Energy tax rebate for service providers reloaded – ECJ addressed once again

The limitation of the Austrian energy tax rebate (ETR) to production enterprises has been subject to disputes before various courts for years already. A recent judgement by the Austrian Supreme Administrative Court (VwGH) on this controversial question has been issued. Contrary to what was expected, the Supreme Administrative Court has not ruled on this issue substantively yet but referred the case to the European Court of Justice (ECJ) regarding questions on the appropriate interpretation of European Union law. While this implies a delay in open procedures, it may also extend the possibility for service providers to submit ETR applications.

Previous procedure.

In 2016, it was referred to the ECJ, whether the limitation of the Austrian energy tax rebate to production enterprises was contrary EU law (ECJ 21 July 2016, C-493/14, Dilly’s Wellnesshotel GmbH). The VwGH ruled that, in the context of legislation amendments to Austrian law, formal errors had been made relating to applicable state aid provisions (see our Breaking Tax News dated 22 July 2016). Subsequently, the Tax Court of Appeals (“BFG”), which had initiated the procedure before the ECJ, decided that service companies are entitled to apply for ETR for the years following 2011 onwards. Austrian tax authorities appealed against this judgement and thus the VwGH referred questions to the ECJ.

Restriction of beneficiaries.

Assuming that the previous ETR system (for production and service companies) is seen as an approved state aid, the VwGH questions whether the legislation amendment (limitation to production companies) was required to be notified. It may be argued that this only was a reduction of aid recipients. The VwGH deduces – based on previous ECJ judgments – that the approval of aid does not impose an obligation to the respective Member State to always concede grants in its entirety. The VwGH therefore questions whether the restriction on the number of beneficiaries regarding ETR is really to be qualified as a legal disuse of approved EU state aid.

Formal errors.

Referencing to already mentioned formal errors in the ECJ case Dilly, the VwGH seeks clarification whether these formal errors lead to the prohibition of limitation due to the prohibition of implementation (so-called “Durchführungsverbot”). If this leads to a prohibition of the limitation, the ETR would have to be granted to all companies as it was the case before the year 2011. According to the VwGH, this may be interpreted as an “obigation of implementation”. Such an obligation would contradict the fact that states are not obliged to grant state aid.

New EU regulation.

Additionally, the VwGH questions whether the ETR limitation to production companies is compatible with the new so-called Block Exemption Regulation (“GVO”), which entered into force on 1 January 2015. Such EU regulations repeatedly have subjected certain categories of state aid to a simplified authorization procedure and also may be relevant to ETR. If this was the case, the restriction of the ETR to production enterprises could have become effective as of 1 January 2015. However, the VwGH also questions whether the wording of the transitional provision in the Block Exemption Regulation would make a retroactive application regarding the periods from January 2011 onwards obsolete.


If the ECJ affirms one or more questions raised by the VwGH, the limitation to production enterprises could be in line with EU law. Nonetheless, many arguments speak against an (retroactive) approval. This may be the case as various ECJ judgements confirm a notification obligation for the amendment of existing state aid, but steadily deny retroactive authorization in the case of state aid law. Moreover, the ECJ has ruled in the case of Dilly that a formal error in the notification of the state aid is relevant.

Further developments.

The contentious legal question whether service providers are still entitled to the energy tax rebate after January 2011 is still unsolved. It is desirable that the current ECJ procedure brings clarification. Anyway, service enterprises have to keep in mind that applications for the energy tax rebate regarding the year 2012 have to be submitted by the end of 2017. Therefore, service providers who want to maintain their potential claims need to submit applications.

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Andreas Kapferer

Andreas Kapferer

Partner | Deloitte Tirol | Telefon: +43 512 58 2555-23 | E-Mail senden

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