German Energy Firms Braced For New Taxes

by Ulrika Lomas, Tax-News.com, Brussels

06 September 2010

Following months of internal political wrangling and intense speculation, Germany’s coalition government has finally united on its energy concept, which includes highly controversial plans to extend the operational lifetimes of the country’s 17 nuclear power reactors, and plans to demand a multi-billion euro contribution from its energy giants.

After almost twelve hours of tough negotiations, the government agreed to extend the working lifetimes of nuclear reactors by an average of 12 years. While working lifetimes for older reactors are due to be extended by 8 years, newer reactors, built post 1980, are due to run for a further 14 years. Under existing plans, the last reactor was due to be removed from the network by around 2023.

In return for the considerable concessions, the energy giants will be required to pay a “substantial contribution” over the course of the next few years, which will flow directly into a fund to develop renewable energy in Germany. This contribution, to be paid in addition to the previously proposed and highly contested nuclear fuel tax, is to target the profits of the energy concerns, and will amount to around EUR300m per concern in 2011 and 2012, and EUR200m from 2013 to 2016.

Designed to consolidate the country’s budget, the nuclear fuel tax will be levied on companies annually until 2016. The government aims to generate in the region of EUR2.3bn each year from the new levy.

Heralding the coalition’s energy policy as a “big success”, Germany’s Environment Minister Norbert Röttgen announced that the government has secured a comprehensive programme designed to promote renewable energy in Germany.

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