VAT on electricity and gas at 10% in Navarra (Aug-Sep 2026): conditions, who benefits and what changes in the IVPEE

Key data

Navarre domestic consumers with contracts of up to 10 kW and beneficiaries of the severe vulnerable social bonus can see their electricity bill reduced if the CPI condition is met. This regional decree harmonizes Navarra's tax regulations with the state regulations, incorporating the measures of the Real Decreto-ley 18/2026, approved in response to the energy crisis resulting from the conflict in the Middle East.

The regulation enters into force on the same day of its publication, August 17, 2026, and its effects extend until 2028 regarding the IVPEE.

What does this regulation establish?

The regional decree introduces two differentiated blocks of measures: one on VAT for energy products and another on the Tax on the Value of Electricity Production (IVPEE).

Block 1: VAT reduced to 10% for domestic energy

The reduction of VAT from 21% to 10% applies to the following products, conditioned on the electrical CPI for June or July 2026 exceeding that of the previous year by more than 15%:

The period of application of the reduced rate is August and September 2026.

Block 2: IVPEE reduction and progressive elimination

Electricity-producing companies see their tax burden on the IVPEE reduced in a staggered manner. The taxable base for 2026 is reduced according to the quarter:

For the following years, the IVPEE rate is set at 3.5% in 2027 and 0% from 2028, which means the practical elimination of the tax.

Economic and operational impact

For domestic consumers, the shift from 21% to 10% VAT represents savings of 11 percentage points on the net invoice amount for two months. In a context of high prices, this relief can be significant for households with gas heating or pellets.

For electricity-producing companies, the impact is twofold:

• In 2026, the 100% reduction in the second quarter means they do not pay tax for that period. In the fourth quarter, the reduction is 40%, which considerably reduces the year-end tax burden.
• They must recalculate their installment payments according to the quarterly reductions established. An error in this calculation can generate undue income or overpayments that complicate the annual settlement.
• From 2028, the IVPEE disappears, which structurally improves the profitability of electricity production in Navarra.

For the Hacienda Foral of Navarra, the regulation implies a reduction in tax revenues in the short term, offset by the objective of relieving pressure on consumers and producers in the face of the energy crisis.

Who does it affect?

• Domestic consumers in Navarra with electricity supply contracts of up to 10 kW of contracted power.
• Beneficiaries of the electrical social bonus in the severe vulnerable category, regardless of contracted power.
• Consumers of natural gas, biomass pellets and firewood in Navarra, if the CPI condition is met.
• Electricity-producing companies subject to the IVPEE in Navarra, which must recalculate their 2026 installment payments and plan for the disappearance of the tax in 2028.
• Hacienda Foral of Navarra, which manages the application and control of these measures.

Practical example

Case 1 — Domestic consumer with gas heating: A Navarrese household with a natural gas contract receives a monthly invoice of €150 (net amount). With VAT at 21%, they pay €181.50. If the reduction to 10% is activated, they pay €165. The savings in August and September is €16.50 per month, that is, €33 over the two months of application. For households with higher consumption or pellet heating, the savings scale proportionally.

Case 2 — Electricity producer and IVPEE installment payments: A producing company that under normal conditions would pay €100,000 in the second quarter of 2026 for the IVPEE, with the 100% reduction pays nothing in that period. In the fourth quarter, if its ordinary fee were €80,000, the 40% reduction reduces it to €48,000. The company must adjust its installment payments to these figures to avoid undue income or deviations in the annual settlement.

What should companies do now?

1. Verify if the CPI condition is met: Check whether the electrical CPI for June or July 2026 exceeds that of the previous year by more than 15%. This data is published by the INE and determines whether the reduction to 10% is activated or not.
2. Update billing systems: Gas, electricity, pellets and firewood retailers and distributors in Navarra must apply the 10% rate to invoices in August and September if the condition is met, and revert to 21% in October.
3. Recalculate IVPEE installment payments: Electricity producers must apply the quarterly reductions (10%, 100%, 30% and 40%) to their 2026 taxable bases and adjust installment payments already made or pending.
4. Plan for the extinction of the IVPEE: Update financial models and budgets for 2027 (3.5% rate) and 2028 (0% rate), taking advantage of the reduction in tax burden to improve projected profitability.
5. Coordinate with Hacienda Foral: If you have doubts about the application of reductions or the CPI condition, contact the Hacienda Foral of Navarra to obtain official guidance before submitting settlements.

Official source

View complete regulation in official source

Notice: This article is for informational purposes only and does not constitute legal advice. For specific decisions, consult a qualified professional. Source: https://www.boe.es/diario_boe/txt.php?id=BOE-A-2026-17838