Fuel tax falls at first hurdle

20 September 2011

The German government's plans to impose a tax on nuclear fuel have been rejected by the Hamburg Tax Court as doubtful in terms of the country's constitution. One utility is to be refunded and nuclear fuel tax collections are to be suspended. 


A fuel pellet 
One of the advantages of nuclear power
is the low and relatively stable cost of
nuclear fuel - except in Germany
The tax was meant to raise about €2.3 billion ($3.1 billion) per year for the German treasury, and came as part of the 2010 deal to 'extend' the lives of nuclear power plants. While the extension was scrapped after this year's Fukushima accident, the fuel tax remained. EOn, EnBW, RWE and Vattenfall were told they would still have to pay €145 ($198) for each gram of uranium or plutonium loaded into a reactor after 1 January. At the same time, eight reactors were ordered to close down immediately.


The first to announce a lawsuit was EnBW, which said it would have to pay a 'nine-figure sum every year' - over €100 million ($136 million). EnBW paid the tax when it refuelled the Philipsburg 2 reactor in July and quickly launched legal action, claiming the tax was unconstitutional and contrary to European law.


Now, the Hamburg Tax Court has expressed "serious doubt" that the nuclear fuel tax is compatible with the German constitution. It granted a request from an unnamed utility to return some €96 million ($131 million), and suspended the collection of any more money.


The court's judgement said that the tax does not qualify under the constitution as a consumption tax because these should be collected from the vendor at the point of purchase, rather than from the consumer at the point of use. Furthermore, consumption taxes are meant for general goods in the marketplace, not for single-purpose supplies like nuclear fuel.


The court took its decision based on these constitutional points and did not even begin to consider other areas the utility had contested: whether the tax violated equality laws or European directives on taxation.


Separately, all the nuclear generators are seeking compensation for the effective confiscation of generating rights from the eight reactors ordered shut after Fukushima despite safety assurances from the regulator. 


EOn have warned shareholders of massive losses and cuts of up to 11,000 jobs in the wake of Germany's policy upheaval. "Obviously we're taking legal action against the nuclear fuel tax, which we believe is unlawful. And obviously we'll quantify the financial damage caused by the early shutdown of our nuclear power stations and present these figures to Germany's political leadership," said CEO Johannes Teyssen in May.


RWE's first-half results for this year noted some €200 million ($273 million) in fuel taxes as part of the €900 million ($1.23 billion) the policy change has cost it so far.


Vattenfall is owned by the Swedish government and said simply that it expects full compensation for its costs, which it noted as SEK10 billion ($1.5 billion) for the first half of this year.
Researched and written
by World Nuclear News