Alex Trelinski
THE New Year will herald a raft of tax increases and price hikes that will affect every household in Spain.
With inflation predicted to be around 2% next year, the Bank of Spain is projecting a year of economic moderation, but people will have to deal with the costs of essential goods and services rising.
One of the most significant changes will be the return of VAT on electricity to 21%, following the reductions implemented in recent years.
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A family with a monthly consumption of 250 kWh could pay about €72 more per year, according to the Selectra comparison site.
In addition, changes in the PVPC regulated tariff, which will depend more on future energy market prices, will add uncertainty to final costs.
After tax cuts applied in 2023 and 2024 to fight inflation, basic foodstuffs will return to higher rates.
VAT on bread, milk, eggs, fruit, vegetables and legumes will increase from 2% to 4% in January 2025.
In addition, products such as pasta and seed oils will recover their 10% rate.
The exception will be olive oil, which will remain at a reduced rate of 4%, as it has been classified as a basic necessity.
The mandatory waste tax comes into force in April 2025, with an estimated cost of 165 to 200 euros per year per household.
This tax, which until now was optional, will affect every municipality in Spain.
Also in April, a new tax will be applied to tobacco and liquids for vapes, levelling up taxation to that of traditional tobacco.
Public transport will continue to benefit from aid during the first half of the year.
Renfe’s free train season tickets for Cercanias and Media Distancia will remain until June, while the Government is working on a new bonus scheme that will include a single Cercanias ticket for €20 per month and free transport for children under 15 years of age.
However, tolls on motorways managed by SEITT will rise by 2% in 2025 for vehicles without an electronic reading device, and up to 11% for those that do.
The country’s main telecommunications operators have announced widespread increases in their monthly rates, with increases of up to €6 in some packages.
Income tax reductions for energy improvements will no longer be available in 2025, eliminating an incentive to improve the energy efficiency of homes. In rental homes, a new reference index comes into force to update contracts, affecting the rents of tenants.
As for home mortgages, the conditions that allowed variable mortgages to be changed to fixed mortgages at no additional cost are eliminated, which will make future contract changes more expensive
Gas prices will continue to rise due to the conflict in Ukraine and international energy policies.
Added to this is an increase in taxes on diesel, which will level up rates to that petrol at forecourts. causing an increase of 10 cents per litre.
