BFH: Utilities Subject to Electricity Tax Despite Inability of Final Customers to Pay

In a judgement handed down in December 2013, but published recently, the Federal Fiscal Court (BFH) ruled that utilities remain subject to the electricity tax even if their customers are unable to pay to the electricity bill (comprising the electricity tax) due to insolvency or death.

BFH argued as follows:

1. Although the electricity tax was an excise tax that was passed on to the final customer, it was not inequitable to collect the tax from the utility as the debtor named in the Electricity Tax Act (Stromsteuergesetz – StromStG), even if the utility did not receive payment on the electricity bill from the end customer due to insolvency or death.

2. There was the empirical risk of default of customers. All those cases taken together formed a group of cases and could not be considered as atypical (non-standard) cases, so that the tax could not be waived or refunded based on Section 227 Tax Code (AO).

3. The special provision for taxation of energy products laid down in Section 60 Energy Tax Act (EnergieStG) could not be understood as a general rule for excise taxes, which could be applied  to the Electricity Tax Act.

BFH said it did not expect electricity prices to rise in view of its judgement as utilities already had to price in the risk of default.

Source: BFH, ref. no. VII R 8/12

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