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Spain: Potential recovery of Spanish energy taxes

Spanish electricity producers, including those using renewable systems, need to review their tax payments on the value of electricity output to determine if they may be eligible for a refund in the wake of court cases on the controversial tax.

Javier Calatayud Apellániz


The Spanish electricity system presents a structural deficit due to the gap between revenues from supply tariffs and costs associated to the system. To remedy this deficit, Act No. 15/2012 (Bill on Tax measures in the area of the environment and energy sustainability) introduced three new taxes: the tax on the value of electricity output (TVEO), the tax on the spent of nuclear fuel and radioactive waste resulting from the generation of nuclear energy, and the tax on the storage of spent nuclear fuel and radioactive waste.

In this article, we will focus on TVEO, which levies at a single ad valorem tax rate (7%) on the revenue obtained by electricity production facilities, including renewable energies.

Some taxpayers reacted against this so-called environmental tax, contesting their self-assessments of TVEO (583 tax-form) on the grounds of a potential breach of the "economic-capacity principle" established in the Spanish Constitution and, on subsidiary basis, defending that Act No. 15/2012 infringed the European Directive regarding indirect taxes over energy production.

The first of these arguments led the Supreme Court, by means of two resolutions dated June 14 2016, to raise a question of unconstitutionality against various articles of Act No. 15/2012 because the same economic capacity – according to the Court– was already levied by another tax, the tax on economic activities.

According to the 2016 Spain Tax Revenue Annual Report, since the introduction of the tax in 2013, TVEO collection has raised to more than €6.6 billion ($7.4 billion). Therefore, after the Supreme Court rulings, which provided electricity producers a reasonable expectation of success, a great number of new appellants initiated the administrative procedure to recover TVEO.


However, the Spanish Constitutional Court has ruled rejected the questions of unconstitutionality in two very recent cases (ref. 204/2016 and 205/2016), published on its webpage.

In any case, there is nothing to worry about, as the dismissal is not based on a material issue but on a procedural one. For the Constitutional Court, due to the primacy of European Law, the order of the resolution of the controversy must be the contrary: first, the Court of Justice of the European Union (CJEU) has to determine if the TVEO infringes the European Directive and, in case it appreciates that there is no infringement, the Spanish Constitutional Court would then decide about the alleged unconstitutionality. On the contrary, if the CJEU declares Act No. 15/2012 to be null and void, it will mean the question of Spanish unconstitutionality is unnecessary.

The immediate consequence of the Constitutional Court decision is that, as expected, the Spanish Supreme Court maintains its initial doubts about TVEO, it will forward within the next months a preliminary ruling to the CJEU.

Next steps

Despite Constitutional Court's recent dismissal, from a practical point of view, taxpayers still have two judicial stages (CJEU and, again, the Spanish Constitutional Court) to obtain a refund of the TVEO already paid. In this regard, the duration of the appeals will very likely take many years.

Meanwhile, if a self-assessment of the 583 form is not challenged in a period of four years since its former submission, such TVEO will become definitive and, thus, with no possibility of refund, even in the case that the CJEU or Constitutional Court eventually declares Act No. 15/2012 null and void.

As the amount of potential tax refunds are rather significant, Spanish electricity producers, including those using renewable systems (such as wind power plants, photovoltaic installations or cogeneration plants), are highly recommended to immediately contest their TVEO self-assessments. This will prevent a statute of limitation derived from a potential declaration of the Act's invalidity, and once and for all, not limiting the temporary effects of the refund.

Javier Calatayud Apellániz (, Valencia

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