Spain Reverts VAT on Energy, Faces EU Pressure on Hospitality Tax Breaks

On 1 June 2026 the Spanish government restored the standard 21 % value‑added tax on electricity and gas, ending the temporary 10 % rate introduced in March to offset the energy‑price shock from the Middle‑East conflict. The special electricity tax also rose to 5.11 %. Analysts estimate the change will lift average household electricity bills by roughly 15 %, from about €56 to €65 for variable‑price contracts and from €61 to over €70 for fixed‑price contracts.

The government said the fiscal relief could be withdrawn as the situation improves, while keeping reduced fuel taxes in place until 30 June. The European Commission, however, criticised Spain for the extensive use of reduced‑rate VAT, especially the 10 % rate for hospitality, which it says costs the Treasury about €7 billion annually. Brussels urged Madrid to curb such exemptions to strengthen fiscal sustainability and tackle child‑poverty challenges.