Nuclear-fuel tax

Answer to €7 Billion Question

Eon klagt gegen Brennelementesteuer
Getting their money back. Source: DPA

Germany’s constitutional court in Karlsruhe ruled on Wednesday that a nuclear-fuel tax was illegal. The utility companies that paid this tax between 2011 and 2016 — RWE, E.ON and EnBW — can now get their money, about €6 billion, or $6.8 billion, in total, back from the government.

Including 6 percent in yearly interest on the tax refund, Germany’s federal government will have to cough up a total of around €7 billion to comply with the court ruling.

The tax came into existence in 2010 and was partly meant to fund the renovation of a dilapidated nuclear facility. Providers of nuclear energy had to pay €145 per gram each time they used a new nuclear fuel rod — the tubes that let reactors split atoms to release energy and therefore heat. The providers usually added new fuel rods twice a year. In the five years during which the tax existed, E.ON paid €2.8 billion, RWE €1.7 billion and EnBW €1.44 billion. In 2016 the tax was phased out.

The three companies have long argued that the tax was illegal. In 2015 the European Court of Justice ruled against them. But the red-robed judges in Karlsruhe have now decided that the German government never had the right to levy this tax, declaring it null and void retroactively. They reasoned that the tax did not count as a consumption levy, partly because it cannot be transferred to consumers. In effect, the judges opined that the government doesn’t have the right to simply invent new forms of taxation.

The utilities will now demand their money back, and investors have already bid up their shares in anticipation. The firms badly need the money as they struggle to cope with the so-called Energiewende, Germany’s transition from both nuclear and fossil-fuel energy to renewable sources such the sun, wind and biomass. E.ON and RWE have scrambled to shift away from coal and nuclear, taking big losses for several years and splitting themselves into separate firms for traditional and renewable energy sources.

The lawsuits over the nuclear-fuel tax have been a political battlefield between the government and the companies for years and stood in the way of further negotiations on winding down nuclear power. The government is seeking a deal with the companies on who should pay for the storage of nuclear waste. It is close to an compromise with the providers on a common fund to finance storing the waste. But the utilities had refused to withdraw their lawsuits over the nuclear fuel tax. Today’s court decision thus removes the final obstacle to an agreement.

 

Allison Williams is deputy editor in chief of Handelsblatt Global. Heike Anger covers politics for Handelsblatt and contributed to this article. To contact the author: williams@handelsblatt.com 

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