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Judgment of the European Court of Justice concerning the exemption from the Mineral Oil Tax of the consumption of energy products used in cogeneration

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On 1 January 2013, Law 15/2012 of 27 December on fiscal measures for energy sustainability came into force

On 1 January 2013, Law 15/2012 of 27 December on fiscal measures for energy sustainability came into force, the main objective of which was to harmonise the Spanish tax system, making it more efficient and respectful of the environment and sustainability.

One of the measures introduced was the elimination of the exemption provided for energy products used in the cogeneration of electricity and useful heat, for environmental purposes. As a result, the use of natural gas in cogeneration was no longer exempt from the mineral oil tax.

In this sense, the High Court of Justice of the European Union (TJUE) ruled on 7 March 2018, in relation to French legislation, which established the mandatory exemption for the consumption of natural gas used in a cogeneration installation. The ECJ based its ruling on Article 14(1)(a) of Directive 2003/96/EC, which provides for a mandatory exemption from taxation for energy products used to produce electricity.

The French authorities did not recognise the application of the compulsory exemption provided for in the Directive, taxing natural gas used in cogeneration, as is the case in Spain.

Even though the judgment is applicable to the French case, given that the Tax on Hydrocarbons is harmonised in the EU by Directive 2003/96/EC, the exemption on the use of natural gas for cogeneration could be applicable to the Spanish case, which is taxed on its use from 1 January 2013. Thus, the judgment itself establishes that cogeneration has great potential for saving energy and leads to fewer CO2 emissions, in contravention of the environmental argument for which the Spanish legislation abolished the exemption.

Therefore, based on the ruling of the ECJ, entities dedicated to cogeneration could be entitled to a refund of the Tax on Hydrocarbons unduly supported in the use of natural gas. Given that the levy came into force on 1 January 2013, if it is decided to carry out the request, our recommendation is to proceed as soon as possible, taking into account the statute of limitations of the right to request a refund.


For more information, please contact:

María Olleros

Jaime Varanda

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