The Spanish Supreme Court has ruled in its judgments of 8, 22, and 24 July 2024 that the removal of the exemption from the Special Tax on Hydrocarbons (IEH), applicable to natural gas used for the production of electricity or the cogeneration of electricity and heat, established by Spanish Law 15/2012 on Fiscal Measures for Energy Sustainability, is contrary to European Union law.
Law 15/2012 abolished, with effect from 1 January 2013, the exemption from the IEH for biogas and natural gas intended for the production of electricity in power plants, the cogeneration of electricity and heat in combined plants, or for self-consumption in the facilities where they were generated. However, this exemption was reintroduced, with effect from 1 July and 7 October 2018 for biogas and natural gas, respectively, in order to prevent the tax from being passed on to final prices during hours when these technologies set the prices in the wholesale market.
As a result, certain operators who had paid the tax during the period when the exemption was abolished considered that such removal violated European Union law and sought the refund of the IEH amounts they had paid.
The Spanish Supreme Court has determined that the environmental policy grounds invoked to justify the removal of the exemption were merely formal, and has concluded that natural gas used in the generation and cogeneration of electricity and heat must be exempt from the IEH.
Thus, the Supreme Court upholds the refund requests submitted by operators who claimed the IEH amounts they had unduly paid due to the removal of the exemption.
These rulings allow for the recovery of the IEH - without prejudice to examining the impact on the specific remuneration impact of high-efficiency cogeneration plants (CHPs)- in the following cases:
- Companies with ongoing refund procedures, whether at the administrative, economic-administrative, or judicial stage. In such cases, either an ex officio application by the competent authority or tribunal, or the submission of these rulings by the interested company, will suffice.
- Companies whose procedures have been concluded but still have pending enforcement proceedings. It is important to note that procedures concluded by a judgment with the force of res judicata, in which the now-invalidated regulations were applied, cannot be reopened.
- Companies that have not exhausted the limitation period (due to its interruption or because the collection procedure is suspended) and are able to initiate a process for the refund of undue payments, unless the tax authority initiates ex officio review procedures on its own initiative. A corresponding form will be available at sede.agenciatributaria.gob.es. This ex officio review procedure will have a maximum duration of six months, after which, if no express decision is issued, the request may be considered rejected.
- Companies that have not initiated proceedings or whose claims relate to prescribed periods may file, on different grounds and with different requirements, a compensation claim for legislative liability against the State before the Council of Ministers, within one year from the publication of these rulings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.