The electricity bill not only increases by 11% due to the increase in VAT

Last week we read that Inflation returned to 2.9% due to rising energy prices. Without a doubt, the price of electricity and fuel are the main factors driving up prices in the domestic economy, as they not only affect family pockets but also the costs - and therefore the prices - of companies. But have you ever stopped to think about what we pay for on our electricity bill?

Surely this 2025 you will have noticed an increase in the bill. And yes, there is more consumption due to the few hours of light or heating. However, there has been a substantial change: VAT has gone from 10% to 21% and, therefore, family tax pressure in 2025 does not stop increasing, as with the increase in diesel. And what is most surprising is that this VAT is applied to the entire invoice amount. Let me explain.

The items broken down on the electricity bill are: (i) the contracted power, (ii) energy consumption, (iii) equipment rental, (iv) social aid for those who cannot pay for electricity, and (v) the tax on electricity. To these five factors is added the 21% VAT. Therefore, we are paying VAT on a rate and a tax on electricity, which makes the collection greater than the 11% increase in VAT that should be applied to the first three items, since the taxable base is higher. Let no one in the government act surprised if inflation rises - it is already the expected measure when VAT on electricity is increased.

However, I recommend that you check your bill. At the bottom of the page you will find a QR code or a link that will take you to a page of the National Commission of Markets and Competition (CNMC) that will tell you the price of your bill with another supplier. You will surely save a few euros (not many) per month.