By Jörn Kassow and Alexander Wilhelm

On 7 June 2017, the Federal Constitutional Court of Germany (FCC) published a recent decision that declared the German Nuclear Fuel Tax Act (Kernbrennstoffsteuergesetz – KernbrStG) void due to the lack of legislative competence of the federal legislator (Bundestag) to enact the law constitutionally. The FCC argued that neither the Federation (Bund) nor the federal states (Länder) have the right to seek tax outside the competencies of the Basic Law (Grundgesetz). The court found that the tax on nuclear fuel cannot be allocated to the type of excise duty (Verbrauchsteuer) within the meaning of Art. 106 of the Basic Law.

The tax on nuclear fuel was imposed in 2010 as a measure for fiscal consolidation. From 2011 through 2016, each gram of fissile nuclear fuel loaded into a German reactor carried a levy of €145. The legislator deemed the tax to be an excise duty within the meaning of tax regulations. According to the Federal Ministry of Finance, the tax revenue amounted to nearly €6.3 billion.

The operators of nuclear power plants challenged the levy before several German Fiscal Courts. The Fiscal Court of Hamburg referred the case at hand to both the FCC and the European Court of Justice (ECJ). The Fiscal Court doubted the compatibility of the Nuclear Fuel Tax Act with national constitutional law and the law of the European Union. In 2015, the ECJ found the German law compatible with the European Directive (2003/96/EC) on taxation of energy products and electricity and rejected the claim that nuclear fuel must be exempted from taxation. The Directive exempts energy products for the production of electricity which are subject to harmonized excise duty. The ECJ noted that nuclear fuel is not included in the scope of this Directive.

The Recent FCC Decision

The FCC’s decision mainly depended on the question whether the Nuclear Fuel Tax Act constitutes an excise duty. Only if the answer was in the affirmative did the Bundestag have the sole legislative competence to enact the KernbrStG. One of the most important issues in the very controversial discussion was whether an excise duty requires the taxpayer to pass the tax on to the final consumer.

The FCC decided that the central criterion of an excise duty is that it taxes the private application of generated income. The court found that the Nuclear Fuel Tax Act only imposes a tax on the means of production, and thus constitutes a tax on the entrepreneurial generation of income. The court noted that the legislator himself assumed that the final consumer does not bear the tax, because the use of nuclear fuel lies outside the consumer’s sphere of influence. The ECJ ruling also confirmed an excise duty would have imposed a tax on the consumption of electricity — which is not the case with the Nuclear Fuel Tax Act. The FCC argued that the Nuclear Fuel Tax Act cannot be considered an excise duty on the consumption of nuclear fuel because such fuel is not brought to the general market to meet a private need.

Furthermore, the FCC pointed out that the fiscal regime of the Basic Law limits the legislator’s ability to “invent” taxes beyond the classification of taxes outlined in the constitution. Protecting the confidence of individuals and legal entities would require a prior change of the constitution.


The three German utilities which are affected by the decision — Eon, RWE and EnBW — are now entitled to claim reimbursement. Each utility will recover between €1.44 billion and €2.8 billion plus interest. Thus, the utilities’ strategy not to waive their complaint against the Nuclear Fuel Tax Act in the course of the discussion on the costs of nuclear decommissioning in Germany has been successful.