Royal Decreto-ley 7/2026, of March 20, approved in the Council of Ministers and published in the BOE on the same day it was signed, completes the Government's response package to the economic impact of the Middle East crisis on energy markets. The measure extends — and in some cases deepens — the tax reductions on energy introduced in 2021 that have gone through various extensions, and adds incentives under IRPF and Impuesto sobre Sociedades aimed at accelerating the energy transition for households and businesses. This guide analyses each tax measure, its exact scope, who benefits, and what specific actions should be taken before the measures expire.
Context: why RDL 7/2026 was approved
The escalation of tensions in the Middle East during the first quarter of 2026 caused significant spikes in natural gas prices on European wholesale markets, with TTF sustaining above €55/MWh from mid-February onwards. The electricity spot price in the Spanish daily market (OMIE) followed suit, with consecutive weeks above €90/MWh. The impact on vulnerable households, hauliers, farmers, and small businesses justified activating the emergency legislative mechanism.
The decree follows the path of earlier instruments — Real Decreto-ley 17/2021, 6/2022, 11/2022, and 4/2025 — calibrating the intensity of the measures to prevailing market conditions. Unlike previous extensions, RDL 7/2026 incorporates a structural element: some of the IRPF and Sociedades incentives are not temporary but permanent, as they take the form of deadline extensions to deductions already embedded in the Ley del IRPF and the Ley del IS.
VAT: reduced rates on energy until June 30, 2026
What changes
Article 1 of Real Decreto-ley 7/2026, of March 20, temporarily modifies the VAT rate applicable to certain energy supplies. The changes took effect on March 21, 2026, and remain in force until June 30, 2026, unless extended by further legislation.
| Product or supply | Previous rate | RDL 7/2026 rate | Valid until |
|---|---|---|---|
| Electricity (contracts ≤ 10 kW) | 21% | 10% | 30/06/2026 |
| Natural gas (domestic and industrial use) | 21% | 10% | 30/06/2026 |
| Solid biomass for heating and hot water | 10% | 10% (maintained) | 30/06/2026 |
| Certified pellets | 10% | 10% (maintained) | 30/06/2026 |
| Wood briquettes | 10% | 10% (maintained) | 30/06/2026 |
The electricity reduction from 21% to 10% applies exclusively to supply contracts with contracted capacity of 10 kW or less, which covers the vast majority of households and most self-employed individuals and small businesses. Contracts with higher contracted capacity remain at 21%.
Natural gas moves from 21% to 10% regardless of use (domestic, commercial, or industrial), which is a new feature compared to earlier extensions that only covered domestic use.
Who benefits
- Households: All electricity contract holders up to 10 kW see their bills reduced automatically, with no action required.
- Self-employed and SMEs: Businesses with contracted capacity up to 10 kW benefit equally. Those with higher contracted capacity are excluded from the electricity reduction but do benefit from the natural gas reduction.
- Industry with gas consumption: The unrestricted reduction of gas to 10% benefits manufacturing companies, hospitality businesses, industrial laundries, and any activity with significant gas consumption for production processes.
Accounting and input VAT implications
For businesses entitled to deduct VAT, the rate reduction has a neutral effect on input VAT (they deduct less VAT but also pay less). The real saving arises for final consumers without deduction rights (individuals, VAT-exempt entities) and for taxable persons with a reduced pro-rata (subsidised schools, foundations with exempt activities, etc.).
Special Electricity Tax: rate down to 0.5%
What changes
The Impuesto Especial sobre la Electricidad (IEE) — governed by Ley 38/1992 on Special Taxes — sees its effective minimum rate reduced to 0.5% until June 30, 2026, in line with Article 2 of Real Decreto-ley 7/2026, of March 20.
| Standard rate | RDL 7/2026 rate | Estimated saving (1,000 kWh) | |
|---|---|---|---|
| IEE on the energy term | 5.11% | 0.5% | ~€4.60/MWh |
The IEE is applied to the taxable base of the electricity supply before VAT. When the IEE reduction is combined with the VAT reduction, the cumulative effect on the final consumer’s bill is greater than either measure would produce in isolation.
Combined IVA + IEE impact
A typical residential contract (monthly consumption 250 kWh, energy price €0.12/kWh) illustrates the accumulated saving:
| Item | Before | With RDL 7/2026 | Monthly saving |
|---|---|---|---|
| Energy term (250 kWh × €0.12) | €30.00 | €30.00 | — |
| IEE (5.11% / 0.5%) | €1.53 | €0.15 | €1.38 |
| Subtotal + IEE | €31.53 | €30.15 | €1.38 |
| VAT (21% / 10%) | €6.62 | €3.02 | €3.61 |
| Total bill | €38.15 | €33.17 | €4.98 |
Annually, this typical household saves approximately €60 on the electricity bill from the combined IVA + IEE effect alone. Homes with higher consumption (300–400 kWh/month) can expect annual savings of between €70 and €100.
Hydrocarbon Tax: rate reduction
What changes
Article 3 of Real Decreto-ley 7/2026, of March 20, establishes a reduction in Impuesto sobre Hidrocarburos rates for professional diesel and LPG (liquefied petroleum gas). Unlike the electricity and gas measures, this reduction has no express expiration date: it remains in force as long as it is compatible with the minimums set by Council Directive 2003/96/EC of October 27, 2003, and until harmonisation measures are adopted at European level.
| Product | Previous rate (€/1,000 L) | RDL 7/2026 rate (€/1,000 L) | Change |
|---|---|---|---|
| Professional diesel (heading 1.4) | 78.71 | 61.25 | −17.46 |
| LPG for heating and industrial use | 57.47 | 38.00 | −19.47 |
| Certified sustainable biodiesel | 78.71 | 61.25 | −17.46 |
The professional diesel reduction is especially significant for the road transport sector, which already benefited from the partial Hydrocarbon Tax rebate provided in Ley 38/1992. Under the new rate, the combined saving between the direct reduction and the partial rebate can reach €22–28 per 100 litres for self-employed hauliers and transport companies.
Quantified impact for the transport sector
A self-employed haulier operating a long-haul truck consumes approximately 3,000 litres of diesel per month:
| Item | Before | With RDL 7/2026 | Monthly saving |
|---|---|---|---|
| Hydrocarbon Tax (3,000 L) | €236.13 | €183.75 | €52.38 |
| Estimated annual saving | — | — | ~€628/vehicle |
For a transport company with a fleet of 10 vehicles, the annual saving on the Hydrocarbon Tax approaches €6,000–6,500, not counting the additional effect on the pump price (pass-through to the final price depends on the distributor’s margin).
Agriculture and other benefiting sectors
The agricultural sector — which uses subsidised diesel (heading 1.4) for farm machinery — also benefits from the reduction. The ministerial order governing the subsidised diesel rate updates its reference to the new RDL 7/2026 rate. Farmers need take no additional steps: the reduced rate is applied directly at the point of supply through the subsidised diesel card.
IRPF: extended deductions for energy efficiency and vehicles
Deductions for energy efficiency improvements in housing
Article 4 of Real Decreto-ley 7/2026, of March 20, extends by one additional year — until December 31, 2027 — the three deductions for energy efficiency improvement works on housing provided in Additional Provision Fifty of Ley 35/2006, the IRPF Act:
| Deduction | Maximum annual base | Percentage | Minimum improvement required |
|---|---|---|---|
| Works reducing heating/cooling demand | €5,000 | 20% | Reduction ≥ 7% in indicators |
| Works reducing non-renewable primary energy consumption | €7,500 | 40% | Reduction ≥ 30% or class A/B |
| Full building energy rehabilitation | €5,000 | 60% | Reduction ≥ 30% in primary consumption |
The 60% deduction for full building energy rehabilitation is the most powerful in the Spanish tax system in this area. It allows owners of flats in homeowners’ communities that carry out comprehensive energy rehabilitations of the building (facade, roof, shared installations) to deduct up to €3,000 per year over a three-year window, with the possibility of accumulation.
The extension to 2027 widens the available window to plan and carry out works that, in many cases, require more than a year of licence processing and execution.
Deductions for solar self-consumption installations
The deduction for installing photovoltaic self-consumption systems in a primary residence is likewise extended until December 31, 2027. It allows a 15% deduction on the investment in the installation, with a maximum annual base of €4,000 and a cumulative maximum of €12,000 over the four years of application.
This deduction is compatible with regional grants received for the installation, though the deduction base must be reduced by the amount of any grant received.
Incentives for electric and fuel cell vehicles
RDL 7/2026, of March 20, extends until December 31, 2027, the IRPF tax incentives for the purchase of electric and plug-in hybrid vehicles introduced by Real Decreto-ley 5/2023:
- Deduction for the purchase of a new electric vehicle: 15% of the purchase price, maximum base €20,000, i.e. up to €3,000 deduction per taxpayer.
- Deduction for installing a charging point at the primary residence: 15% of the installation cost, maximum base €4,000, up to €600 deduction.
The deduction is subject to a taxpayer taxable base ceiling (it cannot exceed €45,000 of liquidable base), which limits the benefit to middle-income profiles rather than higher earners.
Corporate Tax: free depreciation on energy assets
What RDL 7/2026 maintains and extends
Article 5 of Real Decreto-ley 7/2026, of March 20, extends until December 31, 2027, the application of free depreciation — provided in Additional Provision Seventeen of Ley 27/2014, the Impuesto sobre Sociedades Act — for the following investments:
Renewable self-consumption installations: Investments in photovoltaic, wind, and other renewable energy installations for business self-consumption may be freely depreciated in the year of commissioning, regardless of their accounting useful life. The only requirement is that the installation enters service before December 31, 2027.
Electric vehicle charging infrastructure: Investments in charging points (type 2, CCS, CHAdeMO, and similar) installed at business premises — industrial estates, logistics warehouses, fleet garages, etc. — also benefit from free depreciation.
Quantifying the tax benefit for a typical company
A company with an effective IS rate of 25% that invests €100,000 in an industrial photovoltaic self-consumption installation obtains the following comparative tax benefit:
| Scenario | Year 1 | Years 2–25 | Total IS | Financial saving |
|---|---|---|---|---|
| Straight-line depreciation (25 years) | −€1,000 tax charge | −€1,000 tax charge | €25,000 (deferred) | — |
| Free depreciation (RDL 7/2026) | −€25,000 tax charge yr 1 | No additional deduction | €25,000 (same) | ~€18,000 NPV (5% rate) |
Free depreciation does not reduce the total tax paid over the asset’s life, but it generates a deferral of tax liability that, discounted to present value, represents a significant financial benefit. In the above example, at a 5% discount rate, the net present value of the deferral exceeds €18,000.
Compatibility with other deductions
Free depreciation is compatible with the green asset investment deduction provided in the 2025 IS reform (10–15% on the tax charge), allowing both benefits to be combined in the same year. The combination of free depreciation plus a charge-level deduction can result in effectively zero taxation in the year of investment for companies with sufficient tax capacity.
Quantified impact: simulations for different profiles
Average household (3 people, owner-occupied home)
- Saving on electricity bill (VAT + IEE): ~€60/year
- Saving on gas bill: ~€85/year (annual consumption 1,200 m³, price €0.07/m³)
- IRPF deduction for energy efficiency works (if undertaken): up to €3,000/year
- Estimated total saving 2026: €145 without works; up to €3,145 with rehabilitation works
Self-employed with commercial premises (electricity ≤ 10 kW, industrial gas)
- Saving on electricity bill: ~€120/year (consumption 500 kWh/month)
- Saving on natural gas: ~€150/year (consumption 2,000 m³/year)
- IRPF deduction for solar installation on premises: up to €600/year
- Estimated total saving 2026: €870 combining bills and solar deduction
Transport company (fleet of 5 trucks, professional diesel)
- Saving on Hydrocarbon Tax: ~€3,100/year (5 vehicles × 3,000 L/month)
- Free depreciation if investing in charging points: IS deferral up to €25,000 per €100,000 invested
- Estimated tax saving/benefit 2026: €3,100 in hydrocarbons + deferral
Industrial SME (warehouse with 50 kW photovoltaic, IS 25%)
- Saving on energy bills (natural gas for production): ~€600/year
- Free depreciation on photovoltaic installation (€200,000): €50,000 IS deferral
- Green asset deduction (10%): €20,000 on the tax charge
- Combined tax benefit 2026: €20,600 in savings and deductions + financial deferral
Fiscal action calendar
The effectiveness of these measures depends on knowing precisely when they expire and which actions or investments must be completed before those dates.
| Measure | Effective date | Expiry | Recommended action |
|---|---|---|---|
| Electricity VAT at 10% (≤ 10 kW) | 21/03/2026 | 30/06/2026 | Automatic; check July bill |
| Natural gas VAT at 10% | 21/03/2026 | 30/06/2026 | Automatic; check July bill |
| IEE at 0.5% | 21/03/2026 | 30/06/2026 | Automatic |
| Hydrocarbon Tax reduction | 21/03/2026 | No express date | Verify application on supplies |
| IRPF deductions – energy efficiency | Extended from 2024 | 31/12/2027 | Plan works before end of 2027 |
| IRPF deductions – solar self-consumption | Extended from 2024 | 31/12/2027 | Contract installation before end of 2027 |
| IRPF deductions – electric vehicle | Extended from 2023 | 31/12/2027 | Complete purchase before end of 2027 |
| IS free depreciation (photovoltaic) | Extended from 2022 | 31/12/2027 | Commission before end of 2027 |
| IS free depreciation (EV charging) | Extended from 2023 | 31/12/2027 | Commission before end of 2027 |
Short-term expiry alert: The VAT and IEE reductions expire on June 30, 2026. The Government has the power to extend them again — as it has done at each expiry since 2021 — but there is no guarantee it will do so. Businesses that need to plan long-term energy supply contracts must include scenarios based on standard rates (21% VAT, 5.11% IEE) from the third quarter of 2026 onwards.
Interaction with other regulations in force
LPG price cap
Real Decreto-ley 7/2026, of March 20, also establishes, in its First Additional Provision, a maximum retail price for bottled LPG (11 kg and 15 kg cylinders) until June 30, 2026. This measure is not strictly fiscal in nature, but it interacts with the VAT measures by capping the reference taxable base for calculating tax on domestic LPG supply contracts.
Iberian gas and electricity mechanism
The measures in RDL 7/2026 apply to the final invoice price regardless of whether the consumer is on the regulated tariff (PVPC) or on the free market. The Iberian electricity market adjustment mechanism — which has been active in various forms since 2022 — continues to operate in parallel, unaffected by the new regulation.
Compatibility with regional government grants
The IRPF and IS deductions in RDL 7/2026 are compatible with grants awarded by regional governments (comunidades autónomas), provincial councils, and municipalities for the same categories of investment (photovoltaic installations, energy rehabilitation, etc.), with the sole caveat that the national deduction base must be reduced by the amount of any grant received, to prevent double public subsidy of the same cost. Coordinating the timing of grant applications with the tax deduction is one of the areas where professional advice adds the greatest value.
What does not change: points to watch
To avoid confusion, it is worth clarifying what Real Decreto-ley 7/2026, of March 20, does not modify:
- General IS rate: Remains at 25% (23% for SMEs with turnover below €1 million). There are no changes to corporate tax rates beyond the free depreciation extension.
- IRPF scales: The IRPF rate tables (general base and savings base) are not modified. The only IRPF change consists of the specific deduction extensions already described.
- Electricity VAT for high-power contracts: Electricity supply contracts with contracted capacity above 10 kW remain at 21% VAT.
- Impuesto sobre el Valor de la Producción de Energía Eléctrica (IVPEE): The 7% rate remains unchanged. It should be noted that this tax falls on electricity generating companies, although part of its effect is passed through to the final price.
- Impuesto Especial sobre el Gas Natural (ISGN): Remains suspended since 2022 under a European Commission decision, with no changes in RDL 7/2026.
Planning recommendations for businesses
From BMC we have identified the following priority actions for businesses and self-employed individuals following the publication of Real Decreto-ley 7/2026, of March 20:
For businesses with intensive gas or electricity consumption:
- Review long-term energy supply contracts and verify that the correct VAT rate has been applied from March 21 onwards.
- Evaluate the opportunity to invest in photovoltaic self-consumption or energy efficiency improvements before December 31, 2027, to take advantage of free depreciation and IS charge-level deductions.
- Analyse whether the green asset deduction (10–15%) can be applied in combination with free depreciation.
For the transport and logistics sector:
- Verify that professional diesel supplies are applying the new Hydrocarbon Tax rate from the effective date.
- Plan fleet renewal towards electric or hydrogen vehicles with a 2027 horizon, incorporating the relevant IRPF or IS deduction as applicable.
For self-employed individuals and natural persons:
- Plan energy rehabilitation works or photovoltaic installations with sufficient lead time to schedule installers and process licences before end of 2027.
- Verify compatibility with regional government grants (PREE, MOVES III, or other programmes in force) to maximise the total return on investment.
For all taxpayers:
- Do not assume that the VAT and IEE reductions will be renewed automatically on July 1, 2026. Include the scenario of a return to standard rates in energy cost planning for the second half of the year.
If you have questions about how these measures affect your business or would like to analyse the opportunity to invest in energy efficiency with maximum tax benefit, contact our tax team. At BMC we support our clients from regulatory analysis through to practical implementation.
