Change in VAT: what impact on electricity prices?

The Finance Act for 2025 has validated, as of 1^er August 2025, the abolition of the reduced VAT rate of 5.5% on electricity bills. This development is the result of tax compliance with European law.

France has hitherto applied a reduced VAT of 5.5% on the fixed part of the subscription and a normal VAT of 20% on consumption. However, this double taxation is not authorized by the European Union, which imposes uniform VAT rates for the same service. A VAT rate at 20% will now be applied to the subscription portion.

Maintain stability with compensating movements

On 19 June 2025, the French Energy Regulatory Commission (CRE) published a new deliberation on the regulated tariff for the sale of electricity (TRVE). It takes into account the change in VAT.

To compensate for this increase in the subscription-related share, the government has also planned a reduction in excise duty (consumption tax) and TURPE (tariff for the use of public electricity networks). This responds to a CRE recommendation to keep regulated tariffs at a stable level.

Excise duty will increase from €33.70/megawatt hour to €29.98/MWh in 1^er August 2025.

The TURPE, which saw an increase of 7.7% in February 2025, will also fall by around 2.5%.

Market offer tariffs are also affected by these developments.

What impact on the electricity bill?

With the decrease in excise duty, the price per kilowatt hour will pass from 0,2016 € to 0,1952 €.

The impact on the regulated electricity price will depend on the level of consumption of users:

• for low consumption, the increase in the share of subscriptions will be more visible than the decrease linked to consumption;
• for high consumption, on the other hand, the bill will fall. Indeed, the decrease in the price per kilowatt hour will have a greater impact on the amount of consumption and the increase in the subscription will be less felt.