Filenews 2 September 2022
While in Cyprus government sources claim that the reduction of VAT is contrary to the EU acquis, European governments continue to take and implement decisions for a large reduction in VAT, mainly on the consumption of energy products, in an effort to offer some relief to households.
Yesterday it was announced by Spanish Prime Minister Pedro Sanchez that his government will reduce vat on natural gas from October to 5% from the current 21% in order to reduce the impact that rising gas prices have on households' utility bills.
For its part, the Belgian Federal Government decided yesterday to extend the reduced VAT rate of 6% on gas and electricity. Special prices will also apply for the poorest households, until the end of the first quarter of 2023.
"In order for heating bills to be lower for citizens, the government seeks to fairly distribute the costs and charges caused by the war (in Ukraine)," spain's social democratic prime minister said, speaking to radio station Cadena Ser. The Spanish government has reduced VAT on electricity twice in the last year.
Energy costs have skyrocketed since Russia invaded Ukraine in February, as Russia is a key supplier of natural gas to Europe for heating and electricity generation.
Spain has committed to its partners in the European Union to reduce its gas consumption by 7% in 2022, but the use of gas has increased by the end of the summer, compared to the same period in 2021. The heatwaves that occurred during the summer have caused an increase in the demand for electricity, due to the use of air conditioners, while at the same time the production of hydropower - an important source of energy for Spain - has decreased due to water scarcity.
