Spain to scrap 7% electricity production tax in 2028

The Spanish government announced that the Impuesto sobre el Valor de la Producción de Energía Eléctrica (IVPEE) will be eliminated from 1 January 2028. The tax, introduced in 2013 to help pay down a €28.7 billion electricity‑tariff deficit, has generated about €1.5 billion in annual revenue. Its removal is linked to the full repayment of the remaining debt, which is expected to be cleared by early 2028.

The phase‑out will be gradual: the 7 % levy will be cut by 30 % on 1 July, reduced another 40 % in October, and lowered to 3.5 % in 2027 before reaching zero in 2028. The government estimates that the end of the tax could lower household electricity bills by up to 6 %.

The tax has been contentious, prompting legal challenges from large utilities and renewable‑energy producers. The Spanish Supreme Court referred the case to the EU Court of Justice, which upheld the tax’s compatibility with EU law. The government has also used the levy to temper electricity prices during crises, such as the price spikes following the Iran‑related conflict.