Economic measures in the face of war

Below, Grant Thornton summarises the main economic measures that may affect your company, whether fiscal, legal or labour, which have been announced in recent weeks.

Tax on large electricity, gas and oil companies.

One of the main measures adopted, which will be of a temporary and extraordinary nature, according to the government, and which will affect electricity, gas and oil companies. The government estimates that this tax will raise around 2,000 million euros per year, or 4,000 million euros during the period it is expected to be in force.

Among the companies that would be subject to the new tax would be the main energy groups, such as Iberdrola, Endesa, Naturgy, EDP, Repsol, Cepsa and BP España, pending further clarification of the scope of application and whether transport and distribution activities are also included, as well as groups such as Redeia (the former Red Eléctrica Group) and Enagás.

One of the parameters that the government wants to use to apply the new tax is annual sales. According to statements made by various members of the government, it is assumed that the threshold for energy companies to pay the new tax would be those whose sales exceed one billion euros.

Temporary and exceptional tax on large financial institutions.

According to the government's announcement, this tax will be of an exceptional, transitory nature and will be in force in 2023 and 2024. Likewise, this tax will be applied to the extraordinary profits obtained by these companies in 2022 and 2023. With this, it is intended and expected to raise 2 billion euros per year.

The main problem with this measure lies in the difficulty of considering what extraordinary profits are and how they will be accounted for in the banks' profit and loss accounts. Whether a comparison will be made with 2019, the last year before the pandemic, or how it will be possible to take into account whether there has been a change of perimeter in the accounts.

Reduction in VAT on electricity

The main fiscal novelty of the Royal Decree-Law approved on 25 June is the reduction of VAT from 10% to 5% until 31 December 2022. This VAT reduction affects consumers with a contracted power equal to or less than 10 kW, provided that the average price on the wholesale electricity market in the previous month had exceeded 45 euros per MWh.

This reduction allows the bill to be lowered for more than 27 million households, the self-employed and businesses. The 5% VAT rate also applies to 72.5% of electricity supply contracts for companies and businesses. The suspension of the Tax on the Value of Electricity Production (IVPEE), a tax on income from the sale of electricity on the wholesale market, which was previously set at 7%, will also be maintained until the end of the year.

200 euros for workers, the self-employed and the unemployed

The Royal Decree-Law of 25 June included the approval of a 200 euro subsidy for the lowest incomes. Thus, the regulation allows wage earners, the self-employed and the unemployed registered at employment offices to receive 200 euros in a single payment. Those who are beneficiaries must live in households in which the sum of the incomes of the people living with them is less than 14,000 euros and whose assets, excluding the main residence, do not exceed 43,196.4 euros.

Excluded from this allowance are those who already receive the Minimum Vital Income or receive pensions from the General Scheme and the Special Social Security Schemes or from the State Pensioners' Scheme.

Fuel subsidy

Another of the measures extended in the Royal Decree-Law is the fuel price subsidy of 20 cents per litre, which began to operate on 1 April and was due to end on 30 June, but was extended until 31 December 2022.

In the same way, direct aid for the gas intensive sector is extended to other activities in this area. The impact of this measure between July and December 2022 is estimated at 4,038 million euros. In addition, state aid of up to 400,000 euros per beneficiary is established for gas-intensive industries, such as fertiliser producers.

Support measures for the agriculture, livestock, fisheries and aquaculture sector.

Finally, the regulation includes a new package of support measures for the agricultural, livestock, fisheries and aquaculture sector, adopting and extending certain measures to try to alleviate the economic and social consequences of the war in Ukraine. In the case of the agricultural and fisheries sector, these measures include an increase of 60 million euros in the line of aid for taking out agricultural insurance, and 12 million euros in subsidies for obtaining financing for the agricultural sector, agri-food SMEs and operators in the fisheries and aquaculture sector.

In addition, retroactively, from 24 to 30 June, the Spanish fleet that fishes in international waters and refuels outside Spain will also benefit from the compensation for the increase in the price of fuel provided for in the European funds.

The government has also announced that it will set up the State Public Health Centre as soon as possible to improve the management of health emergencies, will present a new Common Agricultural Policy and will promote collective self-consumption to achieve Spain's energy independence and access to electric vehicles. On the other hand, a new basic state regulatory framework will be established for fire prevention and extinguishing personnel, in collaboration with all the administrations involved.

If you have any doubts about how these new measures may affect you and how you should prepare your business for them, please contact our Partners and professional experts.