The Spanish government has decided to partially extend measures implemented last year to mitigate inflationary pressures and stabilize energy prices, according to a report by the Spanish daily El País, as announced during a cabinet meeting on Wednesday, December 27th, 2025.
The measures include reductions in electricity tariffs and Value Added Tax (VAT) on food, as well as lowered public transportation fares. Initially introduced to counter the economic fallout from the war in Ukraine, these policies were slated to expire but will now remain in effect, albeit with some modifications.
Regarding electricity costs, the VAT rate, previously at 21%, was reduced to 10% in June 2021 due to the energy crisis. Further reductions, implemented in September 2022, saw the rate lowered to 5%. The latest decision eliminates the additional 5% reduction, returning the VAT on electricity to the pre-war level of 10%. A gradual restoration to the original rate of 21% is planned for the future, though a specific timeline has not been announced.
Natural gas will also spot a VAT increase. Previously reduced to 5% in September 2022, the rate will rise to 10% until March 31st of the following year. Biomass products used as alternatives to natural gas, such as wood pellets, will be subject to a 10% VAT rate until June 30th.
The VAT reductions on essential food items – including bread, flour, dairy products, and vegetables – will be extended. These items, currently taxed at 0% (down from a previous rate of 4%), will remain at that level. Pasta and cooking oils, previously taxed at 10%, will continue to be taxed at 5% until December 31st of the following year, extending a policy originally scheduled to end this year.
Spain is actively pursuing strategies to increase its reliance on green hydrogen. The government recently proposed setting a 2.5% target for the proportion of green hydrogen and its derivatives in overall transport fuel by 2030, exceeding the European Union’s 1% requirement. This move, according to the Spanish Ministry of Energy Transition, is strategically important for reducing greenhouse gas emissions, achieving energy independence, and securing a leading role in the European hydrogen supply chain.
The Spanish government’s National Energy and Climate Plan (NECP) has also been updated to include increased targets for green hydrogen and energy storage. The country’s robust renewable energy resources and existing hydrogen infrastructure are seen as key advantages in achieving these goals.
