EU Flags Spain, Poland Over Fuel Tax Cuts

The European Commission said on Wednesday that Spain and Poland may have breached EU rules with their recent fuel tax reductions, aimed at easing the economic impact of the Middle East war.

Madrid introduced a €5-billion plan last month to cut the value-added tax (VAT) on fuel, while Warsaw also reduced VAT on petrol and diesel amid rising energy costs stemming from the Iran conflict.

However, EU VAT rules do not allow reductions for fossil fuels, a commission spokeswoman said in Brussels. “We recommend rather to use reduction of excise duties,” she added, noting that letters had been sent to both governments, with responses still awaited.

European Union (News Central TV)

Spain and Poland are among several EU nations introducing tax cuts, price caps, and other measures to contain soaring energy prices.

Oil and gas prices fell sharply on Wednesday after the United States and Iran agreed to a two-week ceasefire, including arrangements to reopen the strategic Strait of Hormuz.

Under EU directives harmonising taxation across the 27-member bloc, VAT cannot fall below 15 per cent, with exceptions for certain goods and services—but fuels are not among them.

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