The government recently revised the tax framework for energy revenues, removing a 1.2% levy on income from regulated power and gas activities and from other regulated prices. This change significantly dents the expected revenue from the new energy tax. The Bank of Spain, led by Governor Pablo Hernández de Cos, projects that the parliamentary amendment shaping the tax bill will reduce the tax’s annual collection to about 1.0 billion euros over the next two years. In effect, the previously anticipated 2.0 billion euros per year (4.0 billion in total over two years) will not materialize under the new rules.
The bank’s estimate of 1.0 billion euros less in yearly revenue, resulting from the parliamentary tweak, surpasses the Finance Ministry’s forecast by about fivefold. Treasury officials had previously suggested that exempting the 1.2% tax on income from regulated energy activities would cut about 10% of the tax-raising capacity. That would translate to roughly 200 million euros less each year and about 400 million euros less across two years of tax validity, culminating in a total impact of around 3.6 billion euros through 2024.
During a Senate Budget Committee session, Governor Hernández de Cos explained that the funds’ annual revenue-raising capacity would settle at approximately 2.5 billion euros. This projection reflects the changes from the parliamentary process and the merger that created the new taxes on banking and energy companies. The 2.5 billion figure falls short of the Government’s initial July estimate of 3.5 billion euros for yearly collection, a gap that underscores how structural changes to the energy sector and the taxed activities influence expected outcomes. The bank’s analysis notes that the revised framework reduces the projected intake for the energy-related levy, suggesting a potential drop from an expected 2,000 million euros per year to about 1,000 million euros annually. This explanation appeared in a footnote accompanying the governor’s Senate testimony on November 29.
The legislation currently under parliamentary review designates that the revenue generated by the new energy tax will support measures aimed at helping families and businesses facing higher living costs. It also funds investments in energy sector infrastructure, intended to bolster resilience and long-term efficiency amid price pressures.