German nuclear fuel tax is legal

8 June 2015

Europe's highest court has ruled that a German tax on nuclear fuel is legal. Germany's largest energy groups, including E.ON, RWE and EnBW, had gone to the European Court of Justice to argue that the tax, which has cost them more than €5bn ($5.7bn) to date, was illegal under European law and favoured other competing energy companies.

In its judgement, the court said it "rejects the argument that nuclear fuel must be exempt from taxation under the directive on taxation of energy products and electricity".

The court added that the German duty on nuclear fuel does not constitute state aid prohibited by EU law.

So far, E.ON has paid €2.3bn in nuclear fuel taxes, while EnBW has paid €1.1bn. RWE will have paid €1.6bn by the end of 2015.

Immediately following announcement of the judgement on 4 June shares in RWE lost 2.5%, while E.ON shares were down 1.85%. EnBW shares were down slightly but recovered to trade slightly higher.

Germany's utilities are now pinning their hopes on a related lawsuit filed with the Constitutional Court, the country's highest legal body, which could in theory still rule the tax illegal. "This is not the end of it, since today's decision only referred to the question whether the tax is in line with European law. Germany's Constitutional Court is examining the tax's conformity with German law in a parallel case," a spokesman for E.ON said in an interview with Reuters.

A decision from the Constitutional Court is expected during 2015.


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