Facts: That’s how the verdict is
Prior to the ruling, the Swedish Tax Agency had annually granted deductions or refunds of biogas tax to approximately 700 companies, amounting to just over SEK 1.5 billion.
Companies that consume biogas or biodiesel for heating cannot, after the ruling, continue to deduct the tax in their return or get a refund of the tax afterwards after applying.
These may be industrial companies that use gas from the West Swedish natural gas network for heating, both of premises and in industrial processes.
This applies to municipalities that make use of biogas from their waste facilities and use the gas to produce electricity that is consumed in their own operations or heat for heating their own premises. A number of condominium associations, non-profit associations and faith communities are also affected.
It will be much more expensive for haulage companies and municipal bus traffic to run on biogas.
Source: Tax Agency
Center party Helena Lindahl, member of the Riksdag’s tax committee, demands quick action.
— I hope you understand that this is a matter of fate for the future of Swedish biogas, you cannot afford to fail. Agriculture and haulage companies, above all, have bought into this technology under the assumption that biogas was tax-free until 2030, says Lindahl.
Government support for the production of biogas and electricity from biogas has been extensive in recent years. Last year alone, 1.8 billion was granted in support for electricity production with biogas and almost half of it went to farmers with biogas plants.
Urge the government
The Center Party wants the Riksdag to call on the government to ensure that biogas producers are not hit with tax refunds and that biogas should once again be exempt from tax.
The same demands are made by the industry and representatives of public transport, haulage companies, the truck manufacturers Scania and Volvo, farmers and municipalities in an open letter to the government. They write that the tax exemption, which was last extended by the EU Commission in 2020, to 2030, has “driven a fantastic development” for biogas in Sweden.
In December last year, however, the General Court of the European Court of Justice ruled that the Commission’s 2020 tax exemption decision rested on loose grounds. It should have been investigated more, the tribunal stated, since a German biogas producer had complained about the Swedish tax exemption.
When the ruling became legally binding a month ago, the Swedish Tax Agency decided that the tax freedom was over, immediately, and that the issue of refunds is being analysed.
The situation worsens
“The consequences worsen with each passing day with a full tax on biogas and biogasol and the threat of a retroactive tax,” write the signatories of the open letter to Finance Minister Elisabeth Svantesson (M), Energy and Industry Minister Ebba Busch (KD) and four other ministers.
There is dissatisfaction, according to information to TT, that the government is not talking about what it envisions as a solution. The letter with the appeal for restored tax freedom that the government has sent to the European Commission is not enough.
The government and the biogas industry hope that the EU Commissioner responsible for competition, the Danish Margrethe Vestager, will allow the Swedish exemption for tax on biogas to be reinstated. Archive image.
Once the commission restarts its review, it can take over a year to receive any kind of response and for it to be able to make new decisions. The Commission has not yet initiated a more thorough examination as required by the General Court. This is stated by a spokesperson for the responsible Commissioner Margrethe Vestager for TT, but adds:
“The Commission is well aware of the importance of the tax exemptions (read: for biogas in Sweden) and sees the matter as a priority”.
Suggest solution
The idea of waiting, while money flows away and no one knows what the outcome will be, does not attract the biogas operators. Instead, they propose that Sweden should use an exception in the state aid rules that the commission announced in March.
— We see the solution to notify Sweden’s tax exemption for biogas and biodiesel under the EU’s Block Exemption Regulation (GBER) as the fastest and safest, says Maria Malmkvist, CEO of Energigas Sweden, one of the signatories of the letter to the government.
But the government sees it as a risky journey with an unclear final station and timetable. It also requires amendments to Swedish law.