Brussels warns the Spanish government that lowering the VAT on fuels goes against Community rules
The reduction of this tax is the star measure of the decree to alleviate the impact of the war on families and businesses
BarcelonaThe European Commission has warned Spain that reducing VAT on fuels to 10%, as the government of Pedro Sánchez has done in the decree to alleviate the impact of the war in Iran on households, violates European rules. This was communicated in a letter sent to the Spanish government at the end of March, according to sources from the European executive told El País. "It is important to point out that the EU VAT directive does not provide for the possibility of applying a reduced rate to fuel supplies," the Commission explains, according to the Madrid newspaper. Poland, another country that has opted for the same path as Spain, has also received a similar letter.
The VAT reduction for fuels constitutes one of the main fiscal measures of the anti-crisis decree adopted by the Spanish government on March 20. The Ministry of Finance, which Arcadi España has headed for a little over a week, defends the fiscal relief adopted with the argument that the VAT discount does not constitute a structural measure, but rather a cyclical and temporary one.
Therefore, despite Brussels' warning, the Ministry of Finance does not plan to reverse the measure, which will be in force until June 30, at least. After that, if the economic situation derived from the war in Iran requires it, the Spanish government will assess the possibility of extending the reductions. If that happens, the Ministry of Finance will have to decide whether to maintain the formula or change it to comply with Brussels' requirements.
The Spanish government, among other fiscal changes, reduced VAT on fuels to 10% in the package of measures to alleviate the impact of the energy crisis caused by the war on prices. But the Commission believes that reduced VAT for fuels does not fit within European regulations, and proposes a reduction in special taxes on fuels. Pedro Sánchez's executive, in the same decree, also reduced this special tax to the minimum allowed.
