German nuclear fuel duty is legal, says European court

05 June 2015

Germany's tax on nuclear fuel conforms to European Union laws, the European Court of Justice (ECJ) ruled yesterday.

Since January 2011, each gram of fissile nuclear fuel loaded into a German reactor has carried a levy of €145 ($161). The tax is expected to bring in about €2.3 billion ($2.6 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 lives 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 lives and forced the early closure of older units. Power companies were quick to take the matter to court.

Kernkraftwerke Lippe-Ems GmbH - the 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 to determine whether it meets EU regulations.

The ECJ has now ruled that the duty on nuclear fuel is indeed compatible with EU law. It said, "By today's judgement, the Court of Justice replies that EU law does not preclude a duty such as the German duty on nuclear fuel."

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 harmonized 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. "In essence, the court rejects the idea that a duty cannot be levied at the same time on the consumption of electricity and on the sources from which it is produced which are not energy products within the meaning of the directive," the ECJ said in a statement.

The ECJ also determined that the EU directive concerning the general arrangements for excise duty does not preclude the German duty on nuclear fuel. It said Germany's tax is levied on a fuel for electricity production and not levied on the consumption of the electricity produced. It therefore does not constitute excise duty or 'other indirect taxes' on that product within the meaning of the directive, the court ruled.

Germany's tax on nuclear fuel does not also constitute state aid, the court said.

The Euratom Treaty does not also preclude the tax, the ECJ said. It noted, "That duty does not constitute a charge having equivalent effect to a customs duty. It is levied not because nuclear fuel has crossed a frontier but because it is used for the commercial production of electricity, irrespective of the source of that fuel."

The Federal Constitutional Court in Karlsruhe, meanwhile, is considering whether the Federal Republic has the legal power to impose a tax such as the nuclear fuel tax. A decision in that proceeding is expected by the end of 2015. As a consequence, there still is a chance for the German utilities to stop further payments of the tax and to get reimbursements for taxes already paid.

Researched and written
by World Nuclear News