Germany's Nuclear Tax Branded 'Unconstitutional'

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- Germany's controversial nuclear fuel rod tax which was designed to earn the government billions of euros from energy companies has been thrown into doubt.

A Hamburg finance court has questioned the constitutional validity of the federal government's tax and ordered that one unnamed energy company should suspend any further payments and be repaid almost 100 million it paid in tax earlier this year.

"The Finance Court Hamburg voices serious doubt that the nuclear fuel tax law is constitutional," the court ruling stated. The decision could spell the end for the tax if the Federal Finance Court agrees with the Hamburg court's decision.

The 'unnamed company' is believed to be E.ON AG (OTC:EONGY) (Dusseldorf, Germany) which confirmed that had taken action in the Hamburg court. The payment the court ordered repaid refers to the 96 million paid in the fuel in tax by the company this summer for replacing rods at the Grafenrheinfeld nuclear reactor.

The fuel rod tax was introduced at the start of this year as part of deal that would allow the German government collect billions of euros in tax from the energy companies in return for extending the lives of Germany's older nuclear plants. The four operators, Energie Baden-Württemberg AG (EnBW) (Karlsruhe, Germany), E.ON, RWE AG (OTC:RWEOY) (Essen, Germany) and Vattenfall AB (Stockholm, Sweden), were expected to pay €2.3 billion ($3.4 billion) a year for six years. Additionally, the companies agreed to pay €1.4 billion each over that period into a renewable energy fund that would help fund clean energy projects.

In May, in aftermath of the Fukushima disaster in March, Germany's government reversed its previous decision to extend the lives of the older plants and announced instead that it planned to shut all 17 reactors down before 2022. The tax, however, remained in place and all four companies have vowed to take action. For additional information, see May 30, 2011, article - Germany Votes to Dump Nuclear Power.

In July, EnBW announced that it intended to take legal action against the nuclear fuel rod tax, claiming that it would cost it more than €100 million ($141.8 million) each year. For additional information see July 20, 2011, article - EnBW to Fight German Nuclear Tax.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.