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ECJ To Rule On Constitutionality Of Germany's Nuclear Fuel Tax

by Ulrika Lomas, Tax-News.com, Brussels

22 November 2013


The Fourth Senate of the German Tax Court in Hamburg has requested that the European Court of Justice (ECJ) deliver a preliminary ruling on Germany's controversial nuclear fuel tax (Kernbrennstoffsteuer), to determine whether or not the levy is in accordance with European Union (EU) law (Az: 4 K 122/13).

Germany's nuclear fuel tax law entered into force on January 1, 2011. The law provided for the introduction of a new tax imposed on the use of nuclear fuel. In the particular case in question, the plaintiff replaced the nuclear fuel elements in the nuclear reactor back in June 2011. She subsequently completed a tax declaration to the tax authorities, although immediately submitting a legal challenge.

On November 19, 2013, the Fourth Senate of the Tax Court in Hamburg ruled that it was unable to "unequivocally" determine whether or not the nuclear fuel tax law is in accordance with European law, or whether it must be repealed on the grounds that it violates European legislation. The Fourth Senate therefore requested that the ECJ provide its interpretation of various provisions under EU law.

Germany's nuclear fuel tax law imposes a tax on the use of nuclear fuel, specifically uranium 233 and 235 and plutonium 239 and 241, used in the commercial production of electricity. Levied at a rate of EUR145 (USD196) per gram of nuclear fuel, the tax is due when a fuel element is fitted to a reactor and triggers a chain reaction. The levy was initially forecast to generate around EUR2.3bn annually for the state. Of the 17 nuclear reactors operational in 2011, only nine are still in service. This is as a result of the Government's decision to move to safer, renewable sources of energy (energy transition policy), in the wake of the Fukushima disaster.

Yet Germany's nuclear fuel tax law has been contested from the outset, and opinion remains very much divided as to whether or not it is legal. While the German Tax Courts in Hamburg and in Munich have both expressed "serious doubts" as to its constitutionality, the Tax Court in Baden-Württemberg insisted that the law is in accordance with both the German Constitution and with European law.

Commenting, Fourth Senate President Christoph Schoenfeld explained that the Hamburg Tax Court intends to ask the ECJ whether or not the European Energy Tax Directive prohibits the levying of a tax on the production of electricity using nuclear fuel. Furthermore, the Court plans to ask the ECJ whether the nuclear fuel tax constitutes an indirect tax on electricity, in the sense of the European Excise Duty Directive. This Directive specifically prevents member states from "inventing" new electricity taxes to finance their general budgets, Schoenfeld ended.

TAGS: Energy | tax | energy | law | budget | corporation tax | legislation | tax rates | Germany | European Union (EU) | Europe | Tax

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