Electricity Bills in Mallorca Surge as Government Reinstates 21% VAT

Electricity Bills in Mallorca Surge as Government Reinstates 21% VAT

If your electricity bill suddenly feels a lot higher, you’re not imagining things. As of January 1, 2025, the Spanish government has reinstated a 21% VAT on electricity bills, up from the temporary 5% reduction that had been in place to ease consumer costs. The move has placed Spain among the highest-taxed countries for electricity in the European Union, trailing only Hungary (27%), Denmark (25%), Croatia (25%), and Sweden (25%).

Why Has VAT Increased Again?

The Spanish government had originally slashed VAT on electricity to 5% as a temporary measure to offset soaring energy costs, but has now decided to bring it back to the full 21% rate. While other EU nations have implemented more consumer-friendly tax policies, Spain has resisted external pressure from Brussels to reconsider its decision.

An ENDESA spokesperson confirmed:
"From January 1, 2025, VAT on electricity returned to the general rate of 21%, after having been temporarily reduced to ease the burden on consumers' bills. All bills issued after this date will be subject to the new rate, even if the consumption occurred in 2024."

This decision means that households and businesses across Spain will now pay significantly more for their energy consumption.

How Does Spain Compare to Other EU Countries?

Spain's new 21% VAT on electricity puts it among the highest in Europe. Here’s how it compares:

Where Is All This Money Going?

While consumers struggle with rising costs, ENDESA—the country’s largest electricity provider—reported record profits.
In 2024, its net profits more than doubled, reaching €1.89 billion, compared to €742 million the previous year. This was largely driven by a strong recovery in its gas business and an increase in electricity prices.

What’s Next for Electricity Prices in Spain?

The government’s decision to reinstate the full VAT rate has sparked frustration, but so far, officials have shown no signs of reconsidering. Meanwhile, European leaders continue to push for measures to control energy costs, though Spain has resisted direct intervention.

For now, consumers are left footing the bill, with no relief in sight. If you're looking for ways to cut your electricity costs, monitoring consumption, switching providers, or investing in energy-efficient solutions might be your best bet.