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Slovakia: Tax on sold or unused greenhouse gas emissions

Slovakia: Tax on greenhouse gas emissions

The Court of Justice for the European Union (CJEU) today concluded that EU law precludes a Slovak tax on the value of sold and unused greenhouse gas emission allowances.


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The case is: PPC Power a.s. v. Finančné riaditeľstvo Slovenskej republiky and Daňový úrad pre vybrané daňové subjekty, Case C-302/17 (12 April 2018)


Slovakia, during 2011 and 2012, imposed a tax at a rate of 80% on greenhouse gas emission allowances sold or unused by the undertakings participating in the greenhouse gas emission trading program. The allowances had been allowed “free of charge” to economic operators pursuant to an EU directive on the allowance trading program. 

A power company initiated this dispute in the Slovak courts, contesting the compatibility of that tax with an EU directive. A Slovak court referred the matter to the CJEU, with a question whether the directive precludes the tax.

As noted in a release [PDF 107 KB] from the CJEU, the tax does not comply with the principle of the allocation “free of charge” of almost all the allowances for the period 2008-2012 and is not compatible with the EU directive.

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