New configuration of the Electricity Tax

Written on 5 Jan 2015

In the framework of the tax reform carried out, Act 28/2014 establishes, among other measures, a new configuration of the Electricity Tax, the entry into force of which shall take place on 1 January 2015. The most important aspect of the modification is the new definition of the taxable event, which leads to this tax being a tax levied on the supply of electrical energy for consumption or self-consumption by electricity producers.

The reform that Act 28/2014 is making to the Electricity Tax, in order to better transpose the European Directive, represents a profound modification of the tax, which shall no longer be a tax on production and which shall become a special tax levied on the supply of electrical energy for consumption or self-consumption by the producers of the electricity that they themselves generate.

The new configuration of the tax implies the full modification of all of its elements, providing a response to the definition of the taxable event. In this regard, the new definition of the taxable event establishes the supply of electrical energy to a person or entity acquiring the electricity for its own consumption as taxable events, with both the rendering of the service of network access tolls and the delivery of electricity being understood as the supply of electrical energy. In this regard, it may be understood that system load managers shall be considered as consumers.

The rule also establishes the obligation to register in the corresponding Regional Registry, exclusively for those operators that provide supplies to consumers of electricity and for the beneficiaries of certain exemptions and reductions in the tax base. Nevertheless, the rule provides that those registrations made in conformity with the regulations governing the old Electricity Tax shall be valid for the purposes of this new tax.

In relation to the exemptions applicable, the rule regulates the exemption corresponding to consumption in electrical energy production, transport and distribution facilities for the exclusive performance of these activities, and the exemption corresponding to the owners of electrical energy production facilities covered under the specific compensation regime in conformity with the sectorial legislation (the former special regime). Additionally, the rule establishes a new exemption for the supplies of electrical energy generated by fuel cells.

From among the main modifications, the reduction of 85 percent of the tax base of the Special Electricity Tax for those industrial activities whose electricity consumption represents more than 50 percent of the cost of a product, or for industrial activities whose electricity purchases represent at least 5 percent of the value of production, may be highlighted.