One of the modifications to be introduced by the Tax Reform proposed by the Spanish Government last 23rd June is the approval of a “new” Electricity Tax.
Although we need to wait for the final version of the text, the draft of Bill foresees the approval of a “new” Electricity Tax that will be levied upon the consumption of electricity instead of the production, as it is the case with the remaining harmonized excise duties. Hence the Electricity Tax will no more qualify as a production excise duty, meaning that it will follow a specific regime different from the harmonized excise duties (alcohol, tobacco and hydrocarbons).
Two main amendments should be taken into account. Firstly, under the new wording proposed, only suppliers of electricity to consumers will qualify as taxpayers, meaning that in fact, all the intermediaries acting within the supply chain will not be subject to the former obligations in force until now, since they will not qualify as taxpayers. Secondly, a new tax rate is proposed: 5,11269632%.
In addition to that, there is a new reduction to the taxable base applicable to those activities where the amount of electricity consumed represents more that 50% of the product cost (i.e. the total amount corresponding to the inputs and indirect costs). This reduction will be of 85% of the taxable base and is similar to the one foreseen by the German Electricity Tax regulation.
Our understanding is that the qualification of this “new” tax as a consumption tax rather than a production one, will deepen the differences between the Tax upon the Added Value of the Energy Production and the Electricity tax itself. According to many experts, under the current wording in force, both taxes are really similar and thus, could be considered incompatible. However, it is likely that such incompatibility would be analysed in the near future by the European Court of Justice.
Although we need to wait for the final version of the text, the draft of Bill foresees the approval of a “new” Electricity Tax that will be levied upon the consumption of electricity instead of the production, as it is the case with the remaining harmonized excise duties. Hence the Electricity Tax will no more qualify as a production excise duty, meaning that it will follow a specific regime different from the harmonized excise duties (alcohol, tobacco and hydrocarbons).
Two main amendments should be taken into account. Firstly, under the new wording proposed, only suppliers of electricity to consumers will qualify as taxpayers, meaning that in fact, all the intermediaries acting within the supply chain will not be subject to the former obligations in force until now, since they will not qualify as taxpayers. Secondly, a new tax rate is proposed: 5,11269632%.
In addition to that, there is a new reduction to the taxable base applicable to those activities where the amount of electricity consumed represents more that 50% of the product cost (i.e. the total amount corresponding to the inputs and indirect costs). This reduction will be of 85% of the taxable base and is similar to the one foreseen by the German Electricity Tax regulation.
Our understanding is that the qualification of this “new” tax as a consumption tax rather than a production one, will deepen the differences between the Tax upon the Added Value of the Energy Production and the Electricity tax itself. According to many experts, under the current wording in force, both taxes are really similar and thus, could be considered incompatible. However, it is likely that such incompatibility would be analysed in the near future by the European Court of Justice.
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