Top EU Court: German Nuclear Fuel Tax Is Legal
Germany’s tax on nuclear fuel rods is not against European Union (EU) law, the bloc’s top court has ruled.
The decision from the Luxembourg-based Court of Justice of the European Union on June 4 may be detrimental to utilities that own nuclear power plants, which have already paid about $5.67 billion in the levies that they say are illegal.
The tax was introduced as part of a deal in late 2010 brokered by Chancellor Angela Merkel’s conservative government to reverse a plan implemented by the Social Democrat-Greens government to phase out nuclear power. In exchange for the tax, the lawmakers agreed to extend the lifetimes of nuclear power plants in Germany by as many as 14 years. In light of the Fukushima disaster in 2011, however, Merkel’s government effected a U-turn in policy and moved to shutter every nuclear plant in the country by 2022—but it did not revoke the tax.
The nuclear fuel tax is triggered when a nuclear reactor is equipped with a fuel element and a self-sustaining chain reaction is initiated. The amount of tax depends on the nuclear fuel used, but it carries a levy of €145 ($161) per gram of nuclear fuel (U-233, U-235, Pu-239, and Pu-241) used for the commercial generation of electricity between January 2011 and December 2016.
Germany’s three nuclear generators—E.ON, RWE, and EnBW—have challenged the nuclear fuel rod tax, arguing it is incompatible with Germany’s Constitution and with European law.
The Financial Court of Hamburg in January 2013 agreed that the tax was unconstitutional. It went as far as to declare that the tax was enacted simply “to siphon off the profits of the nuclear plant operators.” In April 2014, it referred the case separately to the federal Constitutional Court—which alone has the jurisdiction to rule on the unconstitutionality of a law—and to the European Court of Justice for a preliminary ruling to clarify compatibility with European law.
On Thursday, the Court of Justice made its decision. It ruled that nuclear fuel is not exempt from taxation under the EU directive on taxation of energy products and electricity, even though it does not appear on an “exhaustive list of energy products” in the directive. Moreover, the tax does not constitute state aid that is prohibited by EU law or favor other energy sources, it said.
Germany’s utilities must now await a decision from the federal Constitutional Court in Karlsruhe, which could still rule that the tax is illegal. A decision may come from that court by the end of the year.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)