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New Year price changes in Spain: What's gone up and come down?
Thursday, January 18, 2024 @ 7:32 PM

EVERY January in Spain sees the start of a new tax year and, with it, changes in prices of utilities, commodities and certain consumer goods, along with amendments to State benefits, the minimum wage, and contributory pensions.

Calculating the cost of a New Year…but not everything has gone up in price in 2024 (photo: Caixa Popular)

It's not always bad news: Sometimes, prices go down – although pensions and the lowest legal salaries never do; in theory, these should rise in line with inflation, but even larger hikes can be introduced where it is considered socially necessary.

Not everyone is affected by increases in taxes, when these are announced. For January 2024, it is mainly the highest earners who will have to pay slightly more.

So, what's going up and what's coming down as we face the usual post-Christmas efforts to tighten our belts?



Energy bills are the first to go up in 2024, due to a review in taxes applied to electricity supply. 

Throughout 2023, the government slashed value-added tax (IVA) on mains electricity to 5%, to offset energy price inflation caused by the war in Ukraine, but a gradual return to the usual mid-rate IVA band of 10% is expected over 2024.

Standing charges will rise slightly for electricity use at peak times – between 10.00 and 14.00 and 18.00 and 22.00 on weekdays – but will experience a small decrease for the lowest-priced time brackets, between midnight and 06.00 on weekdays and all day at weekends.

Also last year, the government opted to subsidise Special Tax on Electricity (Impuesto Especial sobre la Electricidad) by 5.11%, leaving it at a total of 0.5%; from the start of 2024, this tax will rise again to 2.5%, and after June this year, will go up again to 3.8%.

For households who use biomass pellets for wood-burning stoves to heat their homes, the reduction in IVA on these to 5% in 2023 will gradually be axed; it has now gone up to 10% and, after June, will return to its previous top-band IVA rate, which is 21%.

So far, the government has not made any amendments to its electricity bill subsidies for low-income households. Last year, 'vulnerable' consumers' discounts went from 25% to up to 65%, and 'extremely vulnerable' consumers' reductions from 40% to up to 85%. This scheme has been renewed again until June – it is reviewed on a six-monthly basis, but as it has been in place for nearly seven years now, is likely to be renewed again mid-year – and is available to individuals and very small businesses who meet the income threshold.


Value-added tax on food

In response to food price inflation, Spain's government opted to cut value-added tax (IVA) on staple goods as a temporary measure, and has announced this will continue until at least June 2024.

When prices soared as a consequence of the invasion of Ukraine, some food items which attract the mid-rate IVA band of 10% had theirs reduced to 5% - namely cooking oil and pasta – whilst those considered 'basics', levied at the bottom rate of 4%, became IVA-free.



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