The European Court of Justice endorses the Spanish tax on electricity generation

The recent ECJ decision of March 3rd, 2021 (case C-220/19, Promociones Oliva Park, S.L.) brings to an end the long-lasting controversy on the compatibility with EU Law of the Tax on the Value of Electricity Generation.

As explained in our Newsflash #11, the High Court of Justice of the Autonomous Community of Valencia (“TSJV” by its Spanish acronym) had referred to the ECJ for a preliminary ruling the question of the real nature of the tax and the compatibility of the Tax on the Value of Electricity Generation (hereinafter, “IVPEE” by its Spanish acronym) with the legal system of the European Union, to the extent the tax burden of the IVPEE is in practice being borne by the final consumer of electricity. The IVPEE has been challenged by taxpayers since its introduction in by Law 15/2012, on fiscal measures for sustainable energy.

The ECJ has now finally concluded that the IVPEE cannot be considered an indirect tax for the following reasons:

From our perspective, it is foreseeable that the administrative and judicial proceedings submitted by the taxpayers requesting the refund of the IVPEE, following the ruling of the ECJ will be dismissed. Hence, we recommend not to continue any administrative proceedings and to voluntarily withdraw from the judicial proceedings to avoid any litigation fees.