A new law in Spain in September will increase the price of buying new cars in Spain. 

The price hike in the car industry comes from a new tax coming into effect from September 1, 2022 on air conditioners, freezers and refrigeration equipment. Prices are, as a result, anticipated to be up to 10 percent more expensive as a result of Law 14/2022.

The bill is at its core a reform to taxes on fluorinated gas – a gas used in several components of car parts –  and is a tax that will inevitably be passed onto consumers.

Technically speaking, the tax did already exist: the Tax on Fluorinated Greenhouse Gases was regulated by Article 5 of Law 16/2013, but its scope has now been broadened as part of a raft of government measures to mitigate the impact of skyrocketing energy prices.

Whereas in the past only sellers of fluorinated gases paid taxes, according to the Association of Refrigeration Companies and their Technologies (AEFYT), the new reform applies tax to the manufacture and import of new refrigeration equipment and systems, air conditioning, heat pumps and other household appliances that use fluorinated gas.

This will have a knock-on effect on consumers, and it is anticipated the change will bring a price hike of 5-10 percent in a plethora of industries that rely on these types of appliances, including the food industry, hospitality, and supermarkets.

What is less known, however, is that the new tax will also have an effect on the car industry. 

The tax on fluorinated gases not only increases the cost of air conditioning, but also heat pumps – a key component of vehicles, in particular electric cars.

A 5-10 percent increase may not feel as stark as spiralling utilities bills, but it will be more pronounced in new car purchases. 

The unwelcome news comes at a time of crisis for the automobile industry in Spain, with a combination of supply and demand problems caused by the pandemic and a lack of microchips making (new, second-hand and even rental) cars much harder to come by in Spain.

While all of Spain is currently experiencing car rental shortages, the problem is particularly affecting areas of Spain with high numbers of tourists such as the Costa del Sol, the Balearic Islands and the Canaries.

READ MORE: Why you should think twice about buying a car in Spain, even if it’s second hand

According to the employers’ associations of the Balearic Islands, Aevab and Baleval, there are 50,000 fewer rental cars across the islands than before the pandemic.

The reforms have, unsurprisingly, not gone down well with businesses.

It is believed as many as 20 business associations have submitted their displeasure with the proposals, arguing that they “will have an impact on different sectors of the economy, but also on households or small businesses.”

And to further pour salt in the wound, the new law also obliges sellers to register in the Territorial Registry of the Tax on Fluorinated Greenhouse Gases, with fines as high as €1,500 for those who don’t.