German Utilities Win Landmark Tax Refund

German power giants RWE and E.ON welcomed a ruling June 7 by the country’s supreme court overturning a tax on nuclear fuel-rods that was enforced until the end of 2016. All the nuclear generators affected can now expect a refund, at the expense of the taxpayer. 

The tax raised €6.285bn for the state since its introduction in 2011, the Karlsruhe-based Constitutional Court said in a communique. 

The law introducing the tax was adopted December 8 2010, before the March 2011 Fukushima disaster in Japan that led to Berlin ordering that all German nuclear reactors should be retired early.

E.ON said it now expects all its 2011-16 tax payments totalling roughly €2.85bn, plus €450mn interest, to be refunded, adding that it would have a “positive effect on its consolidated net income” but that earnings and adjusted net income would not be affected.

RWE said it had been told that the tax is “retrospectively void.” It had paid €1.7bn in tax and it said it will analyse the reasons for the decision. No decision has been made on how the refund would be used, it added.

E.On and RWE's share prices just prior to the June 7 close of trading were roughly 6% firmer on the previous day's close.

E.ON, RWE and Swedish-state owned Vattenfall challenged the tax up to the Constitutional Court but it’s likely that Germany’s other nuclear generator EnBW – which did not – may also get a refund. EnBW is largely owned by the Green-led Baden-Wurttemburg government and district authorities.

Some federal states run by the Social Democratic party (SPD) have said they may appeal the ruling, according to German newspaper reports. The country has nationwide parliamentary elections on September 24, with incumbent Chancellor Angela Merkel seeking to remain in office.

Mark Smedley