EU complaints lodged against Greece’s retroactive renewable energy tax08. February 2013 | Global PV markets, Industry & Suppliers, Investor news, Markets & Trends | By: Becky Beetz
Greece-based Metaxas and Associates Law Firm has lodged two complaints with the European Commission against the retroactive taxes applied to renewable energy systems in Greece. Meanwhile, rumors abound that the Greek government is considering more retroactive cuts.
The complaints have been filed with the Directorate General for Competition and the Directorate General for Energy, respectively. The first focuses on the violation of energy law, while the second looks at the violation of European competition law, particularly with regards to state aid law.
Antonis Metaxas, managing partner of the law firm, and president of the Hellenic State Aid Institute tells pv magazine the main argument behind the complaints is the selectivity of the retroactive taxation, which renders the tax measure illegal state aid, according to EU State Aid law. "It is an obviously selective measure," he states.
He adds that while the expansion of photovoltaics and payment of renewable energy tariffs has been linked to the €370 million deficit by ministry officials, many independent surveys conclude that remuneration mechanisms for fossil fuel production, and other structural distortions of the Greek electricity market, have played a significant role.
Furthermore, according to a recent report issued from Greece’s electricity market operator, LAGIE, the retroactive tax has actually failed to solve the problem. This is proof, says Metaxas, that the factors leading to the deficit are not solely linked with the remuneration standards of renewable energy producers and, as such, substantiates the law firm’s claim.
However, Greece-based renewable energy organizations believe the Greek government will only rethink its renewable policies if the European Commission applies enough pressure. Meanwhile, on the back of the news of a rising deficit, there are rumors that the government is contemplating further measures, including retroactive renewable energy FIT cuts.
In addition to lodging complaints with the European Commission, there are parallel efforts underway to engage the national courts in Greece regarding the legality of the retroactive tax, not only on grounds concerning the violation of EU law, but also due to the violation of national constitutional law in Greece.
As of yet no judgment has been issued from the courts, however, in a positive development, the Supreme administration court of Greece has decided to hold a pilot trial regarding the legality of the tax.
A press conference will be held on Monday, February 11, by Greece’s renewable energy associations, which are expected to present their views on the retroactive tax and the future of renewable energy investment in Greece.
The retroactive legislation, pushed through parliament last November 7, imposes taxes on revenue, rather than profits, of up to 30% on all solar installations. It has been backdated to July 1, 2012. In response, a number of Greek and international investors, including Voltalia, engaged Metaxas and Associates to investigate whether the legislation (Law no. 4093/2012, Art. 1 para. Ι.2) breaches EU state aid law.
The rationale behind the renewable aspect of the bill was that the backdated taxation – referred to as a 'solidarity payment' – was to address the €370 million deficit of the market operator caused by the now-defunct FIT regime.
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