VAT on electricity supply: the key factor is the enforceability of the price

The determination of the VAT rate applicable to the electricity supply has raised doubts, especially regarding the possibility that consumption periods may span different tax rates. The Dirección General de Tributos (DGT) has clarified that the determining factor is not the actual consumption, but the moment when the agreed price becomes enforceable.

What the DGT has resolved

The ruling analyzes the application of the reduced rate of 10 percent to the electricity supply with a maturity date up to December 31, 2024. The DGT establishes that, in successive performance operations such as electricity, the accrual of the tax occurs when the agreed portion of the price becomes enforceable.

This criterion implies that:

• Enforceability is determined by the terms established in the supply contract.
• The moment of accrual is independent of the period in which the consumption occurred.
• The moment of accrual is independent of the moment when the actual payment is made.

What it means for you

This criterion has direct implications for consumers and companies managing utility invoices with consumption periods that cross calendar years. The VAT rate applied to an invoice will not be determined by the days on which the energy was consumed, but by the date on which, according to the contractual conditions, the company has the right to demand payment of said amount.

For an individual, this means that the tax rate on their invoice depends on the collection structure of their contract and not on the electricity consumption calendar.

What you should do

It is necessary to analyze the contractual conditions of supplies to understand when the invoices become enforceable. Since the tax rate may vary depending on the moment of enforceability, it is fundamental to verify how the billing and collection periods are structured in current contracts to ensure the correct application of the tax.