Electricity tax exemption for companies
From Grupo Trébol Energía through our energy consultancy we take care of advising you to get a reduction of up to 85% of the taxable base of the Special Tax on electricity, something that has already allowed many companies to substantially reduce their electricity bill.
Given the upward trend of electricity prices and other energy sources, although the government continues to implement measures to reduce the inflationary impact, the exemption of the electricity tax for companies is becoming increasingly relevant. From our consultancy we explain the basic aspects of the IEE and how to benefit from its exemption.
Knowing the electricity tax
The origin of this tax dates back to the 1998 legislation. At that time, it was included to raise additional money to cover the expenses caused by coal extraction, so it was born as a way to compensate what was being charged for the electricity service to support the mining sector.
Later on, by means of the Electricity Excise Tax Law of 28/2014, there is a change regarding its application. With this modification, the also known IEE was no longer a charge awarded to manufacturing processes. The new intention was to charge any type of energy consumption.
This is a payment that is made by applying approximately 5.1127% on all the legal concepts included in the electricity bill, not including the rental of metering equipment and VAT, i.e., it is applied on the power and energy terms. If you have a company and you meet the necessary requirements, you can receive a reduction of the electricity tax.
What is the electricity tax exemption?
Article 94 of the law of the special tax on electricity AEAT lists the activities that do not have to pay this tax. This list is composed of:
- Chemical reduction and electrolytic processes.
- Mineralogical processes. Mineralogical processes are considered to be those classified in division 23 of Regulation (EC) No. 1893/2006 of the European Parliament and of the Council, of 20 December 2006, establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No. 3037/90 and certain EC Regulations on specific statistical aspects.
- Metallurgical processes. Metallurgical processes are those related to the production of metal and its preparation, as well as, within the production of metal products, the production of forgings, press, stamping and drawing, rolled rings and powdered ore products, and surface treatment and heat treatment of castings, heating, preservation, stress relieving or other heat treatments.
- Industrial activities whose electricity consumption represents more than 50% of the cost of a product.
For these purposes, the cost of a product is defined as the sum of total purchases of goods and services plus labor costs plus consumption of fixed capital. The cost is calculated per unit on average.
The cost of electricity is defined as the actual purchase value of electricity or the cost of electricity production, if generated in-house, including all taxes, with the exception of deductible VAT.
- Agricultural irrigation.
- Industrial activities whose purchases or consumption of electricity represent at least 5% of the production value. Cases that can receive a reduction of the electricity tax
According to Article 98 of the 2014 Electricity Excise Tax Law, there are activities that can receive a discount of up to 85% on such tax. In this category are:
- Electricity supplied in the framework of diplomatic or consular relations.
- Electricity supplied to international organizations recognized as such in Spain and by the members of such organizations, within the limits and under the conditions determined in the international agreements establishing such organizations or in the headquarters agreements.
- Electrical energy supplied to the armed forces of any State, other than Spain, that is party to the North Atlantic Treaty or by the civilian personnel in their service, or in their dining rooms and canteens.
- Electric energy supplied within the framework of an agreement entered into with third countries or international organizations, provided that such agreement is admitted or authorized with respect to Value Added Tax exemption.
- The electric energy consumed by the owners of the electric energy production facilities under the specific remuneration regime in accordance with sectorial legislation.
- Electrical energy supplied that has been generated by fuel cells.
- The electrical energy consumed in the production, transmission and distribution facilities of electrical energy for the exclusive performance of these activities.
IEE reduction effective September 2021
In order to mitigate high energy prices, the Spanish government approved a reduction of the electricity tax through Royal Decree-Law 17/2021. This modification establishes a new percentage charge for the tax, which will now be calculated based on a rate of 0.5%, with a minimum amount of €0.1 per 100 kWh of consumption.
How to apply for electricity tax exemption?
The procedure to benefit from the 85% electricity tax exemption is relatively simple. It is first necessary to determine whether the legal requirements are met.
Once defined, it is necessary to obtain a copy of the Territorial Registration Card.
From Trebol Energía we help you to make the necessary calculations as well as to process the reduction of the electricity tax.
You should know that the 85% exemption or reduction does not have a retroactive effect, so it starts from the moment of its award.
Finally, we would like to invite you to review our services related to self-consumption, energy audits and other consultancies. In addition to helping you with the energy tax rebate, our professionals will guide you towards a more efficient energy consumption.
Companies exempt from electricity tax
In the current scenario, some companies may qualify for electricity tax exemption, which represents a great opportunity to reduce operating costs. At Grupo Trébol Energía, we are specialists in identifying whether your company meets the criteria for this exemption. We work with you to navigate through the necessary requirements and procedures, ensuring that if your company is eligible, you can benefit from this tax advantage. This exemption not only eases the financial burden but also allows you to reinvest those savings in key areas of your business.
Electricity tax reduction
At Grupo Trébol Energía, we understand the importance of electricity tax reduction for the growth and sustainability of your company. Our approach focuses on maximizing this reduction, offering you customized solutions that not only lower your tax burden but also promote efficient energy use. Our team of experts is dedicated to analyzing every aspect of your energy consumption, ensuring that you take full advantage of the savings and electricity tax reduction opportunities, which translates into a direct economic benefit for your business.
Frequently Asked Questions about electricity tax exemption:
Electricity tax exemption is the exemption from paying this tax for certain activities. Companies and organizations that meet the requirements established by law may benefit from this exemption.
Activities exempted from electricity tax include chemical reduction and electrolytic processes, mineralogical processes, metallurgical processes, industrial activities with high electricity consumption, agricultural irrigation and other specific activities established by law.
The exemption from the electricity tax allows companies to significantly reduce their electricity bill, which means considerable savings in their operating costs. This is particularly relevant in a context of rising electricity prices.
To apply for the exemption of the electricity tax, it is necessary to comply with the legal requirements and obtain a copy of the Registration Card in the Territorial Registry. In addition, having the support of a specialized consultancy, such as Grupo Trébol Energía, will facilitate the necessary calculations and the procedure for the reduction of the electricity tax.
