Opinion of the Advocate General — ECLI:EU:C:2023:66
Date: 2023-02-02
Language of the case: Spanish
Subject matter: Energy;Taxation
Procedure: Reference for a preliminary ruling
Origin: Spain

Summary C-833/21 – 1 
Case C-833/21 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
31 December 2021 
Referring court: 
Audiencia Nacional (Spain) 
Date of the decision to refer: 
14 December 2021 
Applicant: 
Endesa Generación, S. A. 
Defendant: 
Tribunal Económico Administrativo Central 
  
Subject matter of the main proceedings 
Assessment notice issued in respect of the coal tax levied on the consumption of 
coal for use in electricity production. 
Subject matter and legal basis of the request for a preliminary ruling 
Request, under Article 267 TFEU, for interpretation of the term ‘reasons of 
environmental policy’ in Article 14(1)(a) of Directive 2003/96, in relation to the 
Spanish tax on coal used for the generation of electricity. 
Questions referred for a preliminary ruling 
(1) Is the Spanish legislation which provides for a tax on coal used for 
electricity generation compatible with Article 14(1)(a) of Directive 2003/96/EC, 
when, despite stating that its aim is to protect the environment, that aim is not 
reflected in the structure of the tax and the tax levied is used to finance the costs 
of the electricity system? 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-833/21 
 
2  
(2) Is it possible to consider that the environmental aim is given concrete 
expression in the structure of the tax on the ground that the tax rates are set in 
relation to the calorific value of coal used for electricity generation? 
(3) Is the environmental aim achieved simply by reason of the fact that taxes 
have been imposed on certain non-renewable energy products and that no tax is 
levied on the use of such products where they are considered to be less harmful to 
the environment? 
Provisions of EU law relied on 
Council Directive 2003/96/EC of 27 October 2003 restructuring the Community 
framework for the taxation of energy products and electricity 
According to recital 2 in its preamble, this directive aims to impose a minimum 
rate of taxation on electricity and energy products owing to requirements relating 
to the proper functioning of the internal market. 
Tax on electricity is levied on final consumption, as a consequence of which 
Article 14(1)(a) of the directive provides that Member States are to exempt from 
taxation ‘energy products and electricity used to produce electricity and electricity 
used to maintain the ability to produce electricity.’ The same paragraph permits 
Member States, for reasons of environmental policy, to subject those products to 
taxation without having to satisfy the minimum levels of taxation laid down in the 
directive. 
Case-law of the Court of Justice. 
In the judgment of 7 March 2018, C-31/17, Cristal Union, the Court of Justice 
ruled on the mandatory nature of the exemptions provided for in Article 14(1)(a) 
of Directive 2003/96, finding as follows: 
‘25 In addition, since Article 14(1) of Directive 2003/96 sets out an exhaustive 
list of the exemptions which Member States must apply in connection with the 
taxation of energy products and electricity …, its provisions cannot be interpreted 
broadly without depriving the harmonised taxation established by that directive of 
all practical effect. 
26 However, as the Court has already held, the first sentence of Article 14(1)(a) 
of Directive 2003/96, in so far as it imposes on Member States the compulsory 
exemption of energy products used to generate electricity, provides a precise and 
unconditional obligation, with the result that it confers on individuals the right to 
rely directly on it before national courts … 
27 In addition, it should be noted that, when the EU legislature intended to 
allow Member States to derogate from that regime of mandatory exemption, it did 
ENDESA GENERACIÓN 
 
3 
so explicitly in, respectively, the second sentence of Article 14(1)(a) of Directive 
2003/96, which states that Member States may tax energy products used to 
produce electricity for reasons relating to the protection of the environment, and in 
the third subparagraph of Article 21(5) of that directive, under which Member 
States which exempt electricity generated by small producers of electricity must 
tax the energy products used for the generation of that electricity.’ 
In relation to the criteria which a tax must fulfil in order to have a specific 
purpose, such as to satisfy reasons of environmental policy, the judgment of 
5 March 2015, Statoil Fuel & Retail, C-553/13, referring to the same concept in 
Article 1(2) of Directive 2008/118, states that: 
‘37 As regards the first of those conditions – the only one to which the questions 
referred relate – it is apparent from the case-law of the Court that a specific 
purpose within the meaning of Article 1(2) of Directive 2008/118 is a purpose 
other than a purely budgetary purpose … 
41 In order for the predetermined allocation of the revenue from a tax on excise 
goods to be regarded as indicating that the tax pursues a specific purpose within 
the meaning of the same provision, the tax in question must itself be directed at 
achieving the specific purpose referred to, so that there is a direct link between the 
use of the revenue and the specific purpose … 
42 In the absence of such a mechanism for the predetermined allocation of 
revenue, a tax on excise goods can be regarded as pursuing a specific purpose 
within the meaning of Article 1(2) of Directive 2008/118 only if it is designed, so 
far as its structure is concerned, and particularly the taxable item or the rate of tax, 
in such a way as to guide the behaviour of taxpayers in a direction which 
facilitates the achievement of the stated specific purpose, for example by taxing 
the goods in question heavily in order to discourage their consumption …’ 
Provisions of national law relied on 
Law 22/2005 of 18 November 2005 
This Law transposes Directive 2003/96/EC into Spanish law and creates the coal 
tax through the amendment of Law 38/1992 on excise duty (Ley 38/1992 de 
impuestos especiales) of 28 December 1992, by inserting Title III ‘Excise duty on 
coal’. 
Liability to the tax is triggered by the release of coal for consumption, although 
Article 79(3) of Law 38/1992 exempted from the coal tax transactions whereby 
the release of coal for consumption involved the use of coal in electricity 
production and the cogeneration of electricity and heat. 
The basis of assessment is the energy value of coal that is the subject of taxable 
transactions, expressed in gigajoules, and the tax rate was EUR 0.15 per gigajoule. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-833/21 
 
4  
Law 15/2012 on fiscal measures for sustainable energy (Ley 15/2012 de medidas 
fiscales para la sostenibilidad energética) of 27 December 2012  
This Law abolished the exemption, laid down in Article 79(3) of Law 38/1992, for 
the consumption of coal used in electricity production and the cogeneration of 
electricity and heat. 
This Law also laid down a tax rate of 0.65, although subsequently, by means of 
Royal Decree Law 9/2013 adopting urgent measures to guarantee the financial 
stability of the electricity system (Real Decreto ley 9/2013 por el que se adoptan 
medidas urgentes para garantizar la estabilidad financiera del sistema eléctrico) of 
12 July 2013, a reduced rate of 0.15 per gigajoule was introduced for coal 
intended for professional use, provided that that coal is not used in processes 
relating to cogeneration and the direct or indirect generation of electricity. The 
Royal Decree laid down rules governing the taxation of supplies of coal for use in 
combined heat and power plants generating electricity and useful thermal energy, 
the tax rates referred to being applied on the basis of the proportion of coal to be 
attributed to electricity production measured at the alternator terminals and to 
useful thermal energy, thereby complying with the case-law of the Court of 
Justice on that point. 
The second additional provision of Law 15/2012, ‘costs of the electricity system’, 
provided that, in the annual General State Budget Laws (Leyes de Presupuestos 
Generales del Estado) an amount would be allocated for financing the costs of the 
electricity system, as provided for in Law 54/1997 on the Electricity Sector (Ley 
54/1997 del Sector Eléctrico) of 27 November 1997, that was equivalent to the 
sum of (i) an estimate of the annual amounts collected by the State in respect of 
the levies and taxes included in that Law and (ii) the estimated revenue generated 
by the auctioning of greenhouse gas emission allowances, with a maximum of 
EUR 500 million. 
As regards the objective of Law 15/2012, its preamble states as follows: ‘The 
objective of this Law is to adapt our tax system to more efficient and 
environmentally friendly use and sustainable development, values that inspire this 
tax reform, and as such in line with the basic principles that govern the fiscal, 
energy and, of course, environmental policy of the European Union. 
In today’s society, the increasing impact of energy production and consumption 
on environmental sustainability requires a normative and regulatory framework 
that guarantees all agents the proper functioning of the energy model that also 
contributes to preserving our rich environmental heritage. 
The basic foundation of this Law is Article 45 of the Constitution, a provision in 
which the protection of our environment becomes one of the guiding principles of 
social and economic policies. Thus, one of the axes of this tax reform is to 
internalise the environmental costs resulting from electricity production and from 
the storage of spent nuclear fuel and radioactive waste. In this way, [this] Law 
ENDESA GENERACIÓN 
 
5 
must serve as a stimulus to improve our levels of energy efficiency while at the 
same time ensuring better management of natural resources and continuing to 
enhance the new model of sustainable development, both from an economic and 
social point of view, as well as from an environmental point of view. 
The present reform also contributes to integrating environmental policies into our 
tax system, which includes taxes that are specifically environmental and also the 
possibility of incorporating the environmental component into other, existing 
taxes. 
The values and objectives underpinning this Law are intended to be cross-cutting 
and must therefore be a cornerstone of the cohesion of the sectoral measures, 
particularly where these affect a sector, like the energy sector, having such a high 
economic and environmental impact on the country. 
To this end, this Law regulates three new taxes: the tax on the value of electricity 
production, the tax on the production of spent nuclear fuel and radioactive waste 
resulting from the generation of nuclear power, and the tax on the storage of spent 
nuclear fuel and radioactive waste in centralised facilities; a charge on the use of 
inland waters for the production of electricity is introduced; the rates of taxation 
for natural gas and coal are amended and the exemptions for energy products used 
in the production of electricity and in the cogeneration of electricity and useful 
heat are abolished …’ 
Law 15/2012 retained the exemptions from hydrocarbon tax in respect of the 
production of electricity at power plants and the production of electricity or the 
cogeneration of electricity and heat at combined power plants in respect of fuels 
falling within its scope, which include natural gas and diesel fuel. 
Law 54/1997 on the Electricity Sector (Ley 54/1997 del Sector Eléctrico) of 
27 November 1997 
This Law governed the costs and the financing of the electricity system. 
Remuneration for activities in the electricity system 
With regard to the remuneration of production activity, the Law provides as 
follows: 
(a) Based on the price offered to the market operator by the different production 
units, remuneration for electricity shall be paid by reference to the marginal price 
corresponding to the offer made by the last production unit whose entry to the 
system was necessary in order to meet the demand for electricity.  
(b) The capacity guarantee which each production unit effectively provides to 
the system, which shall be defined by taking into consideration the verified 
availability and technology of the plant in the long and short term and in each 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-833/21 
 
6  
programming period, shall be remunerated by calculating the price by reference to 
the long-term capacity requirements of the system. 
(c) Additional services involved in the production of electricity, which are 
necessary in order to ensure adequate consumer supply, shall be remunerated. 
Coal-fired power plants receive remuneration for production activity which 
reflects the capacity guarantee that each production unit effectively provides to the 
system. 
Remuneration for transport activity shall be laid down by regulation and shall be 
determined in the light of the investment, maintenance and operation costs of 
equipment and other costs required for carrying on that activity. 
Remuneration for distribution activity shall be laid down by regulation and shall 
enable the remuneration payable to each subject to be set on the basis of the 
following criteria: costs relating to investment, operation and maintenance of 
equipment, circulated energy, model showing the distribution areas, incentives to 
ensure quality supply and reduction of losses. 
Remuneration for marketing activity which is payable by tariff customers shall 
be paid in the light of the costs derived from activities that are deemed necessary 
in order to supply electricity to those consumers and, where appropriate, the costs 
associated with demand management incentive schemes. The remuneration of 
marketing costs to eligible consumers shall be that which is freely agreed between 
marketers and their customers. 
Costs of the electricity system 
The following shall be regarded as permanent operating costs of the system: (i) 
costs which, because they are for carrying out activities relating to the supply of 
electricity, can be included in the system; (ii) costs allocated to the system 
operator and the market operator; and (iii) the operating costs of the Comisión 
Nacional del Sistema Eléctrico (National Commission of the Electricity System). 
The premium payments referred to in Article 30(4) of this Law shall be regarded 
as costs of diversification and security of supply. 
Law 24/2013 on the Electricity Sector (Ley 24/2013 del Sector Eléctrico) of 
26 December 2013 
Title III, ‘economic and financial stability of the electricity system’, of Law 
24/2013 laid down new rules on the remuneration of activities aimed at the 
production, distribution and supply of electricity, which entered into force on 
28 December 2013. 
Article 14(5) provides as follows: 
ENDESA GENERACIÓN 
 
7 
‘Remuneration for the activity of production shall include the following: 
(a) Electricity traded on the day-ahead market and intraday auction markets, 
which shall be remunerated on the basis of the clearing price between the supply 
and demand of electricity on those markets, obtained through the mechanisms 
established. 
Electricity traded on the bilateral, physical or futures markets, which shall be 
remunerated on the basis of the price of transactions definitively concluded on the 
markets in question. This component of remuneration shall be defined taking into 
account the losses incurred in the systems and the costs occasioned by disruption 
to the normal operation of the bidding system. 
(b) System balancing services which are necessary to ensure adequate consumer 
supply. 
The services which are regarded as system balancing services and the rules 
applicable to remuneration for those services shall be determined by regulation, 
and a distinction shall be drawn between mandatory services and optional 
services. 
(c) Where appropriate, remuneration under the capacity mechanism, which shall 
be laid down by order of the Minister for Industry, Energy and Tourism, and 
which would allow the system to be given an adequate coverage margin and 
incentivise the availability of manageable capacity. 
(d) Where appropriate, the additional remuneration referred to in paragraph 6 
for the activity of electricity production in the electricity systems of non-
peninsular territories. 
(e) Where appropriate, the specific remuneration referred to in paragraph 7 for 
the production of electricity from renewable sources, high-efficiency cogeneration 
and residues.’ 
Succinct presentation of the facts and procedure in the main proceedings 
1 The applicant is an undertaking involved in the generation of electricity using 
coal. The applicant purchases coal through a connected company which declares 
the consignments of that fuel purchased for resale as exempt from coal tax on the 
ground that the chargeable event is consumption. 
2 After carrying out an inspection, the tax authority considered that the chargeable 
event had occurred and the tax had become due at the time when the applicant 
purchased the consignments of coal for consumption in the generation of 
electricity and that the taxable amount should be determined in accordance with 
the higher calorific value of coal, irrespective of the energy actually used in the 
production of electricity. On those grounds, the tax authority issued a fresh 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-833/21 
 
8  
assessment notice and demanded a higher amount of tax and the applicable late-
payment interest from the applicant. 
3 On 7 April 2016, the applicant lodged an administrative complaint with the 
Tribunal Económico Administrativo Central (Central Tax Tribunal, Spain) against 
the notice of assessment to coal tax for the 2013 tax year, disputing (i) the taxable 
amount calculated on the basis of the higher calorific value of coal, since, in its 
view, that amount should be determined solely on the basis of the calorific value 
actually used in the generation of electricity; (ii) the taxation of 268 717.98 tonnes 
of coal, which the connected company had declared exempt in the 2011 tax year 
because it was intended for resale and which was then used by the applicant in the 
production of electricity; and (iii) the compatibility with EU law of the tax on coal 
used to generate electricity. 
4 In its decision of 28 March 2019, the Central Tax Tribunal (i) refused to take into 
consideration the lower calorific value of coal to determine the taxable amount for 
the purposes of coal tax; (ii) maintained that there was no double taxation 
involved in the levying of tax on consignments of coal that had previously been 
declared as exempt on the ground that they were for resale, where the purchaser 
allocates that coal for self-consumption in the generation of electricity, an event 
triggering liability to coal tax; and (iii) did not rule on the compatibility with EU 
law of Law 15/2012 of 27 December 2012 on fiscal measures for sustainable 
energy, which abolished the exemption from coal tax for coal consumed for the 
purposes of electricity generation. 
5 The applicant brought an administrative appeal before the referring court, raising 
identical questions to those raised before the tax tribunal and requesting a 
reference for a preliminary ruling on the compatibility of Law 15/2012 with EU 
law. 
The essential arguments of the parties in the main proceedings 
6 The parties’ arguments are expressed in the positions that they adopted in the 
administrative proceedings. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
7 The referring court is satisfied that, since the tax rate depends on the heat energy 
generated by the use of coal, measured in gigajoules, there is no reason to take 
into account only the heat energy actually used for the generation of electricity. 
The referring court also considers that the event triggering liability to the tax 
occurred when the applicant purchased the coal from its connected company for 
use in the production of electricity. 
8 The referring court does have doubts regarding the compatibility of the taxation of 
the consumption of coal used for electricity generation laid down in Spanish law 
ENDESA GENERACIÓN 
 
9 
with the European legislation restructuring the Community framework for the 
taxation of energy products and electricity. 
9 If it must be held that the application of the coal tax to coal used for the generation 
of electricity does not have an environmental purpose, within the meaning of 
Article 14(1) of Directive 2003/96/EC, the Spanish legislation will be 
incompatible with EU law and the notice of assessment issued by the tax authority 
will be incorrect. 
10 Specifically, the referring court has serious doubts regarding the nature of the 
purpose of that tax, since, for a tax to have a specific purpose, within the meaning 
of Article 14(1)(a), that tax cannot have a solely budgetary purpose such as 
financing the costs of the Spanish electricity system. That budgetary purpose is 
apparent from the fact that Law 15/2012 expressly stipulates that an estimate of 
the annual amounts collected in respect of the taxes included in that Law is to be 
allocated by the General State Budget Laws to financing the costs of the 
electricity system, as provided for in Article 16 of Law 54/1997 of 27 November 
1997 on the electricity sector. 
11 The environmental purpose announced in the preamble to Law 15/2012 is not 
reflected in the structure of the tax and nor is the tax collected intended to reduce 
the environmental impact of the use of coal for electricity generation. 
Furthermore, the fact that the use of a highly polluting energy product to generate 
electricity is subject to taxation does not appear to satisfy the conditions necessary 
for a tax to have a specific purpose, bearing in mind the marginalist system of 
setting prices in the electricity market and the fact that coal-fired power stations 
are not excluded from remuneration in respect of the production guarantee, which 
contributes to their economic and financial sustainability.