Electricity bills in Spain will rise sharply in 2025 as VAT returns to 21%
credit : Shutterstock – Alfredo Maiquez

As 2025 approaches, Spanish residents brace for a significant spike in electricity costs, driven by a VAT hike and changes to the social bonus scheme.

VAT increase to 21%: Impact on your electricity bills

Starting 1 January 2025, VAT on electricity in Spain will revert to 21%, ending a three-year period of reduced rates introduced to alleviate the cost-of-living crisis. This shift follows a series of reductions, with VAT initially lowered to 10% in June 2021 and further slashed to 5% in July 2022.

The impact on households and businesses is substantial:

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Households: An average monthly increase of €5.42, adding approximately €65 annually to bills.

Small and medium-sized businesses: Expected increases of €114 per month, totalling €1,372 annually.

The Organisation of Consumers and Users (OCU) has criticised the move, noting that countries like Portugal and Belgium already apply reduced VAT rates for electricity.

Social bonus changes: Reduced discounts for vulnerable groups

The social bonus, designed to support vulnerable consumers, will also see adjustments in 2025. Additional discounts will be phased out, leaving only partial reductions:

Vulnerable consumers:

50% discount from January to March
42.5% from April to June
35% from July onwards
Severely Vulnerable Consumers:
65% discount from January to March
57.5% from April to June
50% from July onwards

These changes will affect nearly 1.8 million households, with financing costs projected to reach €284.8 million in 2025.

Strategies to lower your electricity bills amid rising sosts

With both VAT and the Special Tax on Electricity (IEE) increasing, residents may consider switching energy providers to secure better rates. Services like Spanish Energy offer free price comparisons and assistance with paperwork, making the transition smoother for homeowners.

Spain’s electricity landscape faces turbulent times as residents prepare for higher costs in the coming year. Exploring alternatives and reducing energy consumption may help alleviate the financial burden.

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