365 days and 15 billion euro later, Pedro Sanchez presented a new package that included measures to overcome the energy crisis. The Prime Minister convened an extraordinary council of ministers to, among other things, reduce VAT on electricity bills from 10% to 5%.

According to the calculations of the executive branch, the total savings from reducing VAT from 21% to 5% is up to 600 million euros per quarter to reach €1,800 million per quarter, taking into account the rest of the measures it had previously implemented: the extension of the reduction of the special tax on electricity and the suspension of the tax on the cost of electricity production, which were extended until 31 December.

Thus, at a press conference after the Council of Ministers, the Prime Minister stated that the executive branch is aware of “the difficulties faced by families and companies, and therefore three months ago we approved the first plan, which was agreed with all public figures in our country.”

Pedro Sanchez argues that the new averages package kept inflation in check. 3.5 points. “If the energy plan, approved three months ago, had not been implemented, the IPC would have jumped to 15 points,” said tenant Palacio de La Moncloa.

In turn, Sanchez announced a new tax on the so-called heaven-sent benefits of energy companies, which will come into force on January 1, 2023. The introduction of the new tax will be delayed as it cannot be approved by Royal Decree-Law and must be processed by Organic Law. “We must comply with the current legislation, but the Ministry of Finance is already working,” he said.

“This is a new tax that will levy excess profits on energy companies approved by the European Commission, the International Monetary Fund or the OECD,” he said during a press conference after the meeting of the Council of Ministers. “In this sense, Pedro Sanchez issued a strong warning to companies in the sector, arguing that “indirect revenues cannot be generated in the face of an unprecedented crisis.” The tax has been criticized by investors, the CEOE and the companies themselves, who do not rule out going to court because they consider it unconstitutional.

News in extension