Tax deductions for renewable energy in Spain (2026)

Spain has no general deduction for environmental investments under corporate income tax: that incentive was repealed with effect from 1 January 2015. What does exist in 2026 is a specific set of tax advantages for those who invest in renewable energy: free depreciation of self-consumption installations, the personal income tax deduction for energy-efficiency improvement works on homes, municipal reliefs on the IBI and the ICIO, and direct grants financed by European funds.

This article clarifies which incentives are really in force, who they apply to and how to combine them, with no promises of percentages that no longer exist. For the general framework, see our guide to green taxation in Spain and how it works.

What tax incentives are there for renewable energy in 2026?

It is worth separating three levels, because each has its own rule and beneficiary:

Free depreciation: the main incentive for companies

The flagship incentive for companies investing in renewables is not a tax-liability deduction, but the free depreciation introduced by Royal Decree-Law 18/2022 in the seventeenth additional provision of the Corporate Income Tax Act. It allows the free depreciation, in the year they enter into service, of investments in installations for the self-consumption of electricity from renewable sources, as well as certain own-use thermal installations that replace fossil fuels.

• Maximum investment qualifying for the benefit: 500,000 euros.
• Workforce requirement: maintaining the total average workforce for the 24 months following the start of the year of entry into service.
• Validity: the installations must enter into service in 2023, 2024, 2025 or 2026. The measure has been extended successively (Royal Decree-Law 9/2024, Royal Decree-Law 16/2025 and, for 2026, Royal Decree-Law 7/2026).

In practice, bringing depreciation forward reduces the year's taxable base and improves cash flow, which is what really accelerates the return on the investment.

Personal income tax deduction for energy efficiency

For individuals (not for companies), the main tax route is the deduction for energy-efficiency improvement works on homes. Installing solar panels can fit here if it reduces energy consumption. The government extended these deductions: they apply to works carried out until 31 December 2026 (until 31 December 2027 for building refurbishment). Their three brackets are:

• 20% of the amount invested (maximum 5,000 euros per home) if the works reduce heating and cooling demand by at least 7%.
• 40% (maximum 7,500 euros per home) if they reduce non-renewable primary energy consumption by at least 30%, or achieve an A or B energy rating.
• 60% for the energy refurbishment of residential buildings (maximum 5,000 euros a year, 15,000 euros cumulatively).

It is essential to prove the improvement with the energy performance certificate issued before and after the works.

Municipal reliefs: IBI and ICIO

The Local Finances Act allows, but does not require, municipalities to grant relief for solar self-consumption. That is why they vary widely from one town to another and always have to be applied for:

• IBI: up to 50% of the charge for several years. According to the Spanish Photovoltaic Union (UNEF), around 67% of municipalities apply it.
• ICIO: relief of up to 95% on the tax for the installation works.

Before installing, it is worth reviewing the tax bylaw of the specific municipality.

Grants and subsidies from European funds

Beyond tax, there are direct grants that coexist with the incentives above, almost all financed by Next Generation EU funds through the Recovery, Transformation and Resilience Plan (PRTR):

• IDAE programmes for self-consumption, storage and energy refurbishment (PREE, PAREER and renewable-energy calls), managed by the autonomous communities.
• MOVES III for electric vehicles and charging points, which ran until 31 December 2025; for 2026 the government has put in place a new electric-mobility plan.
• Regional calls of their own for installing solar panels or storage systems.

Grants are always governed by their call: budget, deadlines and requirements change each time, and some lines exhaust their budget before closing.

How to make the most of the incentives, step by step

1. Identify your status: company or sole trader (free depreciation) or individual (personal income tax deduction). They are not interchangeable.
2. Check your municipality: review the tax bylaw to see whether it grants IBI and ICIO relief.
3. Keep the documentation: invoices, energy certificates and proof of payment are the basis of any deduction or grant.
4. Watch the calls: grants have deadlines and are published in official gazettes and on the IDAE website.

Frequently asked questions

Is there a corporate income tax deduction for installing renewables?

Not as a tax-liability deduction. The deduction for environmental investments was repealed in 2015. The current incentive for companies is the free depreciation of self-consumption installations.

Can a company claim the 20-60% personal income tax deduction?

No. That deduction is exclusive to the personal income tax of individuals for works on homes. Companies use free depreciation.

Can a grant and a tax advantage be combined?

Yes, with caveats. The terms of each grant need reviewing, because the grant received may reduce the base on which the tax benefit is calculated to avoid duplication.

If your goal in investing in renewables is also to measure and reduce your carbon footprint, with Manglai you can calculate it and track its evolution with our carbon footprint solution.