German Federal Court of Justice: EEG is Constitutional

The German Federal Court of Justice has published a decision from June 25 on an attempt to resist the German feed-in tariff system.

The plaintiff in that case paid the feed-in tariff surcharges for April 2012 (about 10,000 Euro) and claims them back with this lawsuit. They argue that the Law on Priority for Renewable Energy is unconstitutional.

The reason for that: In their view, the surcharges are a “special tax” (Sonderabgabe), which means a tax raised for a specific purpose. Such a tax is problematic under the German Constitution, because it calls in question Parliament’s right to decide about how to spend all tax income.

The Federal Court of Justice did not share these concerns. They say that this is not a tax in the first place. A tax requires that the funds raised by the surcharges become part of the state budget. They don’t. All these funds never touch the state budget, they all flow only between private persons.

That of course is also true when discussing if the system is a form of “State aid”, as the EU Commission claims. For exactly the same reasons explained in this opinion, that is not the case as well.

Some people call the new requirement for renewable energy installations over 10 kW to pay 40% of the surcharges (after a transition period) a “solar tax”. That is not correct either. Again, these funds are never in the state budget.

6 Comments

  1. Craig Morris (@PPchef)

    KF, great post, but “dispose about” is not English, and “dispose of” means “throw away.” For “verfügen über,” just say “have” or, here, “Parliament’s right to allocate all tax income.”

    • Karl-Friedrich Lenz

      Thanks for catching this error and taking the time to point it out. 🙂

      I just fixed it in the post above.

  2. But wouldn’t the surcharge for renewable energy installations in this sense be unconstitutional as it represents a double imposition (Doppelbelastung)? Investors in renewables have already contributed to financing the “Energiewende” with their investment.

  3. Karl-Friedrich Lenz

    The new duty to pay 40% of surcharges (after a transition period) for everybody consuming their own electricity was not before the Court in this case, since it will be applied only from August 1st 2014.

    But the reasons of this decisions would seem to apply here as well: Even in this case, the funds stay away from the State budget, so this is not a special tax.

    While it is true that investors already have contributed with their investment, it is also true that they get compensated at above market value with a guaranteed profit. So I see only one “imposition” (probably should be translated as “burden”).

  4. Guaranteed profit obviously only is relevant for the electricity fed into the grid. I am referring to the electricity generated for own consumption – wouldn’t this be a double burden/imposition if they have to pay EEG surcharge on this? I am not talking about payments for grid services, this is another story.

    • Karl-Friedrich Lenz

      I see your point now, thanks.

      I am not sure however about the “double burden” standard in this case. It may be a problem under the Constitution to burden the same income twice with different taxes, see for example this court decision: http://openjur.de/u/322746.html.

      But in this case, the first burden (investment cost) is not paid to the State budget and therefore no tax. The second one (40% of surcharges) is also not paid to the State budget and therefore no tax (my point in this post).

Comments are closed.