Energy tax

The burden of high energy costs on companies for electricity and gas has dominated the political debates for months. The implementation of the Green Deal and the measures adopted to make the EU the first climate-neutral continent by 2050 are also in full swing. The focus here is particularly on the energy-intensive industry, buildings and transport. Taxes on energy are one of the financial burdens that need to be managed.

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What exactly is energy tax?

Energy tax and electricity tax are based on the European Union’s Energy Tax Directive. Energy tax and electricity tax (hereinafter uniformly referred to as energy tax) is a federal tax that is administered by the federal government. Energy taxes are therefore administered by the main customs offices. They tax the consumption of energy products and electricity and at the same time create incentives for the efficient use of energy and the use of environmentally friendly energy sources.

With an average tax revenue of around 40-45 billion euros, both types of tax make a significant contribution to the federal budget. Consequently, tax monitoring of the consumption of energy products and electricity is one of the main tasks of the main customs offices. The statutory regulations issued in this regard, the case law of the fiscal courts of the Federal Fiscal Court and increasingly the European Court of Justice as well as the statements of the customs administration on individual topics have led to a highly complex and very formal regulatory matter that needs to be dealt with. Knowledge of one’s own market role and position within the regulations is the most important prerequisite for being able to assess one’s own responsibilities and rights within the taxation procedure with legal certainty. The applicable short limitation period and short application deadlines can often lead to irrevocable decisions and a loss of rights.

Energy tax is part of German tax legislation and is subject to certain statutory regulations that govern responsibility in the tax process, the energy products that are subject to taxation, the tax procedure, the tax rate, tax exemptions and tax relief as well as reporting and payment obligations.

Which energy products are subject to energy tax?

The legislator levies the tax on e.g.

  • Fuels (e.g. gasoline, diesel, aviation fuel)
  • heating fuels (e.g. natural gas, heating oil, coal, waste)
  • electricity.

Depending on the energy product concerned and the applicable procedure, energy taxes are levied on manufacturers, tax warehouse holders, suppliers or users. The taxation procedure varies depending on the energy product. For example, diesel and petrol are taxed differently to coal or natural gas.

In many cases, several types of tax are affected (e.g. VAT in addition to energy tax). In some areas, especially in the real estate industry, special attention should be paid to trade tax. In the area of electromobility, wage tax may also be relevant in addition to electricity tax and VAT. The respective effects must be examined separately for each type of tax and the result must be incorporated into the investment decision, the respective contract structure and the business model. This also applies in particular to cross-border situations.

Who is affected by the energy tax?

Some sectors are more affected by energy tax than others. The result of the audit is not always necessarily a tax payment. In some cases, permits must be applied for at the main customs office, in order to be able to take advantage of concessions or simply to give customs the opportunity to ensure tax supervision. The tax relief provided for by law must also be administered. This applies in particular to

  • Operators of one or more electricity generation plants (e.g. power plant operators, operators of waste incineration plants or operators of photovoltaic systems or combined heat and power plants)
  • Operators of energy-intensive production facilities with special processes (e.g. electrolysis, metal production, production of glass, etc. chemical reduction processes)
  • Suppliers of electricity and natural gas (also within small infrastructures, for example suppliers of electricity from photovoltaic systems to third parties)
  • Operators of tax warehouses, authorized storers, distributors or users of fuels and aviation fuel, for example
  • Operators of charging infrastructure for e-mobility
  • Operators of battery storage systems
  • Electricity and/or natural gas traders
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What links energy and taxes in a company?

Companies are constantly facing new challenges due to

  • The reorganization of the energy markets,
  • new market players with increasingly fragmented business models,
  • constantly changing and new legal framework conditions and
  • digitalization.

The resulting investment decisions in new technologies or renewable energies make a company a dynamic entity. Their decisions in the context of corporate restructuring (M&A measures) or the introduction of new infrastructure for the generation, storage and supply of electricity also have an impact on tax compliance obligations.

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Why you should consider energy tax advice from ECOVIS

In practice, companies do not always focus on energy tax and electricity tax. Investment decisions are not made by or with the involvement of the company’s tax department. However, it is not uncommon for the tax department to be unfamiliar with the topic of energy tax and electricity tax during the year. This makes it all the more important to have a strong partner at your side.

The precise knowledge of the respective facts of all stakeholders in the company, the relevant legal framework, the collection, processing and storage of data and the documentation of proof, coordinated internal processes and the fulfilment of compliance obligations in the context of tax reporting are nowadays an important part of corporate organization. This avoids additional tax payments and helps to take advantage of tax exemptions or, in a worst-case scenario, to avoid fines or criminal proceedings.

In which areas can ECOVIS assist you?

We support you with

  • individual questions and special topics regarding energy and electricity tax
  • the “Energy Tax-Health-Check“ (recording the infrastructure, comparison of the existing situation with the target situation and presentation of recommendations where needed)
  • permits applications (e.g. tax warehouses, distributors, users, suppliers, tax-free withdrawal of electricity)
  • the preparation of energy and electricity tax declarations and applications for exemptions
  • the preparation of corrective declarations pursuant to para. 153 German general Fiscal Code and defense situations
  • audits
  • the conduction of opposition proceedings and communication with main customs offices
  • the conduction of court proceedings before the fiscal courts and the Federal Fiscal Court
  • the implementation and further development of the internal control system (ICS)
  • The Due Diligence for M&A transactions
  • tax clauses in contracts
  • supply-chain optimization

In addition to the energy tax, there are additional topics that should be considered on a regular basis. This concerns liability under the Federal Emissions Trading Act (“BEHG”) and the so-called Cross-Border Adjustment Mechanism. Feel free to ask our experts about these topics too.

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