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The Council of Ministers today approved the partial reduction of VAT on electricity. The measure comes into force in December 2021 and covers 5.2 million families, 86% of low voltage customers.
The partial reduction of VAT on the electricity bill has a budgetary impact of 150 million euros per year. It enters into force on December 1 and has an annual impact of 18 euros per year per consumer.
For large families, with five or more members, it will have an impact of 27 euros per year, but this part will not come into force until March 2021.
“The decree-law establishes for all contracts included in Low Voltage (BTN) up to a contracted power of 6.9 kVA (limit of the social energy tariff) the application of the 13% tariff to consumptions up to 100 kWh (for a period of 30 days), applying the normal rate of 23% to the rest. This step of consumption, in order to apply the VAT rate of 13%, is increased by 50% (that is, 150 kWh) for large families (households with five or more elements) “, according to the statement of the Council of Ministers
If this measure is added to the one approved in 2019, to reduce VAT in meters, the savings are greater: 27.6 euros per year for a family with a contracted power of 3.45 kVA, and a monthly consumption of 134 kWh; and 27.8 euros per year for a large family with 6.90 kVA and a monthly consumption of 262 kWh.
This measure was approved under the State Budget for 2020, was sent to the VAT Committee of the European Commission and has already been approved in Brussels.
The Minister of Finance defended that the measure will generate “significant savings for consumers,” considering that it is a “socially fair and environmentally responsible measure,” João Leão said today at the briefing of the Council of Ministers.
The Government indicated that this measure complements the decision in the State Budgets for 2019 to “reduce the VAT rate to 6% in the fixed component of the network access rates for electrical supplies corresponding to a contracted power that does not exceed 3.45 kVA. ”.
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