ECJ Energy Tax C-833/21 (Endesa Generacion) – Questions – Is a coal on tax used for the production of electricity protecting the environment?

Keywords : energy, taxes, electricity, coal

Subject :

Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity.

Facts:

The applicant is an undertaking engaged in the production of electricity through the use of coal. The applicant acquires the coal through a related company which exempts consignments of coal intended for resale from coal tax, since the chargeable event is consumption. After an inspection, the tax authorities considered that the chargeable event had occurred and the tax had become chargeable at the time when the applicant acquired the coal for use in electricity production, and that the taxable amount should be determined on the basis of the gross calorific value of the coal, irrespective of the energy actually used to generate electricity. For those reasons, the tax authorities issued a new assessment and demanded from the applicant a higher amount of tax and the applicable default interest. On 07-04-2016, the applicant lodged an economic-administrative appeal against the assessment before the Tribunal Económico Administrativo Central (TEAC). coal tax for the 2013 tax year

Consideration:

The referring court considers that, if the tax rate depends on the calorific energy generated by the consumption of coal, measured in gigajoules, there is no reason to take into account only the energy actually used for the production of electricity . It also considers that the chargeable event occurred when the applicant acquired coal from its related company for use in the production of electricity. The referring court has doubts as to whether the tax on the consumption of coal for the production of electricity provided for in Spanish legislation is compatible with the European scheme restructuring the Community system for the taxation of energy products and electricity. If it were considered that the tax on coal levied on coal intended for use in the production of electricity does not have an environmental objective within the meaning of Article 14(1) of Directive 2003/96/EC, the Spanish law would be incompatible with EU law and the tax authorities’ assessment would be incorrect.

Preliminary questions:

1) Is a Spanish national legislation imposing a tax on coal used for the production of electricity compatible with Article 14(1)(a) of Directive 2003/96/EC, if it is stated that that tax has the objective of protecting the environment, but this objective is not reflected in the structure of the tax, and the proceeds are used to finance the costs of the electricity system?

2) Can the environmental objective be considered to be given concrete form in the structure of the tax through the fixing of tax rates on the basis of the calorific value of the coal used in electricity production?

3) Is the environmental objective achieved by the mere fact that taxes are levied on certain non-renewable energy products and not on the use of products that are considered less harmful to the environment?

Source Minbuza.nl