Energy-intensive businesses - possible higher excise duty refunds on electricity consumed

Energy-intensive businesses – possible higher excise duty refunds on electricity consumed

2024 / 06 / 24

On 13 June 2024, the CJEU (Case C-266/23) stated that additional energy-related charges, such as a mandatory distribution fee paid when electricity is purchased should also be included in the cost of electricity purchased.

The cost of electricity purchased is important for those entities that may be energy-intensive businesses within the meaning of Article 31d(2) of the Excise Duty Act. Such companies, in certain circumstances defined by the law (e.g. the relevant type of activity), may benefit from an excise duty exemption on electricity purchased, through its partial refund (Article 31d of the Excise Duty Act).

The amount of the exemption and the right to apply it depend on the cost of electricity used in a given tax year. So far the Polish courts presented the view that it applied exclusively to the cost of electricity purchased. However, the CJEU has taken a different stance, which may mean that some energy-intensive businesses:

will get a higher excise duty refund or
will acquire the right to get an excise duty refund.

This is because the distribution charges in practice represent a significant part of the actual cost of electricity purchase.

The new approach to determining the cost of electricity purchased should make some entities reconsider the exemption. This applies to in particular:

companies that have not benefited from said exemption to date (e.g. because the share of electricity costs in the value of production sold was too low) – with the new approach, such businesses will have a greater chance of obtaining a partial excise duty refund this year or in the coming years;
businesses that received excise duty refunds in previous years, calculated according to the previous methodology (potential possibility to increase excise duty refunds received for previous years).

The judgment will be binding on Polish courts and tax authorities from the date of its publication in the Official Journal of the European Union. The date of publication will also be relevant for calculating the time limit for taking steps related to excise duty refunds granted for previous years.

Our experts are ready to support you with refunds received in the past as well those that are to be received in the future.

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