Dáil Éireann Debate, Thursday - 30 November 2023
308. Deputy Eoin Ó Broin asked the Minister for Finance to provide the amount of electricity for which relief is claimed from the electricity tax for 2022 for each of the categories for which relief is available, in tabular form. [52961/23]
View answer309. Deputy Eoin Ó Broin asked the Minister for Finance to outline the basis in EU law for offering relief from the electricity tax based on the fuel mix disclosure, as outlined in Section 63(3)(c) of the Finance Act 2008, as amended. [52962/23]
View answer310. Deputy Eoin Ó Broin asked the Minister for Finance further to Parliamentary Question No. 178 of 23 November 2023, of the 15.6 terawatt hours of renewable electricity for which relief was claimed from electricity tax in 2022, the portion claimed with recourse to the fuel mix disclosure; and the portion claimed by other means. [52963/23]
View answer321. Deputy Eoin Ó Broin asked the Minister for Finance whether some or all of the electricity tax has been refunded to producers of renewable electricity in line with article 15(2) of the Electricity Tax Directive in any year. [53174/23]
View answerI propose to take Questions Nos. 308, 309, 310 and 321 together.
Ireland’s taxation of fuel and electricity is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). The ETD provisions relating to taxation of electricity are transposed into national legislation in Chapter 1 of Part 2 of the Finance Act 2008 (as amended). This legislation provides for the application of an excise duty, in the form of Electricity Tax, to electricity supplied to consumers in the State. The rate of Electricity Tax is currently €1.00 per megawatt hour which is one of the lowest excise duty rates on electricity across the EU.
Electricity Tax law provides for full relief for electricity supplied for certain uses and for electricity generated from renewable sources. The amount of electricity in terawatt hours (TWh) on which relief was claimed in 2022 is set out in the table below;
|
Relief from Electricity Tax |
Amount of electricity relieved in 2022 |
|
Supplied for household use |
8.4 TWh |
|
Generated from renewable sources |
15.6 TWh |
|
Produced from environmentally friendly heat and power cogeneration |
0.5 TWh |
|
Used for combined heat and power generation |
0.000013 TWh |
|
Used for the production of electricity or in connection with such production |
0.01 TWh |
In addition to the reliefs outlined above, which operate in the first instance by way of remission, Finance Act 2008 provides for relief from Electricity Tax for electricity used for chemical reduction, electrolytic and metallurgical processes, produced on board a boat or other craft and used under diplomatic arrangements in the State. These reliefs are operated by way of repayment. I am advised by Revenue that data on repayment claims in respect of these reliefs is not readily available.
The relief for electricity generated from renewable sources is provided for in Section 63(1)(b) of the Finance Act 2008. These provisions are underpinned by Article 15(1) of the ETD which allows Member States to fully or partially relieve supplies of electricity generated from renewable sources including solar, wind, wave, tidal or geothermal/hydraulic origin, along with electricity produced from biomass or from products produced from biomass. In addition to the relieving provisions in Article 15(1), Article 15(2) allows Member States to operate reliefs by way of repayment. As Ireland operates the renewable electricity relief by way of remission in the first instance, refunds to suppliers only arise in cases of overpayment.
In response to recent Parliamentary Questions from the Deputy I have outlined that the regulation of the State’s electricity market falls within the remit of my colleague, the Minister for the Environment, Climate and Communications. The electricity market regulatory framework requires suppliers to provide details to consumers and to the Commission for Regulation of Utilities (CRU) on the origin of electricity supplies, referred to as Fuel Mix Disclosures. Under EU law, electricity suppliers may trade in Guarantees of Origin which are electronic documents that are used to certify that a quantity of electricity was produced from renewable sources. Guarantees of Origin may be used as the basis for accounting for renewable electricity in Fuel Mix Disclosures. It is important to note that Guarantees of Origin do not necessarily follow the flow of electricity. The electricity market is complex with multiple transactions between suppliers and electricity generators prior to supply to consumers. This means that there may not always be clear traceability of renewable supply from the producer to the consumer.
As already outlined, Section 63(1)(b) of the Finance Act 2008 provides for relief for electricity generated from renewable sources. Suppliers claim this relief by way of remission and detail the amount of renewable electricity on annual returns. Where a supplier cannot establish the origin of electricity supplied, section 63(4)(c)(i) provides that the supplier should use Fuel Mix Disclosure data. This is a national legislative provision for the purposes of supporting the effective operation of the Electricity Tax in situations that would otherwise be unclear. The ETD does not prescribe how Member States should operate reliefs or exemptions. Best practice in designing and legislating for reliefs is to minimise administrative burden and address cashflow issues whilst mitigating compliance risks to the greatest extent possible.
I am advised by Revenue that Electricity Tax returns data does not allow for the quantification of relief claims based on Fuel Mix Disclosures and therefore it is not possible to provide the breakdown the Deputy is looking for in relation to the 15.6 TWh of renewable electricity for which relief was claimed from electricity tax in 2022. I am further advised that claims for Electricity Tax relief are subject to compliance interventions on a risk basis, as is the norm with all self-assessed taxes, and where non-compliance is detected, it is dealt with under the terms of Revenue’s published Code of Conduct for Revenue Audit and other Compliance Interventions. This could involve the collection of any underpaid, or improperly claimed refund of, tax or duty together with statutory interest and civil penalties, if appropriate.
