Düsseldorf, 28 October 2010 – "The current compromise of the government coalition of CDU/CSU and FDP on green tax sends a proper signal to our industrial clients", said Dr. Karen Möhlenkamp, attorney-at-law at WTS World Tax Service, in a comment on the law accompanying the budget passed by the Federal Parliament on Thursday. "The considerable administrative effort is reprehensible, though."

Dr. Karen Möhlenkamp is a member of staff of one of the major German tax consulting firms. At WTS in Düsseldorf she heads the department for Energy and Electricity Tax and advises large and medium-sized enterprises. Most of all she and her clients are annoyed with the fact that the new law does no longer allow manufacturing companies to be automatically put into a reduced tax-rate category by their electricity supplier. As of 2011 applications for tax-relief will have to be filed retrospectively. "I doubt that all medium-sized businesses realize that they will have to pay more in future unless they file such an application for tax relief", warns Dr. Möhlenkamp. "Moreover, we consider the introduction of new applications an unnecessary additional bureaucratic burden." Even for the so-called energy contracting - the resale of useful energy (including the passing-on of steam) - evidence of proof will have to be provided in future that the buyer is a manufacturing company as well."Such evidence of proof means an incredible additional cost and time spent."

As WTS sees it, the tax relief provided for in the law passed today is well-received by the German industry, though. In particular energy-intensive businesses depend on substantial relief on green tax. "Since energy and electricity costs account for a considerable share of the total production costs, the financial implications of today's vote of the Federal Parliament are crucial for the competitiveness of Germany as an industrial location,“, said Dr. Karen Möhlenkamp of WTS. "We had actually expected considerable additional burdens for our clients with regard to energy and electricity tax. But thank goodness this has been dismissed as it would have jeopardized the economic recovery."

The government coalition had originally agreed to eliminate green tax privileges amounting to 1.5 billion euro. Businesses then warned that this could result in a loss of several hundred thousand jobs. Manufacturing companies now qualify for tax-relief for internal usage once they exceed a basic amount of 1,000 euro (previously 512 euro) - and not as originally planned 2,500 euro. The leaders of both CDU/CSU and FDP agreed on Sunday to place a less heavy green tax burden on energy-intensive companies than planned. According to estimates of the FDP the difference for the manufacturing industry might well be half a billion euro.

To enable companies affected by this parliamentary decision to adapt to the new situation in due time before January 1, WTS offers a quick test even before this law will be passed by the German Federal Council on 26 November. Thus businesses will be given certainty for planning and the chance to benefit from so far unutilised tax optimisation. For further details on the quick test offered by the energy and electricity tax team, please use the WTS information hotline on: (0211) 200 50 817.

On 26 November WTS World Tax Service will take part in the 1st German Energy Tax Convention at the Federation of German Industry (BDI). In the debate on green tax the BDI had warned that up to 870,000 jobs might get lost in foundries, cement plants or the chemical industry.

Pictures and Press Materials

 Dr. Karen Möhlenkamp heads the department for Energy and Electricity Tax at WTS.

Press Release (PDF)