January 2025 |
260112 |
ENERGY CHRONICLE |
The abolition of the gas storage levy for end customers, which was decided by the Bundestag in November, will probably place an even greater burden on the Climate and Transformation Fund (KTF) than the €3.063 billion that the federal government transferred to Trading Hub Europe (THE) on December 11 to cover the remaining deficit (251108). The federal government has forgotten – at least it seems that way – that THE has a legal right to reimbursement of all costs incurred in performing its duties under Part 3a of the Energy Industry Act.
“This also includes any sales tax payments,” according to a letter from the Federal Ministry of Finance dated January 14, which Parliamentary State Secretary Dennis Rohde (SPD) sent to the chair of the Budget Committee, Lisa Paus (Greens). The amount in question is €582,990,000, which must be transferred to THE by February 10 at the latest – “provided that no decision has been made by the tax office regarding the taxability of the compensation payment by that date,” as Rohde indicated in the letter as a last glimmer of hope, because “the final decision on whether the compensation payment is taxable under the UStG will be made by the tax office at THE's headquarters.”
However, the Sales Tax Act does not allow for any such exemption from tax liability: According to Section 1 (“Taxable Transactions”), taxability does not cease to apply “if the transaction is carried out on the basis of a legal or official order or is deemed to have been carried out in accordance with legal provisions.” The processing of the gas storage levy by THE is such a service on behalf of and in accordance with the instructions of the state.
“The need is therefore objectively and temporally irrefutable,” the letter continues. “The entry into force of the next budget law cannot be awaited. The need is also ”unforeseen." Under these circumstances, the Federal Ministry of Finance intends to approve this “unplanned expenditure” and therefore asks the Budget Committee to “take note” of it in accordance with the regulations – nothing more.
In fact, according to Article 112 of the Basic Law, the government can decide on “unplanned and extraordinary expenditures” even without the approval of parliament, provided that the Federal Ministry of Finance agrees. However, this approval may “only be granted in the event of an unforeseen and unavoidable need.”
This “unforeseen and unavoidable need” must be viewed with a big question mark here. The Federal Ministry of Economics, headed by Katherina Reiche, apparently acted negligently when it took the lead in negotiating a public law contract with THE to reset the gas storage levy account to zero. It is by no means the case that VAT was not considered in the negotiations. On the contrary, THE was expressly assured in this agreement that the federal government would compensate for the VAT due by February 9, 2026, with a corresponding compensation payment.
It was not yet clear exactly how low the account balance would fall by the end of the year. But the order of magnitude of just over €3 billion was just as foreseeable as the 19 percent sales tax that would be incurred as a result. So why was this considerable sum not reported during the budget deliberations? Was the intention to make the costs appear lower in order to better accommodate them in the budget? Or was the intention from the outset to stretch the limits of Article 112 of the Basic Law in order to approve the €582 million simply by government decree, citing an “unforeseen and unavoidable need,” and thus outsmart parliament?
In its letter, the Federal Ministry of Finance apparently wants to make it appear that it was an oversight on the part of the Federal Ministry of Economics not to take VAT into account: “The need is unforeseen, as the lead ministry, the BMWE, assumed when drafting the bill and the 2026 budget application that the payment to THE to compensate for the negative difference was not subject to sales tax. For this reason, no budget funds were applied for or estimated for this purpose.”
As a kind of alternative explanation, it is also pointed out that the public law contract “was only finally agreed between all parties on November 28, 2025. For this reason, “no compensation payment for the sales tax amount was planned until the conclusion of the 2026 budget preparation process.”
So you can choose whether the Ministry of Economic Affairs simply did not know about the VAT liability of the payment to TEH, at least until the “budget registration,” or whether it was simply imperative or at least correct to wait until the final agreement on the contract with THE (which took place on November 28, which coincidentally was also the day the 2026 budget was passed by the Bundestag).
Both options are quite unreasonable. After all, it can be assumed that both the Ministry of Economics and the Ministry of Finance had long been aware of this by November at the latest. However, there would have been an opportunity until November 14 to bring up the additional sales tax in the budget committee meeting, which convened on that day to make the final corrections to the draft budget.
“It is scandalous that the CDU/CSU and SPD are now using additional funds that could have been used for climate protection and transformation to offset fossil fuel subsidies,” said Green Party MP Katrin Uhlig. "The 2025 budget was approved in September after intensive consultations. The fact that further financial requirements are only now emerging in January is highly irritating and raises the question of why these figures were not already on the table during the budget process. We Greens have repeatedly asked the federal government about the expected costs. There was no transparency. This is particularly irritating because the government now seems to have only just noticed that more funds are needed for VAT reasons. This raises the question of whether the government really has a clear understanding of the situation."