Learn about the energy tax on companies in Spain

If you live in Spain and work in the business world, you have probably heard about the importance of taxation. If so, do you already know about the energy tax? Do you know what measures have been taken by the government? Here we tell you about the current situation in the country.

Energy tax on companies

In order to control the energy crisis that Europe has been experiencing since the outbreak of the war between Russia and Ukraine, from mid-2022 there is talk of the implementation of a new extraordinary levy aimed at energy entities with an annual turnover of more than €1 billion.

In this sense, Spain contemplates a temporary tax corresponding to 1.2% of the total income generated by energy companies; with a validity applicable during the years 2023 and 2024.

It is important to point out that this measure has already been applied in other European destinations such as Portugal, France or the United Kingdom; being considered countries committed to an improvement in income and to face inflation in order to moderate those extraordinary gains involving the energy sector.

Ideally, the tax should come into force in Spain by 2023, however, depending on the current approval procedures, the date could be affected and delay its start.

Taking into account that this business sector is estimated to generate around 100,000 million euros annually, the Spanish Government expects to collect 2,000 million euros for each applicable year of this tax.

It is understood that the energy tax will directly affect the dominant group of companies. In the following scheme we tell you what they are:

These large companies, for their part, consider that the decision to impose a new tax could be counterproductive, thus affecting the promotion of renewable energies that require millions of dollars in investments for their deployment.

Likewise, well-known Spanish oil, electricity and gas companies such as Repsol, Cepsa, Iberdrola, Endesa and Naturgy could be the main companies affected, taking into account their annual invoicing scheme.

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Situation Spain – European Union

As we have already mentioned, the energy tax proposed by Spain, promoted by the coalition government of PSOE and Unidas Podemos, emphasizes taxing companies on their total sales and not on the profits obtained, as proposed by Brussels.

In short, both Spain and the European Union share the same goal involving the energy sector; asking the latter to make an effort to minimize the crisis that is currently affecting the whole of Europe and to avoid, in some way, what can be considered as “over-income”.

The Spanish initiative is currently being processed by the Congress of Deputies, but it will have to undergo changes and adapt to the general approach approved by the European Union, thus aligning a single criterion for action in all nations.

In relation to these contrasting proposals, at the end of September 2022, the Minister of Finance, María Jesús Montero, explained that Spain is willing to adjust the energy tax in accordance with the measures to be taken by the 27 Member States on behalf of the European Union.

For her part, the President of the European Commission, Ursula Von der Leyen, has put forward a tax proposal in which a 33% tax would be levied on the extraordinary profits of these large oil, coal and refining companies, provided that profits have increased by at least 20% over the measure of profits in the previous three years.

Consequently, by taking this measure, Brussels expects to raise 140 billion euros.

As such, this new tax will have to be approved by the Member States, so it is possible that there may be new proposals or alternatives to the energy tax.

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Conclusion

At the moment, it is defined that the main objective of the introduction of this new tax by the European Commission is to minimize the extraordinary profits of large energy corporations, which are largely considered to be the result of a global crisis, in order to raise funds as a measure to support consumers.

In addition, the Executive has emphasized that this tax regulation must not have an impact on the final prices for citizens, which is why the National Commission for Markets and Competition (CNMC) is assigned the responsibility of monitoring this fact and applying sanctions in the event that companies do not comply with the law.

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If you want to keep up to date with this and other tax news, be sure to visit our blog and consult all the content we have for you! In addition, we remind you that in TAS Consulting we offer you our team of experts in business, tax and accounting to advise you in Spain.