In the seventh package of measures to deal with the impact of the war in Ukraine that the Council of Ministers approved this morning, the VAT reduction on food and the reduction of public transport passes are extended, in addition to subsidizing the purchase of electric vehicles. A package that mobilizes an additional 3,800 million euros, although the global impact, that is, taking into account the total aid, tax cuts and bonuses, is 8,900 million euros in the second part of the year.
On the other hand, the possibility of extending the validity of rental contracts by six months is not extended under the same terms and conditions established in the current contract. A practically automatic extension possibility, designed to stop the increase in rents, which disappears. It allowed the tenant to renew their contracts without suffering increases in the rental price. This changes and from July 1, landlords will be able to change the conditions of the rental agreements.
The Government’s argument is that the housing law has already entered into force, which establishes protection mechanisms for vulnerable tenants, who can request extensions of the contract price for up to one year. In addition, they add that this extension was an extraordinary and temporary measure that made sense in the context of the pandemic and at a time when inflation was at its highest, and that is no longer the case.
On the other hand, the rise in food prices has forced the Government to extend anti-inflation measures, such as the VAT reduction on basic foods. Although inflation is moderating, at 3.2% in May, food prices rose 12% last month. It is the third consecutive month of decline, but they are still very high rates, with which the Government has decided to extend this VAT reduction in force since January.
It includes the elimination of VAT for foods such as bread, bread-making flour, milk, cheese, eggs, fruit, vegetables, legumes, potatoes and cereals, and a VAT reduction from 10 to 5% for oils and pasta.
On the other hand, the discount for public transport will also continue, with 30% financing of season tickets and multi-trip tickets.
Another element is the gasoline and diesel subsidy. It was eliminated in its general format in January, and was only available to transporters and farmers, although it was reduced to 10 cents per liter from April. It will continue with this discount in the next three months so that, from October and until the end of the year, it will remain at 5 cents.
Another of the decisions is a measure that was already provided for in the addendum to the recovery plan presented to Brussels. This is a 15% deduction in personal income tax for the purchase of electric vehicles. A reduction that will be in force for two and a half years, until December 31, 2025. It can be obtained both for the purchase of an electric vehicle and for the installation of a charging system, with a maximum deduction of 20,000 euros.
