You are currently viewing “It’s a bit unfair”: why is the VAT on propane gas still at 21% when it has been reduced to 6% for natural gas and electricity?

“It’s a bit unfair”: why is the VAT on propane gas still at 21% when it has been reduced to 6% for natural gas and electricity?

  • Post category:Economy News
  • Reading time:6 mins read

Many of you have contacted us via the orange Alert us button to denounce “discrimination” related to the VAT rate on propane gas. This remained at 21%, while it was reduced to 6% for natural gas and electricity. How can this difference be justified? Is there really discrimination? What makes propane gas different from the rest?

“We are told that gas has only been going down since June, why is bulk propane gas only going up? Why does natural gas have 6% VAT and not propane, which has 21%?”wonders Serge. “Propane is more expensive than city gas and our aid is €250, while in town it is a total cumulative aid over 5 months of €750”says Hadrian. “VAT has dropped from 21% to 6% on electricity and natural gas, but why hasn’t it dropped on bulk propane deliveries?”asks Vanessa for her part. “The 6% VAT reduction only applies to natural gas and not to propane gas”insists Jean-Christophe again.

Many of you pushed the orange button Alert us to report “discrimination” between people heating with natural gas and those using propane gas. The VAT on city gas has indeed been reduced to 6%, while that of propane gas has remained at 21%.

People who have town gas have 6% VAT and why should we pay 21% VAT?

A situation that Thomas, a resident of Nassogne, in the province of Luxembourg, does not understand. When he moved into his country home, he had no choice but to turn to propane. Town gas not passing through his street and the oil tank no longer being the preferred option, he opted for an underground gas tank. “The heat pump is quite expensive. And when I had it built, it was not the option I chose”he said.


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Only then, in two years, he saw the price of his propane gas constantly increase. Whereas he paid 0.3944 euro/litre excluding VAT at the time, today, for 1000 liters he has to pay 885 euros, or around 0.70 euro/litre excluding VAT. “It’s almost double”, he exclaims. And it was during his last gas command that Thomas noticed an anomaly: “I ordered 1000 liters and I realized that I had 21% VAT. In fact, it was my mother who pointed it out to me… It’s still not normal. People who have city gas have 6% VAT and why should we pay 21% VAT? It must be the same for everyone”he says.

For him, this difference between the two products is not normal. “We are promised a lot of things and only a certain part of the population really benefits from it. It’s a bit unfair”adds Thomas.

Why this difference?

To explain this difference in VAT between natural gas and propane gas, we turned to the FPS Finances which informs us that VAT is a European matter. Member States must therefore rely on a European directive to possibly apply a reduced rate of VAT. “At present, the reduced rate of 6% can only apply to natural gas distributed in natural gas networks”says the spokesperson, Florence Angelici.

The reason ? “Security of transport is considered more important for natural gas”, she continues. In other words, natural gas would be a way “more sure” only propane gas to be dispensed.

F-Angelici
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As these explanations did not seem sufficient to us, we contacted Olivier Neirynck, spokesperson for the Belgian Federation of Fuel and Fuel Dealers (BRAFCO). He recalls the difference between natural gas and propane gas: “Propane gas, even though it is gas, is liquefied petroleum gas. It is one of the fractions extracted during the refining of crude oil. Unlike natural gas which is extracted from the ground and sold as is. These are methane molecules.”

They are therefore two different energy markets. They are also rated differently and managed differently in terms of legislation. “All petroleum products (propane, heating oil) have a mandatory 21% VAT with reduced excise duties, according to European agreements”, underlines Olivier Neirynck. The European directive for propane gas – derived from oil therefore – is very difficult to move, unlike natural gas and electricity, for which there are European agreements allowing each Member State to “play on the VAT rate to be applied” and thus to reduce it, as has been the case with us for a few months with the 6% VAT. “This is the reason why there was no reduction in VAT on propane, but the granting of an energy check of 300 euros”points out the BRAFCO spokesperson.

O-Neirynck
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Note also another important difference between these two types of gas: the price. “It hasn’t increased the same way for natural gas as it has for propane at all.” For natural gas, the price has multiplied by 5, while it has multiplied by 1.6 to 1.8 for propane. “So all reason kept, the level of aid according to the type of energy must still be differentiated in relation to the increase that there has been. Propane has increased significantly less than natural gas and therefore, it is logical that there should be differentiated aid for these two products”develops our interlocutor.

If the 6% VAT rate were to continue for natural gas and electricity, the government would then have to take new decisions. “to avoid any discrimination between heating energies and continue to help people who heat themselves with propane and oil.” But reducing the VAT to 6% for propane gas would take months of negotiations and discussions, and the measures are needed immediately. And it is currently not on the agenda, he concludes.