Excise taxation of electricity from renewable sources – selected issues

Community tax Directives 1 and national legislation 2 they comprehensively regulate the issue of electricity taxation with excise duty. Electricity is also an excise product under the Excise Tax Act[3]. Excise duty as a selective consumption tax 4 should be proportionate to the actual consumption of electricity[5].

According to Article 21(5) 6 The Energy Directive, the sale of electricity should not be taxed on excise duty before the sale to the final consumer. A key aspect of the excise tax on electricity at the stage of its supply to the consumer is the assumption that losses related to energy transmission should not be subject to taxation.

The adoption of the opposite assumption that taxation of energy excise duty takes place at the stage of production (and not at the stage of sale to the final customer) would result in the levying of a tax on electricity actually not supplied to the customer and which is subject to loss during the transmission process.

It should be stressed that the previously existing provisions of the Excise Tax Act were in breach of this principle[7].

The Polish legislator – using the power set out in the Energy Directive – introduced into the national legal system the exemption in question for electricity from renewable energy sources, based on a mechanism confirming the remission of the certificate of origin of energy.

1. Introduction to taxation by excise duty on electricity

The rules of the Excise Tax Act have in particular defined a catalogue of activities subject to excise duty,

subject to electricity. Regulations refer to the concept of final buyer, defined under Article 2(1)(19) 8 Excise. In particular, it is an entity purchasing electricity without concessions under the Energy Law for the production, transmission, distribution or marketing of electricity.

The Act provides for four entity exclusions from the group of units considered as final purchasers, i.e. companies operating stock exchanges, commodity brokerage houses and brokerage houses, exchange clearing houses, National Securities Depository, clearing houses and clearing houses (in relation to the main functions of the business).

Consequently, the final customer receiving the electricity will be obliged to pay the excise price.

The legislator also specified the closed action directory 9 taxable excise duty on electricity.

In particular, the taxable activity is the sale of electricity to the final customer in the territory of the country, including by an entity not licensed under the Energy Law which produced that energy and the consumption of electricity by the non-licensed entity which produced that energy.

Consequently, excise duty is subject to the sale of electricity by an entity not licensed to produce that energy[10]. This entity will, in principle, be required to establish and settle excise duties only in the case of the sale of energy to the final buyer. This is not the case for sales to an intermediary (energy companies).

Therefore, it will not be subject to excise duty to sell electricity to any concession holder 11 awarded under the Energy Law.

Electricity consumption has also been considered to be an activity subject to excise duty where:

• • the electricity consumption operator has received a concession in the power law world,
• • the electricity consumption operator has produced it and has no concession under the Energy Law,
• and
• • the final purchaser uses electricity and the excise duty has not been paid in due amount and the seller of the final purchaser cannot be determined.

According to Article 9(2) 12 Excise excise duty shall not apply to losses of electricity resulting from the transmission or distribution of energy, excluding energy consumed in connection with its transmission or distribution and electricity collected illegally. Tax liability in the case of electricity arises, according to Article 11(1) 13 Excise, in the case of the sale of electricity in the territory of the country at the moment of the issue of electricity to the final customer and at the date of consumption of electricity (in the cases in question) under Article 9(1)(3), 4 and 6 Excise).

Tax base 14 electricity is its amount, expressed as megawatt hours (MWh). According to the list of excise duty rates on 1 January 2021, the rate of excise duty on electricity has been fixed at 5 PLN for 1 MWh. Excise Tax Act, implementing the Energy Directive, provides for many exemptions from excise duty.

The Directive sets out a list of compulsory and optional exemptions, leaving the Member State free to choose to regulate. An example of compulsory exemption, implemented into the Polish legal system is Article 30(6) 15 Excise.

Following Article 14(1) The Energy Directives, exempt from excise duty the consumption of electricity in the production of electricity, as well as the consumption of that energy to sustain these production processes.

Consequently, not all electricity consumption will be exempt from excise duty, but only those directly related to the production process (in the production/maintenance process).

The Energy Directive sets out a list of optional exemptions from excise duties on electricity under Article 15(1) point b[16]. The Directive allows Member States to introduce exemptions from excise duty, inter alia, for electricity produced from renewable sources.

The Polish legislature, using the above mentioned powers, introduced into the national legal system Article 30(1) 17 Excise, setting out the exemption in question for electricity from renewable energy sources, based on a mechanism confirming the remission of the certificate of origin for energy.

Excise exemption on the basis of Article 30(1) and (2) Excise is not unconditional 18 and shall be made upon receipt of a document confirming the remission of the certificate of origin for energy. This certificate shall constitute a certificate confirming the type of source from which electricity was generated.

The Renewable Energy Act defines certificates of origin for electricity from renewable sources under Article 44(1) and regulates their release. Consequently, renewable electricity generators are entitled to a certificate of origin 19 concerning this energy, confirming its origin.

Renewable energy producers receive certificates of origin irrespective of the basic remuneration for the sold energy as an additional form of financial benefit associated with contributing to a less polluted environment[20].

Certificate of origin of electricity shall be issued at the request of the power generator (in principle, the power company) notified to the President of the URE in accordance with Article 45(1) 21 Renewable Energy Act.

The certificate of origin of electricity from renewable sources shall be decommissioned in accordance with the procedure described under Article 52(1)(1) 22 Renewable Energy Act.

The provisions of the Excise Tax Act do not define renewable energy sources by referring to the regulation of other laws. In the light Article 3(20) 23 Energy law, a renewable energy source is a source within the meaning of the Renewable Energy Act.

According to Article 2(22) 24 This law, renewable energy sources are considered to be renewable, non-fossil energy sources including (closed catalogue): wind energy, solar energy, aerodynamic energy, geothermal energy, hydrothermal energy, hydropower, wave energy, currents and tides, biomass energy, biogas, agricultural biogas and bioliquids.

Only electricity produced from these sources can benefit from this exemption. The exemption design assumes that it is applied by using a mechanism to reduce the excise duty due on electricity for subsequent periods of the tax.

This exemption may be applied not earlier than the moment of receipt of the document confirming the remission of the certificate of origin for electricity.

In conclusion, having evidence of the origin of electricity from renewable sources is a necessary element to benefit from the exemption on the basis of Article 30(1) Excise.

The exemption is made by reducing the value of the excise duty due on electricity for subsequent settlement periods, which consequently obliges the taxpayer to declare and withdraw the excise duty[25].

If the amount of reduction of the taxable person is higher in the month in question than the amount of excise duty payable on taxable electricity, the unused amount of the reduction in that month should be settled in tax returns for subsequent months[26].

Exemption from Article 30(1) and (2) The excise duty applies only to the taxable person and not to any other entity which fulfils the conditions laid down in that provision.

This exemption shall be granted only to a taxable person who has the status of excise duty at the time of receipt of the document confirming the remission of the certificate of origin.

This position confirmed the judgment 27 Provincial Administrative Court in Gliwice from 29 May 2017 Consequently, this exemption is granted First, electricity producers from renewable energy sources. It should be stressed that the certificate of origin of energy involves certain rights of property which give rise to their disposal.

The purchase of certificates of origin (so-called green certificates) as goods takes place on a regulated market – commodity exchanges. The renewable electricity producer is entitled to sell certificates of origin to operators third.

The purchaser of the certificate of origin is also entitled to apply the exemption in excise duty on the basis of Article 30(1) and (2) Excise, provided that at the time of purchase of that certificate he was a taxable person for excise duty.

Consequently, the beneficiaries of this exemption may not only be renewable energy producers but also conventional electricity producers/sellers who have acquired certificates of origin on the regulated market and have applied for their remission and consequently reduced the amount of excise duty due by a value corresponding to the amount of energy covered by the decommissioned certificate of origin.

There's doubt about whether it's based on Article 30(1) Excise in relation to Article 120 28 and the following Renewable Energy Resources Act may be exempt from excise duty of the applicant for guarantees of origin on the basis of Article 121(1) 29 Renewable Energy Act.

It should be indicated that the disposition Article 30(1) The Excise refers directly to the document confirming the remission of the certificate of origin of energy, in accordance with the provisions of the Renewable Energy Sources Act. This law regulates the concept of energy guarantee separately.

The certificate of origin shall be granted to the renewable energy producer and shall confirm the origin of that energy. Certificates of origin are linked to property rights – they are transferable and constitute listed goods on a regulated market.

The Renewable Energy Act sets out a system for guaranteeing the origin of energy separately from the system of issuing and depriving certificates of origin.[30].

The guarantee of origin shall be a document issued to the final customer certifying that a certain amount of electricity entered into the distribution/transport network has been produced from renewable sources.

This law clearly indicates that origin is not bound by property rights with the guarantee, and their transfer is carried out independently of the transfer of property rights resulting from certificates of origin.

In the light of the Renewable Energy Act, certificates of origin and guarantees of origin constitute separate documents with other functions and purposes. Consequently, both concepts have separate meanings and cannot be used interchangeably.

This position is confirmed by the Director of National Tax Information in the interpretation 31 to 4 December 2018 This approach also confirms the analysis of Community law, in particular the Directive on promoting the use of energy from renewable sources.[32].

The provisions of the Directive define guarantees of origin and support schemes separately, in particular the obligation to use renewable energy on the basis of so-called green certificates.

According to the motives 52 and 56 The Directive stresses that green certificates used in support schemes should be distinguished from guarantees of origin. Guarantees of origin as supporting documents do not give the right to use national support schemes.

The concept of support schemes, in accordance with the provisions of the Directive, covers tax exemptions, tax exemptions and tax reimbursement. It should be stressed that the exemptions or reductions indicated are optional 33 for the Member State concerned.

The Excise Tax Act implements the provisions of the Renewable Energy Taxation Directive.

According to Article 30(1) Excise exemption of electricity from renewable sources is a direct exemption linked to the confirmation of the origin of energy from renewable sources by the remission of the certificate of origin document.

Therefore, the support in the form of a tax exemption is linked to the support scheme on the basis of energy certificates. Any tax exemption constitutes a derogation from the principle of universality of taxation, regulations relating to tax exemptions should be interpreted strictly.

"The clear distinction between certificates of origin and guarantees of origin by the legislator, as well as the explicit intention of the EU legislature to ensure that guarantees of origin do not give rise to national support schemes, do not allow the application of excise duty exemptions to electricity on the basis of guarantees of origin only".

Consequently, on the basis of Article 30(1) Excise is not possible to exempt from excise duties of electricity on the basis of guarantees of origin obtained (received according to Article 121(1) Renewable Energy Act).

Under the Regulation of the Minister of Finance on excise duty exemptions 34 , based on section 5 35 excise duty shall be exempt from the consumption of electricity produced from generators with a total conversion power of up to 1MW which is not allowed for combined and co-operating installations for the transmission of electricity. Conditions for exemption from excise duty on electricity produced in generators up to 1 MW is to discharge excise duty at an appropriate amount from energy products used to produce this energy.

In the context of electricity production in so-called micro-installations 36 from renewable sources, it should be pointed out that energy products (energy from renewable sources) are not used in the production of this energy and, consequently, the condition to pay excise duty on energy products does not apply under the excise duty exemption in question. Possible application of excise duty exemption on the basis of section 5 The excise duty exemption Regulation applies to natural persons who do not engage in economic activities as well as to entrepreneurs who consume electricity produced from generators of a total capacity not exceeding 1 MW from renewable sources.

In addition, consideration should be given to whether a natural person who does not have an economic activity or an entrepreneur is required to pay excise duty on electricity produced in so-called micro-installations from renewable energy sources and introduced to the electricity grid.

In this context, reference should be made to Article 9(1) Excise duty on the sale of electricity to the final buyer in the territory of the country.

In this case, the introduction of electricity into the electricity grid would lead to the sale of electricity to an energy undertaking which cannot be considered as a final recipient in this case.

Consequently, the introduction of electricity into the electricity grid produced in so-called micro-installations from renewable energy sources does not create a tax obligation in excise duty[37].

The Excise Tax Act requires the entity performing excise duties on electricity to keep detailed records in accordance with Article 138h(1) 38.

Tax payers (except exporters and intra-Community electricity suppliers) are obliged to keep quantitative records on the basis of the readings of the measuring and accounting equipment installed at the final customer/electricity user[39].

On a preferential basis, the obligation to record quantities of electricity does not apply to electricity producers from generators of a total power not exceeding 1 MW (which is not supplied to the combined and co-operating installations for the transmission of this energy) consumed by that entity, provided that excise duties are paid on energy products used for the production of this energy at the due amount[40].

The Excise Tax Act indicates the minimum requirements to be met by the electricity record, i.e. it must be possible to determine in monthly periods, to the extent that 0.001 MWh, the total amount of electricity purchased in the territory of the country, electricity used for its own needs or losses of non-taxable electricity.

2. Taxation of excise duties on electricity from renewable sources

Legal regulations, including taxation, introduced by the legislator in the field of electricity production from renewable sources, have in mind the promotion of clean energy production in the context of environmental care.

The current system concerning the relationship between the electricity-generating entity in so-called micro-installations (both natural persons who do not have economic activity as well as entrepreneurs) from renewable sources and the energy company (i.e.

an entity professionally producing or trading electricity was based on a net-metering system, net metering 41 ). Consequently, the micro-installer has obtained prosumer status in light Article 2(27a) 42 Renewables Act and an energy company obtaining the status of an obliged seller in the light of Article 40(1) 43 Renewable Energy Act.

The renewable electricity empties system for electricity entering the transmission system is based on the ‘exchange’ mechanism. This mechanism has been regulated under Article 4(1) The Renewable Energy Act and assumes that the obliged seller settles the amount of electricity introduced into the electricity grid in relation to the amount of electricity taken from that grid for own consumption by the renewable energy prosumer producing electricity in a micro-installation with the total installed electricity capacity:

• • more than 10 kW — in quantitative ratio 1 to 0.7;
• • not more than 10 kW — in quantitative ratio 1 to 0.8.

Consequently, it should be pointed out that the prosumer is each loss on the indicated drainage system, respectively 30% or 20%, i.e. The energy undertaking shall charge free of charge for each ‘exchange’ of electricity with a prosumer, respectively 30% or 20% the energy obtained from the prosumer (made from renewable sources).

On the introduction of renewable electricity by the prosumer into the grid in quantities 1 kW, the energy company will retain electricity in quantities respectively 0.2 kW or 0.3 kW – this is the amount of energy that will not be returned to the prosumer.

This excess electricity left on the part of the energy undertaking constitutes an additional kind of remuneration for that entity in order to cover the costs of its activities and relevant charges[44].

On the other hand, the renewable energy prosumer participating in the empties system shall not pay to the seller liable for its clearing and distribution service charges, in accordance with Article 4(4) 45 Renewable Energy Act.

The benchmark shall cover the electricity distribution service paid by the seller to the electricity distribution system operator and the storage charge for the electricity made available for transmission.

This emptying mechanism raises significant doubts as to the determination of the tax consequences for the participants of this system, in particular as regards the settlement of excise duty.

An additional aspect affecting the tax treatment of electricity from renewable energy sources is to determine whether the production of energy takes place from generators with a total power not exceeding 1 MW or higher power generators.

It is therefore necessary to determine the tax consequences for the prosumer for the taxation of electricity introduced into the transmission network and electricity taken from that network.

second The need for analysis is to determine the tax consequences for the energy undertaking (the incumbent seller) in terms of electricity supplied and collected by the prosumer. Additional issue remains taxation of electricity excise duty in quantities 20% or 30% a surplus of energy introduced by the prosumer to the transmission network in relation to the amount of electricity collected by the prosumer from the energy undertaking.

1. 1. Tax implications in excise duty on the prosumer of electricity introduced into the energy network (from renewable energy sources) and electricity collected by the prosumer from the energy network

The settlement of electricity supply by the renewable energy prosumer to the electricity grid and, respectively, the consumption of electricity by the prosumer from that grid leads to a positive or negative balance in those accounts (saldo zero in settlement, although theoretically possible, it occurs very rarely).

The positive balance shall be generated when a prosumer takes more electricity than the quantity produced and discharged into the energy grid. In this situation, the prosumer is obliged to pay the remuneration to the energy company in the amount of the difference.

The negative balance shall be generated in the case of generation and discharge of electricity by the prosumer in more than the amount of electricity taken by the prosumer from the energy grid. In such a situation, in economic terms, the prosumer is entitled to a remuneration for the surplus of electricity supplied.

With regard to the amount of electricity to be accounted for, i.e. in the amount of electricity lower from two value: energy delivered or received by the prosumer (i.e.

value without surplus) it should be indicated that this value is considered to be the consumption of energy produced by a given renewable energy producer within the meaning of the provisions of the Excise Tax Act, in accordance with Article 4(10) 46 Renewable Energy Act.

Consequently, according to Article 9(1) 47 Excise tax laws, an activity subject to excise duty, shall be the consumption of electricity by an entity not licensed to produce, transfer, distribute or trade electricity within the meaning of the Energy Law which produced that energy.

Such an entity would be obliged to clear and withdraw the excise duty due. However, such regulation would be contrary to the assumed preferences of operators producing electricity from renewable sources from micro-installations.

In line with the objective of these regulations, the Minister of Finance issued a regulation on excise duty exemptions in which Under section 5 exemption from excise duty on the consumption of electricity produced from generators of a total power not exceeding 1 MW by the entity that uses this energy.

The prosumer is not obliged to account for the excise duty on the energy it produces and put into the energy network, since this energy is considered to be consumed by the prosumer, in accordance with Article 4(10) Renewable Energy Act. On the other hand, electricity sold by the prosumer to the energy company (the incumbent seller – i.e. an entity licensed to trade electricity under the Energy Law) is not a taxable activity 48 , the obligation in this respect has been transferred to the energy company[49].

In formal terms, electricity generators and users are obliged, as a general rule, to fulfil registration and reporting obligations, as entities subject to excise duty and subject to tax obligations.[50]. According to Article 16(1) 51 Excise, traders who do not even have a duty to pay excise duty, are obliged to submit a registration application to the competent Chief of the Tax Office before the date of implementation first an activity subject to excise duty.

This registration obligation has been waived by electricity generators with a total power not exceeding 1 MW, which is not supplied to combined and co-operating installations for the transmission of this energy, but is consumed by this entity[52].

Provision Article 16(7a) 53 Excise indicates that the exemption from the registration obligation relates to the situation in which excise duties were paid on energy products used for the production of that electricity at the due amount.

Consequently, where electricity produced by an entrepreneur (prosumer) is used entirely for its own use, there will be no obligation to register for excise duty purposes[54].

However, when selling the surplus electricity produced to an energy undertaking (the obliged seller), it should be considered that the use of combined and co-operating installations intended for the transmission of that energy will occur and consequently the obligation to register for excise duty the electricity generator from renewable sources.

It should be considered whether, in the case of a prosumer producing electricity from renewable sources, an obligation to submit excise duty tax returns arises. The consumption of electricity from renewable sources by the producer performs an activity taxed in light Article 9(1)(4) Excise.

In the case of electricity, the taxable person shall, without a request from the tax authority, submit to the competent Chief of the Tax Office tax returns in accordance with the established formula and calculate and pay the excise duty to the account of the competent tax office within the time limit until 25.

on the day of the month following the month in which electricity consumption occurred, according to Article 24(1)(3) 55 Excise. As a consequence, the renewable energy consumption undertaking carries out a taxed activity, which creates an obligation to declare in excise duty.

This entrepreneur, as an entity not licensed under the Energy Law, will not be entitled to benefit from the exemption from the obligation to make declarations provided for under Article 24(2) 56 Excise.

Another obligation to settle excise duty is the quantitative record of electricity[57].

The relevant obligation, in principle, concerns electricity-consumption taxpayers licensed under the Energy Law, as well as non-Concession taxpayers licensed under the Energy Law, who consume electricity they themselves produced, in accordance with the Article 9(1)(3)(4) 58 Excise.

The obligation to record the quantity of electricity is due to Article 138h(1)(2) 59 Excise. The quantitative record shall contain information enabling the total amount of energy produced and energy consumed on its own basis to be determined during the monthly periods, to be accurate to 0.001 MWh.

This obligation shall be exempted from the obligation of electricity-producing operators from generators of a total power not exceeding 1 MW, which is not supplied to combined and co-operating installations for the transmission of this energy, but is consumed by that entity, according to Article 138h(2) 60 Excise.

Consequently, as with the obligation to register for excise duty purposes, there is no obligation to keep quantitative records of electricity for operators engaged in economic activities who use energy for their own needs.

Such an obligation would arise in a month when electricity would be delivered to the combined and co-operating installations (used to transmit this energy).

The quantity of electricity shall be recorded on the basis of the measurement and settlement equipment indicated by the final customer or energy user and, in the absence of measurement equipment, on the basis of the coefficient-defined level of energy consumption of the individual equipment indicated in the documentation kept by the taxpayer, in accordance with the Article 138h(3) 61 Excise.

1. 2. Tax implications of excise duty on the energy company (the seller of the obliged company) for electricity collected from the grid by the prosumer

However, it is important to point out the significantly different tax consequences of the excise duty on the part of the energy company in terms of electricity consumed by the prosumer.

It was doubtful whether the electricity produced by the prosumer and put on the electricity grid was exempt from excise duty, that the electricity supplied by the energy company to the prosumer in the same quantity (on a ‘exchange’) is also exempt from excise duty.

Such a system would constitute a coherent system, indicating the absence of taxation of electricity excise duty in the amount produced by a renewable prosumer[62].

In this regard, he took the position of Minister of Energy in response to the parliamentary interpelling 63 to 1 September 2016, indicating that it is essential to interpret the concept of electricity sales in light Article 2(1)(21) 64 Excise.

The sale of electricity shall be considered to be a factual or legal activity resulting in the transfer of ownership or ownership of energy to another entity.

Consequently, the power issue/collection of electricity by a prosumer from an energy network constitutes a transfer of ownership/ownership of energy from an obliged seller to a prosumer within the meaning of that provision.

This leads to the conclusion that in this case the energy company sells electricity to a final purchaser without a concession under the Energy Law, taxed by excise duty in accordance with Article 9(1) Excise.

As a result, this interpretation of the provisions of the Excise Tax Act leads to the conclusion that the amount of electricity produced from renewable energy sources by micro-installation prosumers (excised from excise duty at prosumer) is de facto taxed on electricity distributors.

In economic terms, the excise duty on electricity generated from renewable sources was transferred from micro-installations from prosumer to obliged seller (energy company). Consequently, the energy in question is taxed on excise duty, only in another entity.

The sale of electricity by an energy company, a concession holder under the Energy Law, to producers of electricity from renewable sources in micro-installations (final purchasers) is subject to excise duty. In the light Article 13(1)(2) 65 Excise excise duty is the taxable person who carries out an activity subject to excise duty, i.e.

the energy distributor (the obligated seller) for the electricity sold to the final buyer, which is a prosumer. The provisions of the Excise Tax Act do not contain specific rules for the taxation of excise duties on electricity sold to prosumers - renewable energy producers in micro-installations.

In addition, the regulation against the background of the Renewable Energy Sources Act on mutual settlement between prosumers (renewable electricity producers in micro-installations) and obliged sellers (energy companies) do not constitute a basis for determining tax obligations in excise duty.

In particular, the provisions of the Renewable Energy Act do not give rise to the establishment or reduction of the excise tax base for the sale of electricity or to the determination of exemptions from excise duty.[66].

1. 3. Excise tax consequences for the taxation of surplus electricity 20% or 30%, the result of the settlement of electricity entered into the energy grid by the prosumer in relation to the amount of electricity taken by the prosumer from that network

According to the Renewable Energy Act, in case a prosumer produces electricity from renewable energy sources and introduces it into the grid in quantities, for example, 1 kW, according to Article 4(1) in conjunction with Article 4(11) Renewables Act, the obligated seller (energy company) retains electricity in quantities respectively 0.2 kW or 0.3 kW, as a specific compensation to cover the costs of energy transmission/distribution.

This electricity retained by an energy undertaking does not constitute taxable income within the meaning of the Act of 15 February 1992 on corporate income tax 67 , according to Article 4(12) 68 Renewable Energy Act.

However, from the point of view of excise duty, further resale of this energy by an energy company is subject to excise duty on a general basis.

In the context of the analysis of the whole regulation on taxation of generated energy from renewable sources, doubts arise as to the duality of the concept of "use" of energy. On the one hand, this term refers to the renewable energy produced using micro-installations and sent to the energy network by the prosumer, and secondly, it refers to the electricity collected by the prosumer from the transmission network.

The Minister of Energy made a significant distinction 69 from the point of view of the excise duty on both identified activities falling within the concept of energy consumption. Namely, it considered that the excise duty-exempted activity was the consumption of electricity by the prosumer (in the form of the electricity produced and put into the transmission network), while recognising that the excise duty-taxed activity was the consumption of electricity in the form of energy sales by the energy company (the seller of the obliged) to the prosumer.

A separate aspect remains the application of the mechanism presented under Article 9(3) 70 Act on Excise Tax, which provides for a single taxation of excise duty (the principle of uniformity of that tax).

The principle indicates that in relation to the electricity for which the tax obligation was previously imposed in connection with the implementation one the taxable activity does not result in a tax liability in connection with the performance of another taxable activity (provided that the amount of excise duty has been determined or declared at the due amount).

As regards the prosumer, the tax obligation arises as a result of electricity consumption operations, where, in addition to the provisions of the Finance Minister's Regulation on Excise Tax Exemptions, the prosumer is exempt from excise duty in this respect.

According to the author, it is difficult to reconcile with the objective of the tax preferences (renewal exemption) for electricity from renewable sources that tax authorities/tax legislators seek to find a separate (other/additional) tax base for the same renewable energy.

The alleged net metering mechanism provided for a reduction in the costs of supporting the energy sector in the renewable sector, in particular on the basis of tax preferences, while in fact the electricity in question is taxed on excise duty, only another entity accounts for it.

An additional point confirming the approach of tax authorities to this issue is the interpretation 71 The Director of the Tax Chamber in Katowice, according to which the adopted empties system on the basis of the Renewable Energy Act does not constitute a barter system, and the electricity transferred by the prosumer does not constitute a payment for the energy supplied by the energy company (the incumbent seller).

As a consequence, the tax authority indicated that excise duty is not only subject to an excess of electricity collected by a prosumer from the energy grid (after the energy prosumer has taken the energy into the energy grid), but all the energy collected by the prosumer from the obliged entity is taxed.

This position was upheld in the judgment 72 Provincial Administrative Court in Gliwice.

3. Summary

In summary, the analysis of the method of taxation of the excise duty on electricity from renewable sources should indicate that the assumed fiscal preference model for renewable energy producers, in particular using generators with a total capacity not exceeding 1 MW, it's not real.

The principle of single-phasity with regard to excise duty, which assumes that if a tax obligation was imposed on electricity in connection with the execution of one of activities (i.e.

where a tax obligation exists, even if the activity is exempt from taxation, there is no tax obligation in connection with the performance of another taxable activity, it has not been fully retained.

The interpretation of the provisions of the Excise Tax Act by the tax authorities leads to the conclusion that the generated electricity from renewable sources from micro-installations by the prosumers is de facto taxed on excise duty, but not on the prosumer, but on the obliged seller.

Principle of universal taxation of excise goods 73 should be restricted in this case. According to the author, fiscal preferences in excise duty on the production of electricity from renewable sources should assume that electricity produced from renewable sources is not taxed, in particular in micro-installations.

Such measures would make a significant contribution to the spread of green energy production.

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1 In particular, the following directives regulate in a framework the taxation of electricity by excise duty, i.e.:

• Directive 2003/96 to 27 October 2003 restructuring the Community framework for taxation of energy products and electricity (Official Journal of the European Union L, No. 283, p. 51 as amended; Official Journal of the EU Polish special edition, chapter. 9, t. 1, p. 405), hereinafter referred to as the Energy Directive;
• Directive 92/12 to 25 February 1992 on the general conditions for products subject to excise duty, their storage, movement and control (OJ L 76, p. 1, as amended; Official Journal of the European Union 9, t. 1, p. 179) – Hereinafter: Directive 92/12, a horizontal directive;
• Directive 2008/118 to 16 December 2008 on general rules on excise duty, repealing Directive 92/12 (Official Journal of the European Union L, No. 9 to 2009, p. 12, as amended) – Hereinafter: Directive 2008/118.

2 Excise tax in Poland is regulated by law with 6 December 2008 on excise duty (i.e. Journal of Laws of 1920, item 722), hereinafter referred to as the Excise Excise Tax Act, excise duty.

3 According to Article 2 Excise duty laws:

1. The terms used in the Act mean:

1. excise goods — energy products, electricity, alcoholic beverages, tobacco products, tobacco droughts, electronic cigarette liquid and novel products, specified In Annex 1 to the Act:

Annex 1. List of excise goods

Product name (product groups) 33 2716 00 00 Electricity

4 M. Cold (ed.), Excise. Commentary, C.H. Beck Publishing House, Warsaw 2017, p. 106.

5 hours. Litwinczuk, P. Karwat, W. Pietrasiewicz, K. Tetlak, Tax Law of Entrepreneurs, WKP, Warsaw 2017.

7 Judgment of the Court of Justice of 12 February 2009, Commission of the European Communities v. Republic of Poland, C-475/07, LEX No. 485098.

(a) a company operating a stock exchange within the meaning of the Act of 26 October 2000 on freight exchanges (i.e. Journal of Laws of 2019, item 312) acquiring electricity for the function described under Article 5(3a) This bill,

(b) commodity brokerage houses and brokerage houses within the meaning of the Freight Exchanges Act, which acquire electricity for the performance of the described function under Article 9(2) that law or acquiring electricity for an account giving an order on a regulated market within the meaning of the Law of 29 July 2005 on trading in financial instruments (i.e. Journal of Laws of 2020, items 89, 284, 288),

(c) the exchange clearing house, the National Depository for Securities S.A. or the company to which the National Depository has delegated the performance of the tasks in question under Article 48(2) Act on the trading of financial instruments purchasing electricity for the performance of the function described under Article 9(2) the Freight Exchange Act,

(d) a company operating at the same time the clearing house and clearing house within the meaning of the Act on Trading in Financial Instruments, acquiring electricity for the function in question under Article 68a(14) that law or to settle and settle transactions concluded on a regulated market.

[9] Article 9(1) Excise: In the case of electricity, excise duty is:

• 1) the acquisition of intra-Community electricity by the final purchaser;
• 2) the sale of electricity to the final customer within the territory of the country, including by an entity not licensed to produce, transmit, distribute or trade electricity within the meaning of the Energy Law which produced that energy;
• 3) electricity consumption by the concession holder concerned Under point 2;
• 4) electricity consumption by a non-concession entity Under point 2, which produced this energy;
• 5) the import of electricity by the final purchaser;
• 6) the consumption of electricity by the final purchaser if the excise duty due is not paid from it and the person who sold that electricity to the final buyer cannot be determined.

10 Most of the excise duties on electricity are related to the sale of energy: M. Lewandowski, The impact of wind turbine taxation on the energy security of Poland [in:] M. Pawelczyk (ed.), Modern problems of energy security. Energy and Gas Sector, Ius Publicum Publishing House, Warsaw 2018, p. 174.

11 M. Czuba, M. Wielec, Taxation of wind turbines in Poland – selected aspects, IKAR 2019, No 5.

1. In the case of electricity, the tax obligation arises:

• 1) from the date of acquisition of intra-Community electricity by the final purchaser;
• 2) with the moment of issue of electricity to the final customer, in the case of the sale of electricity in the territory of the country;
• 3) on the date of electricity consumption, in the cases referred to under Article 9(1)(3), 4 and 6;
• 4) on the date on which the customs debt is incurred, in the case of the importation of electricity by the final purchaser.
• 2. Issue of electricity in question Under section 1 point 2, the final buyer is linked to the invoice or other document by the taxable person resulting in the payment of the duty for electricity sold by the taxable person.
• [14] Article 88(2) and (2a) Excise.
• 2. The basis for the taxation of electricity is its quantity, expressed in megawatt hours (MWh).
• 2a. In case of illegal electricity consumption, the basis for taxation of electricity is its estimated quantity, expressed in megawatt hours (MWh).
• [15] Article 30(6) Excise: Excise consumption of electricity in the electricity production process and consumption of this energy to sustain these production processes is slowing down.

(…)

(b) electricity:

• – from the use of solar, wind, wave, tidal or geothermal energy;
• – obtained from hydropower plants;
• – obtained from biomass or products produced from biomass;
• – produced from methane emissions from abandoned coal mines;
• – produced from fuel cells;

(…).

[17] Article 30(1)(2) Excise:

1. Electricity produced from renewable energy sources shall be exempt from excise duty, on the basis of a document confirming the remission of the certificate of origin of energy, within the meaning of the provisions of the Energy Law or the Act of 20 February 2015 with renewable energy sources (i.e. Journal of Laws of 2020, items 261, 284).
2. Exemption in question Under section 1, it shall apply no earlier than on receipt of a document confirming the remission of the certificate of origin of energy, by reducing the excise duty due on electricity for the nearest settlement periods.

18 Also: M. Czuba, M. Wielec, Taxation of Wind Plants..., op. cit.

19 Certificates of origin of electricity from renewable sources are often called green certificates.

20 J. Markiewicz, Excise Tax Act. Commentary (ed. III). Wolters Kluwer Publishing House, Warsaw 2016, p. 139.

1. Energy undertaking, end-user, industrial customer and commodity brokerage house or brokerage house in question Under section 2, are obliged:
2. obtain and submit to the President of the ERO for redemption a certificate of origin or a certificate of origin for agricultural biogas issued:

(a) for electricity or agricultural biogas produced in renewable energy installations located in the territory of the Republic of Poland or located in an exclusive economic zone, or

b) under the Act - Energy Law or

1. pay a replacement fee within the specified time limit under Article 68(2), calculated as determined under Article 56.

23 Ar. 3 point 20 Energy Laws – the terms used in the Act mean: 20) renewable energy sources within the meaning of the Renewable Energy Act.

25 Also: M. Lewandowski, The impact of wind turbine taxation on the energy security of Poland..., op. cit., p. 175.

26 K. Kowalski, Green Energy with Excise Exemption 24 June 2019, online: https://www.rp.pl/Akcyza/306249957-Zielona-energia-ze-zwolnieniem-z-akcyzy.html „Republic’, 24 June 2019

27 Judgment of the Provincial Administrative Court in Gliwice of 29 May 2017, reference no. III SA/Gl 307/17.

30 K. Wolak, "Accise and Excise Tax - ISP Service", No. Regulation (EU) 12/2019, p. 8 to 33 – ISP Modzelewski.

31 Individual interpretation of the Director of National Tax Information from 4 December 2018, reference no. 0111-KDIB3-3.4013.182.2018.1.PJ.

32 Directive 2009/28 to 23 April 2009 on the promotion of the use of energy from renewable sources, amending and subsequently repealing Directive 2001/77 and Directive 2003/30.

33 According to Article 15 Directives, Member States ‘may’ grant reductions or exemptions. It is for the Member State to choose the form of that exemption.

34 Regulation of the Minister of Finance of 28 December 2018 on excise duty exemptions (Journal of Laws of 2018, item 2525), hereinafter referred to as the Excise Tax Exemption Regulation.

35 section 5 Exemption Regulations:

1. Excise duty-free consumption of electricity produced from generators of a total power not exceeding 1 MW by the entity that uses this energy.
2. Where energy products other than those derived from renewable energy sources within the meaning of the Renewable Energy Act are used for the production of electricity, the excise duty exemption in question Under section 1, may be used provided that excise duty is paid on these energy products at the amount due.

37 Mr Huczko, Taxation of renewable energy in micro-installations, online: https://ksiegowosc.infor.pl/podatki/vat/zakres-opodatkowania/727844 ,2,Taxation-energy-created-from-renewable-in-microinstallations.html, access: 24 March 2021

38 Ar. 138 hours section 1 Excise: The quantitative record of electricity shall be conducted by:

• 1) a taxable person selling electricity to the final purchaser;
• 2) taxable person using electricity in the case in question under Article 9(1)(3) and 4;

(…).

39 In the absence of measuring and accounting equipment, quantitative records shall be kept on the basis of a coefficient of energy consumption, according to the records of the taxpayer.

41 M. Czuba, M. Wielec, Taxation of wind turbines in Poland..., op. cit.

1. Obligation to purchase electricity in question under Article 41(1), Article 42(1), Articles 70c(2) and 92(1), performs the electricity seller designated by the President of the URE, hereinafter referred to as ‘the obliged seller’, on the basis of the contract in question under Article 5 Act - Energy Law.

1a. The seller is obliged to make the settlement in question under Article 4(1) and under Article 38c(3), unless the seller selected by the renewable energy prosumer or the energy cooperative is cleared on the basis of a comprehensive agreement.

(…).

1) to the seller in question under Article 40(1a), the fees for its settlement;

1. charges for the distribution service, the amount of which depends on the amount of electricity collected by the renewable energy prosumer; these charges shall be paid by the seller concerned under Article 40(1a), to the operator of the electricity distribution system to which the micro-installation is connected.

1. For electricity, excise duty is:

• 1) the acquisition of intra-Community electricity by the final purchaser;
• 2) the sale of electricity to the final customer within the territory of the country, including by an entity not licensed to produce, transmit, distribute or trade electricity within the meaning of the Energy Law which produced that energy;
• 3) electricity consumption by the concession holder concerned Under point 2;
• 4) electricity consumption by a non-concession entity Under point 2, which produced this energy;
• 5) the import of electricity by the final purchaser;
• 6) the consumption of electricity by the final purchaser if the excise duty due is not paid from it and the person who sold that electricity to the final buyer cannot be determined.
• 48 M. Cold (ed.), Excise. Comment. Wyd. 2, Warsaw 2020.
• 49 M. Bold, Energy Transformation – Photovoltaic and Excise Tax,
• online: https://www.igeos.pl/images/przeglad_energetyczny/M_miaek_artyku_AKCYZA_fotowoltaika_2_20201028.pdf, access: 24 March 2021
• 50 W. Modzelewski, P. Milczek (ed.), Commentary on the Act on Excise Tax. Comment. Wyd. 10, Warsaw 2020.

52 Individual tax interpretation, issued by the Director of National Tax Information 7 August 2020, reference no. 0111-KDIB3-3.4013.99.2020.1.PJ.

54 Individual tax interpretation, issued by the Director of National Tax Information 8 April 2020, reference no. 0111-KDIB3-3.4013.33.2020.1.PJ.

[55] Article 24(1)(3)) Excise:

1. In the case of electricity, the taxable person shall, without a call from the tax authority, submit to the competent head of the tax office tax returns according to the established formula and calculate and pay the excise duty on the account of the competent tax office within the time limit until 25. on the day of the month following that in which:...
2. electricity consumption – in the cases referred to under Article 9(1)(3), 4 and 6.

57 Individual tax interpretation issued by the Director of National Tax Information 11 October 2019, reference no. 0111-KDIB3-3.4013.163.2019.2.WR.

[58] Article 9(1)(3)(4) Excise:

1. For electricity, excise duty is:

(…)

3) electricity consumption by the concession holder concerned Under point 2;

1. electricity consumption by a non-concession entity Under point 2, who produced this energy.

62 According to the author, this should be the objective of regulation – i.e. preferences for exemption from excise duty on electricity produced from renewable sources in micro-installations.

63 Response of the Minister of Energy to the parliamentary interpelling No. 4855 to 1 September 2016 on the exemption from excise duty on electricity to be cleared by the prosumer.

1. The taxable person shall be a natural person, a legal person and an organisational entity not having legal personality which carries out activities subject to excise duty or to which there is a factual situation subject to excise duty, including an entity:

(…)

1. is a final customer of electricity, if the excise duty due has not been paid on that energy and the person who sold that energy to the final customer cannot be determined.

66 Response to Members' Intervention No. 28185 to 1 February 2019 on VAT and excise duty on electricity production in prosumer RES installations, F. Świtła, Undersecretary of State at the Ministry of Finance.

67 Act of 15 February 1992 corporate income tax, i.e. Journal of Laws of 2020, item 1406 (Next: the Corporate Income Tax Act).

69 Response of the Minister of Energy to the parliamentary interpelling No. 4855 to 1 September 2016 on the exemption from excise duty on electricity to be cleared by the prosumer.

71 Individual interpretation of the Director of the Tax Chamber in Katowice 2 December 2015, reference no. IBPP4/4513-114/15/LG.

72 Judgment of the Provincial Administrative Court in Gliwice of 11 October 2016, reference no. III SA/Gl 270/16.

Bibliography

1. Czuba M., Wielec M., Taxation of wind turbines in Poland – selected aspects, IKAR 2019, No 5.
2. Kowalski K., Green energy with excise duty exemption, https://www.rp.pl/Akcyza/306249957-Zielona-energia-ze-zwolnieniem-z -excise duties.html, ‘Rzeczpospolita’, 24 June 2019
3. Lewandowski M., The impact of wind turbine taxation on the energy security of Poland [in:] Pawelczyk M. (ed.), Modern problems of energy security. Energy and gas sector, Warsaw 2018, Ius Publicum Publishing House.
4. 36 Litwinczuk H., Karwat P., Pietrasiewicz W., Tetlak K., Tax law of entrepreneurs, WKP, Warsaw 2017.
5. Markevich J., Excise Tax Act. Commentary (ed. III), Wolters Kluwer Publishing House, Warsaw 2016, p. 139.
6. Modzelewski W., Milczek P. (ed.), Commentary on the Act on Excise Tax. Comment. Wyd. 10, Warsaw 2020.
7. Pawelczyk M. (ed.), Modern problems of energy security. Energy and Gas Sector, Ius Publicum Publishing House, Warsaw 2018, p. 174 and 175.
8. Bold M., Energy Transformation – Photovoltaic and Excise Tax, ‘Legal Time’, 8 December 2020
9. Wolak K., “Accise and Excise Tax - ISP Service”, No. Regulation (EU) 12/2019, p. 8 to 33 – ISP Modzelewski.
10. Cold (ed.), Excise. Comment. Wyd. 2, Warsaw 2020.
11. Cold (ed.), Excise. Commentary, C.H. Beck Publishing House, Warsaw 2017, p. 106.

List of abbreviations

1. Judgment of the Court of Justice of 12 February 2009, Commission of the European Communities v. Republic of Poland, C-475/07, LEX No. 485098.
2. Judgment of the Provincial Administrative Court in Gliwice of 11 October 2016, reference no. III SA/Gl 270/16.
3. Judgment of the Provincial Administrative Court in Gliwice of 29 May 2017, reference no. III SA/Gl 307/17.

List of positions of tax authorities:

• 1. Individual interpretation of the Director of the Tax Chamber in Katowice 2 December 2015, reference no. IBPP4/4513-114/15/LG.
• 2. Response of the Minister of Energy to the parliamentary interpelling No. 4855 to 1 September 2016 on the exemption from excise duty on electricity to be cleared by the prosumer.
• 3. Individual interpretation of the Director of National Tax Information from 4 December 2018, reference no. 0111-KDIB3-3.4013.182.2018.1.PJ.
• 4. Response to Members' Intervention No. 28185 to 1 February 2019 on VAT and excise duty on electricity production in prosumer RES installations, F. Świtła, Undersecretary of State at the Ministry of Finance.
• 5. Individual tax interpretation, issued by the Director of National Tax Information 11 October 2019, reference no. 0111-KDIB3-3.4013.163.2019.2.WR.
• 6. Individual tax interpretation, issued by the Director of National Tax Information 7 August 2020, reference no. 0111-KDIB3-3.4013.99.2020.1.PJ.
• 7. Individual tax interpretation, issued by the Director of National Tax Information 8 April 2020, reference no. 0111-KDIB3-3.4013.33.2020.1.PJ.