Electricity utilities call for tax harmonisation 

A new report published on 8 July demonstrates large differences between taxes paid by both electricity utilities and consumers in the ten mainly Western European states examined. 

It found that Sweden has by far the highest burden per kWh, at 5.11 eurocents, followed by Germany with 4.03 eurocents. Spain and Portugal, on the other hand, come far behind, with 1.67 and 1.46 cents respectively.

Many countries have also adopted environmental taxes linked to the amount of power consumed in order to generate significant amounts of income for the state coffers, according to Eurelectric. Depending on the country's fiscal system, they are borne either by electricity companies or by consumers, in which case they can represent a significant percentage of electricity companies' turnover.

Environmental taxes have become significant in countries like Hungary and France, where they are levied on electricity companies, and in Germany and Sweden, where comsumers pay the price, according to the report.

Again, Sweden tops the list of countries with the highest environmental fiscal burden, where energy and CO2 taxes amount to 1.6 cents per kWh consumed. Germany follows with 1.16 cents. As levies in many other countries are far lower, the potential for distortion of competition is significant, the authors argue.

Indeed, even the value added tax (VAT) ranges between 2% and 25% despite the fact that EU states must levy it uniformly, the report points out.

"As such differences could impair the ability of electricity companies to compete on equal terms, it would be appropriate to develop measures aimed at increasing the degree of tax harmonisation in the electricity sector," the authors conclude.

Moreover, they point out that assessing the complicated landscape of energy taxation in the EU will become even harder when market liberalisation advances, as electricity companies become less ready to give out tax information.

While the EU's third legislative package on energy market liberalisation (see EurActiv LinksDossier on 'EU electricity market liberalisation') aims to establish a level playing field for electricity and gas utilities, national tax regimes may introduce price differentiation in different parts of the common market.