Brussels, 07.II.2007 C (2007) 298 fin.

Transcription

1 EUROPEAN COMMISSION Brussels, 07.II.2007 C (2007) 298 fin. PUBLIC VERSION WORKING LANGUAGE This document is made available for information purposes only. Subject: State aid No N 820/2006 Germany Tax exemptions for certain energy intensive processes (Article 51 of the EnergiesteuerG (Energy Tax Law)/ Article 9a of the StromStG (Electricity Tax Law)) Dear Sir, 1. Procedure On 6 December 2006, Germany notified the above mentioned measure to obtain legal certainty about its character as non-aid. The notification was registered by the Commission on 6 December 2006 (A/39984). The Notification followed an exchange of information on the modifications of the German energy tax system which was registered under CP61/2006. In the notification Germany refers to its communication of 24 May 2006, registered on 29 May 2006 (A/34092), the meeting with the Commission services on 5 July 2006, for which Germany submitted preparatory information (A/35386), and its communication of 25 August 2006, registered on the same day (A/36699). 2. Description of the measure The German Energy Tax System taxes the use of energy products for heating or fuel purposes. Seiner Excellenz Herrn Frank-Walter STEINMEIER Bundesminister des Auswärtigen Werderscher Markt 1 D Berlin Commission européenne, B 1049 Bruxelles Belgique, Europese Commisse, B-1049 Brussel - België

2 Art. 2 9a of the Electricity Tax Law and Art.1 51 of the Energy Tax Law allow de-taxation of particularly energy intensive processes. These tax exemptions are granted on request and apply to all energy products used for heating purposes as well as for electricity, when used in dual use processes and in mineralogical processes. The measure will apply to more than 1000 SMEs and large enterprises. The measure aims to reduce the costs and thereby the competitive disadvantage for German companies of the manufacturing industry, which apply particularly energy intensive procedures and processes (e.g. metal production, mineralogical processes). Germany expects foregone tax revenues of annually about 70 million of which 50 million will be for de-taxation in accordance with 9a Electricity Tax Law, the remaining 20 million in accordance with 51 Energy Tax Law. The measure entered into force without a standstill clause to await Commission approval and is unlimited in time. Detail description of the tax treatment of particularly energy intensive processes The legal basis for the measure under examination is Art and Art. 2 9 of the Law for establishing the taxation of energy products and for modifying the Electricity Tax Law of (Energy Tax Law) and the modification of 51 Energy Tax Law and of 9a Electricity Tax Law by the Law for the introduction of a bio-fuel quota. The relevant provisions establish the tax treatment as follows Energy Tax Law permits de-taxation for energy products when used by an undertaking active in manufacturing for a) glass and glass products; ceramic products; ceramic tiles and flags; bricks, tiles and construction products, in baked clay; cement, lime and plaster; sand-lime bricks; aerated concrete products; bitumen and mineral fertilizers for drying, burning, melting, keeping warm, annealing or sintering the aforementioned products or intermediate goods used in their manufacture; b) basic metals; c) chemical-reduction processes; d) heating purposes and, simultaneously, purposes other than heating or fuel; by any undertaking e) for the thermic waste and waste-air treatment. 1 Germany informed the Commission also of another modification, which is however not relevant for the assessment of the measure in question. As of 1 January 2009 the de-taxation for heating oil is limited to per 1000 l. This for the following reason: As of 1 January 2009 the tax for heating oil with a sulphur content higher than 50 mg/kg will be /1000 l. Heating oil with a sulphur content of max. 50 mg/kg will be taxed at a rate of /1000 l. In order to avoid the administrative proof for each type of fuel, companies are re-funded the tax rate for heating oil with a sulphur content of max. 50 mg/kg. 2

3 9a Electricity Tax Law permits de-taxation for electricity used by an undertaking active in manufacturing when used for 1. electrolysis; 2. the manufacture of glass and glass products; ceramic products; ceramic tiles and flags; bricks, tiles and construction products, in baked clay; cement, lime and plaster; sandlime bricks; aerated concrete products; bitumen and mineral fertilizers for burning, melting, keeping warm or annealing the aforementioned products or intermediate goods used in their manufacture; or 3. the manufacture of basic metals for melting, keeping warm or annealing. These Articles entered into force on 1 August 2006 and have since been amended, with effect from 1 January Energy Tax Law reads a) in (a), the words "Kalksandstein, Porenbetonerzeugnissen" (sand-lime bricks, aerated concrete products) will be replaced by "Erzeugnissen aus Beton, Zement und Gips, mineralischen Isoliermaterialien" (articles of concrete, cement and plaster, mineral insulating materials); b) (b) should read "für die Metallerzeugung und bearbeitung sowie im Rahmen der Herstellung von Metallerzeugnissen für die Herstellung von Schmiede-, Press-, Ziehund Stanzteilen, gewalzten Ringen und pulvermetallurgischen Erzeugnissen und zur Oberflächenveredlung und Wärmebehandlung." (for the manufacture of basic metals, as well as the use of fabricated metal products for forging, pressing, stamping and roll-forming of metal; powder metallurgy and for the treatment and coating of metals). 9a Electricity Tax Law reads a) in (a), the words "Kalksandstein, Porenbetonerzeugnissen" (sand-lime bricks, aerated concrete products) will be replaced by "Erzeugnissen aus Beton, Zement und Gips, mineralischen Isoliermaterialien" (articles of concrete, cement and plaster, mineral insulating materials); b) Number 3 should read 3. für die Metallerzeugung und bearbeitung sowie im Rahmen der Herstellung von Metallerzeugnissen für die Herstellung von Schmiede-, Press-, Zieh- und Stanzteilen, gewalzten Ringen und pulvermetallurgischen Erzeugnissen und zur Oberflächenveredlung und Wärmebehandlung jeweils zum Schmelzen, Erwärmen, Warmhalten, Entspannen oder sonstigen Wärmebehandlung. (for the manufacture of basic metals, as well as the use of fabricated metal products for forging, pressing, stamping and roll-forming of metal; powder metallurgy and for the treatment and coating of metals, for melting, warming, keeping warm or heat treatment). c) after number 3 the following number 4 is added: "4. for chemical reduction processes." 3. The German position Germany takes the position that the measure in question, which exempt energy products from the energy and the electricity tax, when used in processes and procedures according to Art. 2(4) of the Energy Tax Directive, is in the nature and logic of both, the EU provisions 3

4 and of the German tax system. The measure therefore does not constitute State aid in the meaning of Article 87(1) of the EC Treaty. Germany refers in particular to recital 22 of the energy tax directive and to the statements for the council minutes to the energy tax directive of 24 November 2003 (ENV 582, 14140/03, ADD 1) in particular the point 2 thereof. Recital 22 of the Energy Tax Directive considers that "energy products should essentially be subject to a Community framework when used as heating fuel or motor fuel. To that extent, it is in the nature and the logic of the tax system to exclude from the scope of the framework dual uses and non-fuel uses of energy products as well as mineralogical processes. Electricity used in similar ways should be treated on an equal footing". Point 2 of the Council statement cited above reads "that energy products should essentially be subject to a Community framework when used as heating fuel or motor fuel. It can be considered that it is in the nature and the logic of the tax system to exclude from the scope of the framework dual uses and non-fuel uses of energy products as well as mineralogical processes. Member States may then take measures to tax or not to tax or to apply total or partial taxation to each use. Electricity used in similar ways should be treated on an equal footing. Such exceptions to the general system or differentiations within that system, which are justified by the nature or general scheme of the tax system, do not involve State aids." Germany declared that the de-taxation according to 51 Energy Tax Law is applicable to all energy products, which were taxed as heating fuel, when they are used in dual use processes or in mineralogical processes in the meaning of Article 2(4)(b) of the Energy Tax Directive. Germany explained the consistency between the definition of processes in the energy tax directive and in the German tax laws: 51(1)1.a Energy Tax Law covers mineralogical processes of NACE-Code DI26. This applies Article 2(4)(b), 5 th indent of the energy tax directive. Instead of referring to the NACE-Code DI26, Germany listed the eligible processes. This is done first to simplify the application of the law in German administration. It is also done with the aim, in accordance with the energy tax directive, to exempt only energy uses which are typical for this type of industrial process, but not the entire energy consumption of the companies concerned. 51(1)1.b-d covers dual use processes in the meaning of Article 2(4)(b) 2 nd indent of the energy tax directive. 51(1)2 for thermal waste and waste air treatment is a subcategory of dual use. 9a of the Electricity Tax Law applies Article 2(4) 3 rd and 5 th indent of the energy tax directive. The listing of eligible processes in the German legislation serves the facilitation of the implementation. In case Germany would become aware of further dual use processes or mineralogical processes, Germany undertook to treat those processes equally. Germany explained that the modifications to the Energy Tax Law all aim precisely to ensure the consistency of treatment for all dual-use and mineralogical processes. Germany also explained that the restriction of certain tax exemptions to the manufacturing industry does not restrict the scope of beneficiaries, but only reflects the factual situation. The 4

5 processes in question are carried out only by companies active in the manufacturing industry. To the contrary, thermal waste and waste air treatment is carried out to a large extent by companies outside the manufacturing industry. Therefore the definition of beneficiaries is not restricted with regard to thermal waste and waste air treatment. Background: Tax treatment of the processes in question in a changing legal environment - the definition of heating purposes in EU and German national law Before the entering into force of the energy tax directive, mineral oil used for heating purposes was subject to taxation. The terminology use for heating purposes, which can be found in the minerals oils directive 92/81/EEC and which remained unchanged in the subsequent energy tax directive, as well as the term "dual use purpose" used in Article 2(4) of the energy tax directive, have not precisely been defined in Community legislation. In the past, Germany applied a narrow definition of the term "for heating purposes", relating it to the einheitlichen Verwendungszweck. This refers to the use in the same moment in time of the mineral oil for a taxable as well as for a non-taxable purpose. This definition resulted in non-taxation of a number of energy intensive processes, concerning mainly glass, cement, products for construction purposes, brick, ceramic and partly metal and chemical industry. In its ruling of 29 April 2004 in case C-240/01, the European Court declared the German definition incompatible with the mineral oils directive. The Court stated that the use for heating purposes included all cases where mineral oils were burned, and the thereby produced heat was used for heating, independent of the purpose of heating, which could also be the transformation or destruction of the substance on which the thermal energy was transferred in a chemical or industrial process. Consequently, Germany would have had to tax the aforementioned processes. At this time however, the newly introduced energy tax directive excluded from its scope practically all the processes which under the Court's definition would have had to be taxed. When defining the list of processes eligible for de-taxation, Germany not only aimed to maintain its national definition of heating purposes, but also to include other processes where this definition in practice had led to unequal treatment of competing processes. 4. Assessment of the measure By relieving beneficiaries from a tax burden that other companies in Germany have to bear, the measure confers an advantage to the beneficiaries. With regard to the nature of the economic activity of the beneficiaries and the amounts involved, the advantage has the potential to distort competition and to affect intra-community trade. It needs however to be assessed if the measure benefits a selective group of undertakings in the meaning of Article 87(1) of the EC Treaty or if it constitutes a general measure because the measure is justified by the nature and general logic of the national tax system. In the case of energy taxation, Member States are free to determine the logic of their tax system, but of course the result must respect the Energy Tax Directive. Germany has chosen to align its system to the logic of this Directive. The Energy Tax Directive establishes that the consumption of energy products shall be taxed when used for heating or fuel purposes. When discussing the scope of the directive, Recital 22 builds an argument whereas energy products used in dual use and mineralogical processes should remain outside of the scope of the energy tax directive because they can be considered not to be used for heating purposes. 5

6 The German energy tax system implements the taxation of energy products when used for heating or fuel purposes. The Commission assesses the internal logic of the German energy taxation system and the consistency of the tax exemptions with this logic. First, it needs to be established whether all exempt processes are indeed dual use processes or mineralogical processes, which according to the directive can be considered similar to a nonfuel use. Second, it needs to be examined whether Germany applies the same treatment to all dual use and mineralogical processes in the meaning of the directive. As to the first point, it appears that all processes eligible for de-taxation under 51 Energy Tax Law and 9a Electricity Tax Law fall under Article 2(4) of the energy tax directive, being either dual use processes or mineralogical processes. As to the second point, the Commission considers the following. For mineralogical processes, the energy tax directive refers to NACE Code DI 26. Germany does not exempt all energy consumption of companies belonging to this category, but limits de-taxation to energy use which is typical for the processes in question. The Commission considers this to be consistent with the approach of the Energy Tax Directive. The Commission considers further that the notion of dual use processes has not been precisely defined by the energy tax directive. While there are "typical" dual use processes, there is scope for technical debate at the margins of the terminology. The Commission therefore examines the way Germany itself defined the exemptions from taxation and whether it applies its own definition consistently. Germany described that it orients its notion of "heating purposes" on the notion of "einheitlicher Verwendungszweck". Germany explained that this definition may be narrower than a wider definition which could also be covered by the notion of dual use applied by the Energy Tax Directive. However, it seems that the criteria applied by Germany to define the precise scope of heating purposes follow an objective logic, which has been refined following practical experience of its application. The Commission also considers that Germany undertook to apply the same tax treatment in case other dual use processes or mineralogical processes became known and indeed refined its legal provisions first during parliamentary discussion and later through amending legislation to comply with this undertaking. The Commission has not received any other information which would raise doubts that Germany does not consistently apply its logic of the tax system. 5. Conclusion For all these reasons, the Commission concludes that Germany has established a national energy tax system with the purpose to tax the consumption of energy products when used for heating or fuel purposes. Germany does not tax the consumption of energy products when used for other purposes, and consistent with the energy tax directive, considers the energy products used in mineralogical processes and dual use processes to be not used for heating purposes. Germany appears to apply de-taxation consistently to all processes which fall under the same logic. Germany undertook to treat further dual use processes or mineralogical processes equal should such processes become known. The Commission therefore considers that the tax exemptions described above are in the nature and logic of the national tax system. 6

7 6. Decision The Commission has accordingly decided not to raise objections against the measure since it does not constitute aid. If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to the disclosure to third parties and to the publication of the full text of the letter in the authentic language on the Internet site: Your request should be sent by registered letter or fax to: European Commission Directorate-General for Competition Comp State Aid Greffe B-1049 Brussels Fax No: Yours faithfully, For the Commission Neelie KROES Member of the Commission 7