Association européenne pour la Biomasse European Biomass Association SECRETARIAT : JOSSART JeanMarc Croix du Sud 2, Bte 11 1348 Louvain laNeuve BELGIUM Tél. and fax : + 32 10 47 34 55 email : jossart@ecop.ucl.ac.be http:/ / w w w .ecop.ucl.ac.be/aebiom
Information on VAT applied on biofuels Information collected from AEBIOM members (March 2003). Finland The VAT in Finland is 22 % which is the highest category. The Finnish Bioenergy Association (FINBIO) has suggested the lowest category 8 %. Germany the VAT for solid biofuels (wood chips, wood pellets) is 7 % (reduced tax rate), whereas the normal VAT for other products is 16%. at the beginning of 2003 the German government tried to cancel the reduced tax rate for several products and so to tax also solid biofuels with the normal tax rate of 16%. In several position papers the German Biomass Association tried to convince the German Government that this would be a contradictive measure: it makes no sense to support bioenergy on the one hand in the heat market by subsidies (for example: investment grants, credits) and on the other hand to increase the VATtax rate for solid biofuels from 7 to 16%. This would be no incentive to several target groups to use biofuels. The result was favourable with a VAT for solid biofuels staying at 7%. In Germany the VAT is actually used as one tool to promote solid biofuels and so heat from biomass. To reduce the VATtax rate further (perhaps until a 100% tax exemption) seems to be an option, but unlikely to be implemented. But it could be a possibility if this suggestion comes from the European Union. But in each case, the VAT could only be one possible tool, other instruments to promote the heat market are necessary. France In the official regulation for VAT, one can read that all raw products from agriculture and forestry are taxed at 5,5% (section 1 A.). In addition transformed products (logs, pellets,…) could also be taxed at this low rate if used for heating purposes. In section 1 B exceptions are listed for wood products not directly usable for heating. The low tax rate applies only
for domestic use (section 2). But buildings that have a collective use are also included (hospitals, universities, hotels,…). For professionals the highest rate is valid (wood traders, …). Also for companies buying wood for selling heat, the highest rate is applicable. Heat is also taxed at the high rate. AMORCE is an association for local collectivities. They argue for a reduced rate for subscription to heat network (3 page paper available, in French). The VAT rate in France is 5,5% for annual subscription for electricity and gas (and that is the only country in Europe to do so) while subscription for heat network is taxed at the high rate. The European directive on taxation (dated 19 October 1992) seems to be an obstacle for a reduced rate for heat as this products is not mentioned for a reduced rate. Sweden In Sweden we have the same Vattaxrate for all energy sold to end consumers. That is 25%. Industry and other businesses doesn't pay Vat. Austria The value added tax (VAT) on solid biofuels and heat from biomass is as follows: 1) wood sold by forest owners primary production : 10 % 2) wood byproducts sold from forest industry (saws, mills, etc.) : 20 % 3) heat from biomass district heating : 20 % 4) wood from small forest owner, without bookkeeping systems : 12 % A main help would be to reduce VAT on heat from biomass to zero or at least 10 %. VAT is no problem for companies because they get it repaid by the finance administration. It is only a problem for end users (consumers). The VAT for firewood from farmers (10 %; in cases without book keeping 12 %) is no big problem. The main topic is the VAT on heat from biomass : 20 % that is the general VAT rate in Austria. A reduction of this VAT rate to zero or 10 % would be a big help to the many district heating systems. Slovak Republic Presently, the VAT on solid biofuels is 14%.