Tax exemption for nuclear fund is not state aid

26 January 2006

Claims that exempting nuclear decommissioning funds from tax amounted to state aid have been dismissed as unfounded by the European Union’s (EU's) Court of First Instance.

Under German law, nuclear power stations are required to set up reserves to pay for spent nuclear fuel management, waste disposal and decommissioning. The government does not levy the usual taxes on these funds.

Action claiming that the tax-exempt status gave nuclear power an economic advantage which amounted to state aid was launched by three generation and distribution companies: Stadtwerke Schwaebisch Hall, Stadtwerke Tuebingen and Stadtwerke Uelzen.

A statement issued by the EU’s lower court said that “neither the tax exemption scheme for the reserves nor the detailed rules for the implementation by the authorities of the tax scheme in dispute grant to nuclear power stations a specific advantage inherent in the notion of state aid.”

Furthermore, the court did not agree with the three complaining companies that the size of the nuclear funds was disproportionate.

The ruling is a rejection of an appeal brought by the three companies against a European Commission decision in 1999. The three have two months to contest the matter further at the European Court of Justice, the EU’s highest court, but may do so only on a point of law.




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