The Fiscal Court of Hamburg has decided to refer a case concerning the legality of the German nuclear fuel rod tax to the Court of Justice of the European Union (CJEU) for a preliminary ruling to clarify compatibility with European law.
The Nuclear Fuel Rod Tax Act  (KernbrStG) applies since 1 January 2011. A tax liability arises when plutonium and uranium fuel rods are installed in a nuclear reactor that serves commercial purposes for the first time, leading to a chain reaction. In June 2011 plaintiff exchanged nuclear fuel rods in one of the nuclear power plants that it operates. Subsequently plaintiff submitted a tax declaration for EUR 154 million in accordance with the law, but simultaneously lodged an appeal.
Following yesterday’s oral proceedings, the presiding judge of the competent 4th Senate of the Hamburg Fiscal Court announced to refer the case to the CJEU and stay proceedings until CJEU’s decision. The court could not ascertain beyond doubt whether the KernBrStG complied with European law, or whether it should not be applied because of non-compliance with European law.
The KernbrStG has been controversial since its introduction, the Fiscal Court of Hamburg correctly pointed out.
The law was adopted in 2010 and formed part of the Conservative/Liberal Energy Concept 2010  with which the government extended the operating times of the 17 German nuclear power plants. Nuclear power was then intended to provide a bridging technology for a future renewable energy supply. After the nuclear accident in Fukushima in March 2011 the government reversed its nuclear policy. It proposed comprehensive legislative changes, including a nuclear phase-out until 2022 and the immediate shut down of eight nuclear power plants. The package was adopted by Parliament (Bundestag ) and the Federal Council (Bundesrat ) in mid-2011. The Nuclear Fuel Rod Tax Act was, however, not repealed. In 2010 the government expected to collect EUR 2.3 billion per year between 2011 and 2016 from the nuclear fuel rod tax.
In January 2012 the Fiscal Court of Hamburg in another case granted plaintiff preliminary relief, expressing serious doubt as to the constitutionality of the KernbrStG (please also see a similar decision by the court taken in September 2011 ). In a decision of 9 March 2012  the Federal Fiscal Court (BFH) reversed this decision, arguing that the unconstitutionality could not be decided on in a preliminary injunction procedure. In two other preliminary injunction proceedings against KernbrStG, the Fiscal Court of Munich  also had serious doubt as to the legality of the KernbrStG, while the Fiscal Court of Baden-Württemberg  decided otherwise.
Another case brought by another nuclear power operator has already been referred to the Federal Constitutional Court (BVerfG) by the Fiscal Court of Hamburg because the court doubts the constitutionality of KernBrStG. The court believes the law to be unconstitutional, arguing it is not a consumption tax (despite being called so in Section 1 para. 1 sent. 2 KernBrStG) so that the German Federation did not have the competence to enact it (for more information, please see the first blog post referred to below).
Preliminary rulings are issued by CJEU pursuant to Article 267 TFEU. The CJEU has jurisdiction to give preliminary rulings concerning:
- (a) the interpretation of the Treaties;
- (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union.
Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request CJEU to give a ruling thereon.
Although the Fiscal Court of Hamburg therefore seems generally entitled to refer the case to CJEU, the court points out that its first question will be whether a referral is possible in view of the fact that the court had already referred a case to the German constitutional court BVerfG on the same law (please see above). This other case could also be further referred from BVerfG to CJEU if said court has questions regarding the above mentioned matters. According to Article 267 a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law shall in this case bring the matter before CJEU.
The Fiscal Court of Hamburg further wants to ask CJEU whether the European Energy Taxation Directive (Directive 2003/96/EC ) precludes Member States from levying a tax on nuclear fuel rods used for the generation of electricity. The court also wants to know whether the nuclear fuel rod tax had to be considered an indirect tax on electricity in the sense of the Directive 2008/118/EC  concerning the general arrangements for excise duty. This is important as the Directive precludes Member States from “inventing new electricity taxes for the purpose of generating income for the general budget (zur Haushaltsfinanzierung)”. Besides, the court has questions regarding the compatibility of the nuclear fuel rod tax with European state aid rules and the Euratom Treaty.
The Hamburg Fiscal Court pointed out that its decision (including reasons) is not yet available in writing. Besides the court informed that references to CJEU cannot be appealed. On average preliminary rulings were issued within a period of fifteen months, the court said, adding the a referral did not affect the tax liability of plaintiff.
There are currently a number of cases relating to five nuclear power plants pending in the Fiscal Court of Hamburg. The amounts in dispute total more than EUR 2.1 billion. The competent 4th Senate decides as a Joint Senate for the states of Hamburg, Lower-Saxony and Schleswig-Holstein in matters of customs and market law as well as excise taxes.
Source: Source: Fiscal Court of Hamburg  (FG Hamburg 4. Senat, ref.no. 4 K 122/13)
- Fiscal Court of Hamburg Issues Order for Reference to BVerfG Regarding Nuclear Fuel Rod Tax 
- BFH Denies Preliminary Injunction Against Nuclear Fuel Rod Tax 
- Fiscal Court of Baden-Württemberg Denies Preliminary Injunctions Sought by EnBW Against Nuclear Fuel Rod Tax 
- Munich Finance Court: Nuclear Fuel Rod Tax Unconstitutional 
- Hamburg Finance Court: Constitutionality of Nuclear Fuel Rod Tax Seriously Doubtful 
- EnBW to Take Legal Action Against Nuclear Fuel Rod Tax 
- RWE and E.ON File Lawsuit Against Nuclear Fuel Rod Tax 
- E.ON Announces Legal Action Against Nuclear Fuel Rod Tax