German high court rules nuclear fuel tax illegal

07 June 2017

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Germany's tax on nuclear fuel is "unconstitutional and void", the country's highest court has ruled. German utilities may stand to be reimbursed some €6.3 billion ($7.1 billion) they paid between 2011 and 2016 as a result of the Federal Constitutional Court's ruling.

Since January 2011, each gram of fissile nuclear fuel loaded into a German reactor has carried a levy of €145. According to the legislator, the tax was an "excise duty within the meaning of tax regulations". The tax was expected to bring in about €2.3 billion in revenues annually.

That tax was imposed by the state as a consequence of an amendment to the 2002 Atomic Energy Act that allowed longer operating periods for German reactors. However, the government adhered to the new tax even though, in reaction to the 2011 Fukushima accident in Japan, it took away the longer operating periods and forced the early closure of older units. Power companies were quick to take the matter to court.

Kernkraftwerke Lippe-Ems GmbH - an 87.5%/12.5% joint venture between RWE and EOn that operates the Emsland nuclear power plant - lodged a complaint with the Hamburg Tax Court over the fuel levy that it must pay.

In November 2013, the Hamburg court said it was unable to "unequivocally" determine whether the tax was in accordance with European law. It referred the levy to the European Court of Justice (ECJ) to determine whether it meets EU regulations. The ECJ ruled in June 2015 that the duty on nuclear fuel was compatible with EU law. The court rejected a claim that nuclear fuel must be exempt from taxation under the European directive on taxation of energy products and electricity. This directive exempts energy products subject to harmonised excise duty and used to produce electricity. The court noted that nuclear fuel is not included in the list of fuels set out in that directive.

The Federal Constitutional Court in Karlsruhe, meanwhile, has been considering whether the Federal Republic has the legal power to impose a tax such as the nuclear fuel tax. It had to decide whether the German concept of excise duty is to be interpreted in accordance with the EU directive issued to harmonise these very taxes.

In a decision published today, the court said: "Outside the competencies of the Basic Law, the Federation and the Länder [states] have no right to seek tax. Since the nuclear fuel tax cannot be allocated to the type of excise duty within the meaning of Article 106 of the Basic Law, the legislator lacked legislative competence for the adoption of the Nuclear Fuel Tax Act." It therefore ruled the fuel tax to be "formally unconstitutional and void".

Utility EOn says over the 2011-2016 period, it paid some €2.8 billion under the nuclear fuel tax. RWE and EnBW claim they paid €1.7 billion and €1.44 billion, respectively.

Following the ruling of the Federal Constitutional Court, EOn SE expects all pending tax payments made between 2011 and 2016 - about €2.85 billion plus interest of around €450 million - will be refunded to EOn.

RWE said it "will analyse the reasons for the decision". Referring to a reimbursement of the taxes it paid, the company said: "No decision has been made on how these funds will be used."

EnBW also said it expected to be refunded the money it had paid, plus interest. It said the court's ruling confirmed its opinion that the fuel tax was "not constitutionally compliant".

Researched and written

by World Nuclear News

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