• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 3/27/2014

France - EC investigates tax reductions for large energy consumers 

March 27: The European Commission (EC) today announced its approval for aid provided to on-shore wind power in France, and that it has opened an in-depth inquiry into tax reductions for large energy consumers.

According to today’s release (IP/14/327), the EC concluded that a French plan to provide support for the production of electricity from on-shore wind installations is compatible with EU state aid rules. Under this plan, producers of renewable energy are compensated for additional production costs in line with EU guidelines, and do not receive “overcompensation.”

Investigation of tax relief for large energy consumers

The EC today also announced an in-depth investigation to determine whether three types of reductions of renewable energy surcharges (contribution au service public de l'électricité–CSPE) granted to large energy consumers in France are in line with EU state aid rules.

France supports on-shore wind installations by imposing, on distributors, tariffs on the above-market price for buying the electricity produced in these installations (feed-in tariffs). The annual value of this support is estimated at €500 million. The feed-in tariffs allow producers of renewable electricity to cover the additional production costs they face compared to traditional electricity generation.

To finance the support for on-shore wind, every electricity consumer in France must pay a uniform levy per kWh consumed (CSPE), except in three instances—which together appear to give large electricity consumers a selective advantage that could distort competition.

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