Europe’s highest court has ruled that a German tax on nuclear fuel is legal. Germany’s largest energy groups, including E.on, RWE and EnBW, had gone to the European Court of Justice to argue that the tax, which has cost them more than €5bn (£3.7bn) to date, was illegal under European law and favoured other competing energy companies.
In its judgement, the court said it "rejects the argument that nuclear fuel must be exempt from taxation under the directive on taxation of energy products and electricity".
The court added that the German duty on nuclear fuel does not constitute state aid prohibited by EU law.
Immediately following announcement of the judgement on 4 June shares in RWE lost 2.5%, while E.ON shares were down 1.85%. EnBW shares were down slightly but recovered to trade slightly higher.
"By today’s judgment, the Court of Justice replies that EU law does not preclude a duty such as the German duty on nuclear fuel," judges at the Luxembourg-based Court of Justice of the European Union said. The court also ruled that the Germany duty on nuclear fuel did not constitute illegal state aid.
Germany’s utilities are now pinning their hopes on a related lawsuit filed with the Constitutional Court, the country’s highest legal body, which could in theory still rule the tax illegal. "This is not the end of it, since today’s decision only referred to the question whether the tax is in line with European law. Germany’s Constitutional Court is examining the tax’s conformity with German law in a parallel case," a spokesman for E.ON said in an interview with Reuters. A decision is expected in the course of this year. So far, E.ON has paid €2.3 billion in nuclear fuel taxes, while EnBW has paid 1.1 billion. RWE will have paid €1.6 billion by the end of the year.
The tax requires firms to pay €145 per gramme of nuclear fuel each time they change a fuel rod, usually about twice a year. It is intended to cover some of the cost of storing radioactive waste.