Tax Pressures and Iberdrola’s Global Strategy
Iberdrola has long argued that the electric sector in Spain bears a heavy tax load. On one hand, the company points to the sheer number of taxes and charges that energy players must cover in Spain, totaling 38 state, regional, and local levies. On the other, it highlights the temporary extraordinary tax approved by the government for large energy groups. The firm contends that Spain carries the strongest fiscal burden of any market where it operates.
Iberdrola increased its fiscal contribution in Spain to 3.482 billion euros in the most recent year, a rise of 35% and more than a third of the group’s total tax payments worldwide (9.281 billion euros in 2023, up 24%). This data comes from the group’s transparency report, which notes that the company pays taxes in every country where it is present at a rate of over a million euros per hour.
The breakdown by country places Spain at the top with 3.482 billion euros, followed by Brazil with 2.530 billion, the United States with 1.261 billion, the United Kingdom with 1.119 billion, and Mexico with 310 million. In the rest of the countries where Iberdrola operates, the joint contribution amounts to 579 million euros.
Iberdrola attributes the rise in Spain mainly to electric taxes, such as the temporary 1.2% levy on sales and the water canal charge. The group notes that, excluding the substantial increase in corporate income tax, other tax figures have nearly doubled.
In Spain, taxes and charges that affect the bottom line, excluding corporate income tax, account for 123% of net operating expenses. In other words, tax payments in the Spanish market are higher than all personnel costs, maintenance, and financial and operating expenses in the country. This contrasts sharply with the rest of the world, where these charges represent only about 22% of the total operating costs.
The company’s president, Ignacio Sánchez Galán, has warned that the massive tax pressure and the government’s apparent intention to keep the temporary tax—albeit with incentives to drive energy transition—make the market less attractive for investment. Iberdrola has just updated its strategic plan, committing to investments of 36 billion euros through 2025. Of this total, Spain is expected to account for only about 15% (5.4 billion euros), with stronger emphasis on the United States (35%) and the United Kingdom (24%). [Iberdrola transparency report 2023][Corporate strategy disclosures]