The basis of excise tax on the sale of electricity to the prosumer

The Voivodship Administrative Court in Rzeszów confirmed the correctness of interpretation of the providsions of the tax law issued by the Director of the National Tax Information Office regarding the excise tax resulting from the settlement of electricity collected between the prosumer and the seller.

Does balance of settlements determine the basis of taxation?

Earlier, a company operating in the field of electricity supplies for, among others, end-users, producing electricity solely from renewable energy sources in micro-installations for the purpose of using it for own consumption (prosumer), asked the tax authority the following question:

In the event of a positive balance for the settlement of the prosumer, will the amount of energy equal to the surplus of electricity drawn from the network by the prosumer over the amount of electricity introduced into the grid by the prosumer itself be the tax base for excise tax?

The applicant argued that, in this case, the provisions of Art. 4 sec. 10 of the Renewable Energy Sources Act (hereinafter referred to as the RES Act) should be applied, which states that „the collected energy subject to the settlement … is the energy consumed by a particular prosumer within the meaning of the provisions of the Excise Duty Act of 6 December 2008”. Accordingly, pursuant to the provision of paragraph 3 of Article 9 of the Excise Duty Act, the obligation of the applicant in connection with the sale of electricity to the final purchaser does not arise because the excise duty may, in principle, be imposed only once, ie it is single phased tax.

Excise duty must be calculated on the basis of all sold energy

The tax authority disagreed with the applicant’s position, stating that the provisions of the RES Act does not belong to the substantive tax law and can not be a basis for occurrense of the excise duty.

According to the principle of consumption taxation, only the last stage of turnover is subject to excise duty, ie the stage of final release of electricity for consumption.

Thus, according to the tax authority, the sale of electricity by the prosumer to the seller is not subject to excise tax, because at this stage electricity is not transferred to the final customer. On the other hand, the sale of electricity by the applicant (being the obligated seller) to the prosumer (which is also the final customer) is subject to excise tax.

Ipso facto, the applicant, by selling electricity to the prosumer, will be obliged to pay excise duty on all electricity sold (taken from the network by the prosumer), and not only the difference resulting from mutual settlements with the prosumer.

As a consequence, the applicant lodged a complaint on the above-mentioned interpretation to the Voivodship Court in Rzeszów, which in its judgement no. I SA/Rz 544/17 dated October 5, 2017 supported the tax authority’s argumentation and dismissed the complaint.