Wood chips, sawdust, and bark will be subject to 10% VAT

The Dirección General de Tributos (DGT) has clarified the tax treatment applicable to various wood-derived products used for energy purposes. The ruling addresses the application of the reduced tax rate within the context of measures adopted in response to the energy crisis.

What the DGT has ruled

The advisory body has determined that the supply, import, and intra-Community acquisition of biomass and wood briquettes and pellets, as well as firewood, are subject to a 10% VAT rate. This measure also extends to other wood-derived products, such as:

• Wood chips.
• Sawdust.
• Bark.

In order for these derivatives to benefit from this tax rate, it is a necessary condition that they are intended directly for use as fuel or for the manufacture of briquettes or pellets. This tax treatment will be applicable from March 22 until June 30, 2026, subject to changes in the Consumer Price Index (IPC).

What it means for you

For companies marketing these products, the ruling provides legal certainty regarding the correct application of the tax rate. If your activity consists of selling wood chips, sawdust, or bark with the specific purpose of them becoming fuel or biomass products (such as pellets), you must apply the 10% rate instead of the general rate.

Regarding the final consumer, this measure represents a reduction in the acquisition cost of products intended for heating, as a lower VAT rate than usual is applied to these types of goods.

What should be done

It is necessary to verify that the purpose of the marketed product strictly complies with the requirement of direct intended use for fuel or pellet manufacturing. The correct classification of the goods is fundamental to avoid errors in the tax settlement. It is recommended to analyze the value chain and product documentation to ensure they fall within the scope of the binding ruling.