Pump Prices Plunge In Spain

Pump Prices Plunge In Spain. The Spanish government has cut IVA on fuel from 21% to 10% saving motorists around €20 on a full tank.

The Spanish governent has announced a €5 billion aid package to combat rising energy costs caused by the outbreak of war in Iran. Tax on fuel is being slashed from 21% to 10%, with the cut coming into force today (Saturday 21st March). This will save motorists around €20 on a full tank of fuel. There is also a 20c per litre direct subsidy for transport businesses and the agricultral sector.

The reduction of IVA tax also applies to electricity and gas. Butane gas will have the price capped at €16.35 for the 12.5kg bottles.

The decree also includes measures to protect households struggling with the rising cost of energy. There is a block on water and electricity companies cutting supplies to homes who are unable to make the full payments.

The price of butane gas bottles has been capped in Spain.

Energy Money Saving Tips

This decree is being called the “Social Shield”. Here are our top tips for making the most of the tax cuts and incentives:

⛽ 1. At the Petrol Pump: The 30-Cent Drop

The IVA on petrol and diesel has officially dropped from 21% to 10%.

The Saving: This reduces the price by roughly 30 cents per litre.
Top Tip: Filling an average 55-litre tank now costs about €16 to €20 less than it did yesterday. If you were holding off on a long drive, today is the day to fuel up!

💡 2. On Your Electric Bill: The 60% Tax Slash

The government hasn’t just cut IVA on electricity to 10%; they’ve also suspended the 7% generation tax and slashed the Special Electricity Tax to the bare minimum.

The Saving: Total taxes on your bill are falling by about 60%.
Top Tip: This is the perfect time to check if you qualify for the Bono Social. The discount for “vulnerable households” has been boosted to 42.5%, and for “severely vulnerable,” it’s now 57.5%.

🍊 3. In the Kitchen: The Butane Bottle Cap

The standard 12.5kg orange butane bottle is now officially capped at €16.35.

The Saving: This prevents the price from hitting the feared €20 mark during the current energy spike.
Top Tip: Stick to the traditional orange bottles. The “lightweight” or “silver” bottles sold at some petrol stations are not price-regulated and will likely still cost you €20 or more.

☀️ 4. Long-Term: The “Green” Tax Break

If you’ve been thinking about solar panels or an electric car, the government just made it much cheaper.

The Saving: There is a new 15% IRPF (Income Tax) deduction for the purchase of an electric vehicle and massive new deductions for installing solar panels or heat pumps at home.

Published: 21.03.2026

Written by Dave James.