conflict.
However, the continuation of the tax cuts was made conditional on inflation data. Under the rules approved by the government, the reductions would automatically expire if the final Consumer Price Index (CPI) figures for April showed that prices in the affected categories had not risen by more than 15% compared with the same month last year.
According to final figures confirmed this week by Spain’s National Statistics Institute (INE), electricity prices actually fell by 4.3% in April, while natural gas prices dropped by 9.6% year-on-year. As a result, the conditions required to maintain the lower VAT rates no longer apply.
From June, consumers will therefore lose both the reduced 10% VAT rate on electricity and gas products and the discounts linked to the special tax on electricity.
Fuel-related tax relief, however, will remain in place at least until 30 June, when the wider anti-crisis package is due to expire. Unlike electricity and gas, fuel prices continued to rise sharply in April amid instability in international energy markets linked to the conflict in Iran. ALSO READ: Spanish airlines hold fares steady despite Iran fuel crisis pressures.
Liquid fuels recorded year-on-year price increases of 51.7%, while diesel rose by 28.2%, both well above the government’s 15% threshold.
The government will therefore continue applying the reduced 10% VAT rate on petrol, diesel and biofuels, alongside lower rates under the hydrocarbons tax for commonly used fuels such as diesel and unleaded petrol. Professional diesel users will also continue receiving a rebate of 20 cents per litre.
Another measure that will remain in force until the end of June is the suspension of the tax on the value of electricity production (IVPEE), which the government estimates could save businesses around 450 million euros.
Additional support measures for sectors affected by rising costs will also continue, including aid for farmers and transport operators, as well as enhanced discounts under Spain’s social electricity tariff scheme. Vulnerable consumers currently receive a 42.5% discount on electricity bills, while severely vulnerable households receive discounts of 57.5%.
Despite ongoing geopolitical tensions, inflation in Spain eased slightly in April. Headline inflation stood at 3.2%, two tenths lower than in March and in line with preliminary estimates, helped largely by falling electricity and gas prices.
Core inflation — which excludes energy and unprocessed food — also remained relatively stable at 2.8%, one tenth lower than the previous month. ALSO READ: Spain economy weathers Middle East turmoil with steady growth.
The Economy Ministry said inflation remained under control thanks to the government’s ‘renewable shield’ and the anti-crisis measures introduced following the outbreak of conflict in Iran.
According to ministry estimates, fuel inflation would have reached 28.9% in April without the tax relief package, meaning the measures reduced fuel inflation by more than 16%. Overall, the government believes the response plan lowered headline inflation by close to one percentage point.
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Las medidas de apoyo a empresas y hogares y la apuesta por la soberanía energética permiten amortiguar el impacto de la guerra sobre inflación y poder adquisitivo.
— Carlos Cuerpo (@carlos_cuerpo) May 14, 2026
🔸INE confirma una moderación de la inflación➡️3,2% en abril
🔸Cerca de un punto menos gracias a las medidas pic.twitter.com/cjQvMzLd1R
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