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.