Energy taxes – infringement procedures against Germany for not implementing two Court judgments
European Commission - IP/06/33 13/01/2006
Brussels, 13 January 2006
The Commission has decided to take legal action against Germany for failure on two counts to comply with EU rules on energy taxation (Directive 2003/96/EC) and rulings of the European Court of Justice. It will send Germany a "letter of formal notice", the first stage of the infringement procedure laid down in Article 228 of the EC Treaty, over Germany's failure to follow a 2004 ruling by the Court on the range of products which should be taxed as "heating fuels" under the Directive. It will also send Germany a reasoned opinion, the second stage of the infringement procedure under Article 228, because Germany taxes certain fuels used for navigation in Community waters which should be tax exempt in accordance with the Directive, as confirmed in a second Court decision.
The first case concerns Germany's failure to follow the judgement of the European Court of Justice of 24 April 2004 in case C-240/01, Commission v. Germany, concerning Germany's application of Directive 2003/96/EC on the taxation of energy products and electricity. The Directive lays down the general principle that energy product, such as mineral oils, should be taxed if they are used either as motor fuels or as heating fuels. In its judgement, the Court agreed with the Commission that the notion of "heating fuel" in German law was narrower than the definition laid down in Directive 2003/96/EC. The result was that fuel uses which should have been taxed in all Member States were exempt in Germany. This could lead to distortion of competition.
Article 228 of the EC Treaty provides that a Member State must take all measures necessary to comply with a Court ruling which finds that the State has failed to meet its obligation under Community law. If it does not do so, the Commission may open new infringement proceedings. In the present case, the Commission understands that Germany, more than 18 months after the judgement in case C-240/01, has yet to act on the Court's ruling. The Commission has therefore decided to open new infringement proceedings by way of a letter of formal notice which gives Germany two months to present its observations.
The second case is the reverse situation. Under Directive 92/81, and Directive 2003/96/EC which repealed Directive 92/81, fuels used for navigation in Community waters (other than for pleasure crafts) should be exempt from energy taxes. The European Court of Justice decided (case C-389/02), in response to a request by a German court for a ruling, that the scope of this exemption in German law was too narrow with the result that the fuel used for several forms of navigation was incorrectly taxed. Germany allows the exemption for fuels used by boats on Community waters only in the case of transportation of goods or passengers.
The Commission understands that Germany has not modified its tax system to
bring it into line with the ruling by the Court of Justice. Consequently, the
Commission decided to launch infringement proceedings. As Germany has failed to
provide a satisfactory response to the letter of formal notice that the
Commission sent it earlier this year, the Commission has now decided to issue a
reasoned opinion formally requesting Germany to amend its legislation within two
months. If Germany fails to do so, the Commission may once again bring it to the
Court of Justice, this time with a request under Article 228 of the EC Treaty
for penalties for non-compliance with a ruling of the Court.