Reduced VAT rate temporarily applicable to certain energy supplies and fuels

Royal Decree-Law 7/2026, of March 20, establishes temporary measures in the area of Value Added Tax (VAT) aimed at mitigating the impact of rising energy costs on consumers and economic operators, in a scenario marked by the war in the Middle East, uncertainty regarding its evolution, and its impact on international energy and fuel markets.

Effective March 22, 2026, and generally until June 30, 2026, the reduced rate of 10% applies to supplies, imports, and intra-Community acquisitions of certain energy products. The measure applies to electricity, natural gas, briquettes and pellets derived from biomass, firewood, and certain fuels and biofuels defined by reference to the Excise Tax regulations.

In the case of electricity, the application of the reduced rate is not general in nature but is limited to supplies made to contract holders with a contracted power of less than 10 kW, as well as to beneficiaries of the social tariff who are recognized as severely vulnerable or severely vulnerable at risk of social exclusion.

With regard to natural gas, the measure has a broader scope; the 10% rate applies to its supplies, imports, and intra-Community acquisitions without being subject to subjective requirements equivalent to those established for electricity. The reduction also extends to other energy products for thermal use, such as briquettes and pellets derived from biomass and firewood.

Likewise, the Royal Decree-Law applies the 10% rate to certain types of gasoline, diesel, and biofuels intended for use as fuel, as defined by express reference to the Excise Tax regulations.

However, the reduction does not apply unconditionally throughout the entire period initially envisaged. The application of the reduced rate until June 2026 is contingent, in the case of electricity, gas, and motor fuels, on the CPI variation for the corresponding product in April exceeding by more than 15% that recorded in the same month of the previous year, according to information published by the National Institute of Statistics in May.

The Royal Decree-Law was published in the Official State Gazette (BOE) on March 21, 2026, and entered into force on March 22, 2026, subject to its mandatory ratification by the Congress of Deputies.