German nuclear tax falls at the first challenge

26 September 2011

The German government's plans to impose a tax on nuclear fuel have fallen at the first fence. The Hamburg Tax Court has rejected it as doubtful in terms of the country's constitution. One utility is to be refunded and nuclear fuel tax collections are to be suspended.

The tax was intended to raise about €2.3 billion ($3.1 billion) per year for the German treasury, and came as part of the 2010 deal to extend the lives of existing nuclear power plants while undertaking to license no new ones. While the extension plan was scrapped after this year's Fukushima accident, the fuel tax remained. E.ON, EnBW, RWE and Vattenfall were told they would still have to pay €145 ($198) for each gram of uranium or plutonium loaded into a reactor after 1 January. At the same time, eight reactors were ordered to be closed down immediately.

The first to announce legal action was EnBW, which said that the tax would cost it over €100 million ($136 million) per year. EnBW paid the tax when it refuelled the Philipsburg 2 reactor in July and quickly launched its own legal action, claiming the tax was unconstitutional and contrary to European law.

The outcome is that the Hamburg Tax Court has expressed ‘serious doubt’ that the nuclear fuel tax is compatible with the German constitution. It granted a request from an unnamed utility to return some €96 million ($131 million), and suspended the collection of any more monies.

The court's judgement said that the tax does not qualify under the constitution as a consumption tax because these should be collected from the vendor at the point of purchase, rather than from the consumer at the point of use. Furthermore, consumption taxes are intended for general goods in the marketplace, not for single-purpose supplies like nuclear fuel.

The court took its decision based on these constitutional points and did not even begin to consider other areas the utility had contested, such as whether the tax violated equality laws or European directives on taxation.

Separately, all the nuclear generators are seeking compensation for the effective confiscation of generating rights from the eight reactors ordered shut after Fukushima despite safety assurances from the regulator.

E.ON has already warned shareholders of massive losses and cuts of up to 11 000 jobs in the wake of Germany's policy upheaval. ‘Obviously we're taking legal action against the nuclear fuel tax, which we believe is unlawful. And obviously we'll quantify the financial damage caused by the early shutdown of our nuclear power stations and present these figures to Germany's political leadership,’ said CEO Johannes Teyssen in May.

RWE's first-half results for this year listed some €200 million ($273 million) in fuel taxes as part of the €900 million ($1.23 billion) the policy change has cost it so far.

Vattenfall is owned by the Swedish government and said simply that it expects full compensation for its costs, which it listed as SEK10 billion ($1.5 billion) for the first half of 2011.




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