Use of subsidized diesel in fixed generator engines

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the application of the reduced tax rate on diesel consumption for certain industrial equipment. The inquiry focused on determining whether the fixed engines of power generator sets can benefit from the rate established in heading 1.4 of tariff 1 of the Excise Duties Law.

What the DGT has ruled

The body has ruled that the use of diesel with the reduced tax rate is authorized for all engines, with the sole exception of those intended for the propulsion of vehicles, specific agricultural machinery, or vessels. As they are not included in these exclusions, the fixed engines of power generator sets may legitimately use subsidized diesel.

For this application to be valid, the regulations require the final consumer to prove their status to the supplier. This must be done through one of the following methods:

• A declaration signed in accordance with the model approved by the Administration.
• Prior registration in the register of final consumers of the State Tax Administration Agency (AEAT).

What it means for you

For companies operating with fixed-engine generator sets, this ruling confirms the possibility of reducing operating costs associated with fuel supply. The key lies in the nature of the engine: as it is a fixed engine and not a vehicle or agricultural propulsion engine, the tax benefit is applicable.

What you should do

It is necessary to verify that the activity and the equipment comply with the definition of a fixed engine to avoid contingencies with the Administration. Likewise, you must ensure that the documentation presented to the fuel supplier is correct, whether through the model declaration or registration in the AEAT register, to guarantee that the applied tax rate is appropriate.