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Germany's EnBW Sues Over Nuclear Tax

by Ulrika Lomas, Tax-News.com, Brussels

20 July 2011


Following hot on the heels of German energy concerns RWE and Eon, EnBW (EnKK) has announced plans to take legal action against the government’s controversial nuclear fuel tax.

The government decided to maintain the levy, despite plans for a rapid shift in energy policy away from nuclear fuel to renewable sources of energy.

While confirming that it has now filed its tax returns with the appropriate tax authorities, within the given deadline on the basis of the German Nuclear Fuel Rod Tax Act, EnBW confirmed plans to bring an action against the self-assessment return before the competent tax court in Freiburg.

In its statement, EnBW states that: “In recent months EnBW had repeatedly made clear that it has serious doubts as to the legal validity of the nuclear fuel rod tax and reserved the right to take legal action.”

“It adds: “Having reviewed the matter in detail and considered it intensively, EnKK has now reached the conclusion that it is time to take legal action. This decision was made based on both constitutional law and European law considerations.”

“External appraisers have confirmed EnBW’s legal opinion that the federal government is not only acting outside its legislative powers, but that the act also stands in contravention of the 2001 nuclear energy consensus. In the latter, the federal government had undertaken with regard to the operators not to take any unilateral measures against nuclear power. According to the wording of the consensus, this expressly applies to tax law as well.”

“Besides these constitutional law aspects of unlawful invasion of property rights and freedom of occupation, EnBW further has serious doubts as to the compliance of the act with European law, as it is not based on either the Excise Directive or the Energy Tax Directive.”

Commenting on the matter, Hans-Peter Villis, EnBW’s CEO noted that: “We want to uphold our ambitious plans to expand in the field of renewable energies. The implementation of these plans will, however, also depend on our having the necessary available funds.”

“The nuclear fuel rod tax will cost EnBW a nine-digit figure every year. If we put that amount towards expanding renewable energies, we could take an additional step forward.”

Last month RWE and Eon announced their intention to file an objection to a tax court in Munich, opposing plans to impose a nuclear tax on their Gundremmingen plant in Bavaria.

Outraged with the government over the decision to renege on its commitment to extending the working lifetimes of nuclear power stations in Germany by on average 12 years, and instead pursuing an accelerated move away from nuclear power to renewable energy by 2022, the energy providers are determined to avoid payment of the levy due following replacement of nuclear fuel elements in the Gundremmingen B reactor. Gundremmingen B is set to run until 2017.

Provided for in the coalition’s future package (Zukunftspaket), approved by the German Bundesrat, or upper house of parliament, in November last year, the government’s nuclear fuel tax was originally expected to generate in the region of EUR2.3bn (USD3.26bn) in additional revenues for the government annually, and to yield EUR14bn by 2016.

In view of the decision to close eight of the country’s nuclear power plants, the tax is now expected to yield significantly lower revenues of up to EUR1.3bn annually until 2016 from the nine remaining plants, equating to around EUR150m a year per reactor.

Under current provisions, the nuclear fuel tax is imposed when a reactor is fitted with a fuel element. The amount of tax due by operators is determined by the weight of nuclear fuel in the element.

The current tax rate of EUR145 per gram of nuclear fuel was agreed with energy providers during the course of negotiations held last autumn. Although the government initially planned to levy a tax at a rate of EUR220 per gram of nuclear fuel, energy providers argued that this rate was too high, and that it would not be worthwhile continuing to operate older power stations.

Defending its energy plans at the beginning of June, the government underlined the need to rethink the role of nuclear power in the wake of the Fukushima disaster in Japan. The government aims to progressively abandon the production of electricity using nuclear power stations by 2022, which involves significantly accelerating the energy strategy in order to transfer to renewable energy as quickly as possible, which is to be achieved by means of a targeted budgetary and fiscal policy.

TAGS: court | compliance | tax | business | fiscal policy | energy | law | Germany

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