Spain: Reactivation of the tax on the value of electricity production as of 2024

published on 29 December 2023 | reading time approx. 3 minutes

The Council of Ministers, through Royal Decree-Law 8/2023 of 27 December, has reactivated the Tax on the Value of Electricity Production (IVPEE) with effect from 2024. The IVPEE had been suspended since the third quarter of 2021.

The reactivation of the IVPEE will be carried out progressively in 2024, with the following particularities for the next fiscal year:

Tax Rate

The 7 percent tax rate in force at the time of the suspension of the tax is maintained.

tax Base

For fiscal year 2024, the taxable base of the IVPEE will be made up of the total amount that the taxpayer is entitled to receive for the production and incorporation into the electricity system of electricity minus half of the remuneration corresponding to the electricity incorporated into the system during the first calendar quarter (January-March), and minus a quarter of the remuneration corresponding to the electricity incorporated into the system during the second calendar quarter (April-June).

Prepayment

The prepayment for the first quarter of 2024 will be calculated on the basis of half of the value of the electricity production at the tax rate of 7percent.
The prepayment for the second quarter of 2024 will be calculated based on the value of the electricity production from the beginning to the first 6 months minus half the amount of the remuneration corresponding to the electricity incorporated during the first quarter and minus a quarter of the remuneration corresponding to the electricity incorporated during the second quarter applying the 7 percent tax rate and deducting the amount of the prepayment for the first quarter of 2024.
For the calculation of the third and fourth quarters of 2024, the prepayment will be calculated by the value of the electricity production, from the beginning of the tax period until the end of the 9 or 12 months, respectively, reduced by half the amount of the remuneration corresponding to the electricity incorporated into the system during the first calendar quarter and by a quarter of the amount of the remuneration corresponding to the electricity incorporated into the system during the second calendar quarter, applying the tax rate of 7 percent and deducting the amount of the prepayment previously paid for fiscal year 2024.

It should be remembered that the dates for the settlement of the IVPEE and its prepayments for the year 2024 are as follows:

Prepayments

General Rule:
- First prepayment: 1 and 20 May 2024. The amount is the result of applying the tax rate to the value of the electricity production corresponding to the first three months of the calendar year.
- Second prepayment: 1 and 20 September 2024. The amount is the result of applying the tax rate to the value of the electricity production corresponding to the first six months of the calendar year, deducting the amount of the prepayment previously made.
- Third prepayment: 1 and 20 November 2024. The amount is the result of applying the tax rate to the value of the electricity production corresponding to the first nine months of the calendar year minus the amount of the prepayments previously paid.
- Fourth prepayment: 1 and 20 February 2025. The amount is the result of applying the tax rate to the value of the electricity production corresponding to the calendar year minus the amount of the prepayments previously paid.
Specific Rule:
If the value of electricity production, including all installations, has not exceeded 500,000 euros in the previous calendar year, a single prepayment must be made. The single prepayment must be made between 1 and 20 November 2024. Its amount is the result of applying the tax rate to the value of the electricity production corresponding to the first nine months of the calendar year.

Settlement Date

The annual self-assessment for the two types of prepayments must be made between 1 and 30 November of the following year (2025). The amount is calculated by applying the tax rate to the value of the electricity production corresponding to the calendar year, deducting the amount of the prepayments previously paid.