Germany opposes EU plan to lower electricity taxes

Germany is opposing a European Commission proposal aimed at reducing the tax burden on electricity relative to natural gas. The initiative seeks to narrow the price gap between electricity and fossil fuels to accelerate the electrification of European industry, transport, and heating sectors. The EU has set a target of 46% electrification by 2040 to reduce dependence on imported fossil fuels.

Berlin argues that the Commission is attempting to implement significant fiscal measures through electricity market legislation rather than through EU tax law. This distinction is critical because tax matters traditionally require unanimity among member states, whereas the Commission's proposal could potentially be adopted by a qualified majority.

In a letter signed by Bastian Fleig, a director general at the German Ministry of Finance, Berlin expressed serious doubts regarding the legality of the proposal. Fleig stated that the measure “goes against the requirement of unanimity in tax matters” and “directly interferes with national fiscal and budgetary sovereignty.” Currently, electricity in the EU can cost between three and five times more than gas, a disparity that complicates the transition to electric technologies like heat pumps.