Spain is set to eliminate in its Budget Law the “regionalization” of the Tax on Hydrocarbons

In 2013 the “health cent” was introduced into this tax in what has come to be known, colloquially, as the “regionalization of IH”. This has enabled the autonomous communities to assume competences in relation to the autonomous community IH rate. This has led to differences in taxation since some autonomous communities have not regulated the autonomous community portion of this tax, whereas others have done so, but have set differing rates. 

These regional differences are in breach of Directive 2003/96/EC, which requires the fiscal pressure on energy products to be applied uniformly throughout the entire territory of each Member State.

The aim of the Bill for the Budget Law is to remedy this situation by including the autonomous community IH rate within the central government rate (which is increased as a result) with effect as from January 1, 2019. This change in the law, however, does nothing to remedy the fact that the autonomous community IH has been null and void since 2013, for which the corresponding amounts will need to be recovered through appeals.