UPDATE 2-Berlin defiant as court refers nuclear fuel tax to EU

Tue Nov 19, 2013 10:08am EST

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By Vera Eckert and Tom Käckenhoff

FRANKFURT, Nov 19 (Reuters) - Germany defended its nuclear fuel tax on Tuesday after a Hamburg court referred a complaint by power companies RWE and E.ON to the highest EU court.

The Hamburg Financial Court said it doubted whether the levy was compatible with European law, strengthening the hand of the utilities who say they have paid 3 billion euros ($4 billion) since the tax was introduced in 2011.

But Berlin says it is confident that it has not overstepped its powers. "The German Finance Ministry expects that a decision by the European Court of Justice will confirm this interpretation of the law," the ministry said in a statement.

The levy requires firms to pay 145 euros per gram of nuclear fuel each time they exchange a fuel rod, usually about twice a year. The court said its ruling did not absolve the utilities of their obligation to keep paying the tax.

The case is prominent because of the size of the charges, which were introduced to boost state coffers, and because the tax is one topic in current coalition talks between Chancellor Angela Merkel's conservatives and the Social Democrats, some of whom want to increase the levy and others the duration of the tax, due to expire in 2016.

The tax also reflects Germany's growing scepticism about nuclear power, which it is set to phase out completely by 2022.

E.ON WANTS MONEY BACK

"The court followed the legal argument presented by E.ON and shared doubts about the compatibility of the nuclear tax fuel law with that of the EU," E.ON said in a statement to Reuters.

It said it would consider seeking a temporary moratorium on the payments, as well as reimbursements.

RWE - which had together with E.ON complained to the Hamburg court about the tax payable for the Emsland reactor that they operate jointly, adding to a string of similar local cases - will study the decision and then comment on its next steps, a spokesman for RWE said.

The Hamburg court had in January already sent a similar case to Germany's Federal Constitutional Court in Karlsruhe, which has not yet dealt with it.

A tribunal in Munich has expressed similar doubts on the compatibility of the levy with EU law in a comparable case, while a court in the southern city of Freiburg rejected such a complaint from Germany's other nuclear operator, ENBW.

The utilities argue that the Finance Ministry is not formally entitled to collect the tax as its remit does not stretch to the sector, only to taxes on personal consumption.

The European case is likely to focus more closely on equality and property issues.

Utilities shares have gained in recent days on the prospect of the EU court being called upon. By 1505 GMT on Tuesday, RWE was down by 1.06 percent and E.ON was down 0.57 percent, compared with a 0.22 percent decline in Germany's blue-chip DAX index.

($1 = 0.7394 euros) (Reporting by Vera Eckert, Tom Kaeckenhoff and Markus Wacket; Editing by Kevin Liffey)

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