Germany: Electricity Tax Relief for Manufacturing Industries - New Case Law and Important Practical Guidance

On 22 December 2025, the Third Act Amending the Energy Tax Act and the Electricity Tax Act (Dritte Gesetz zur Änderung des Energiesteuer- und des Stromsteuergesetzes) was promulgated, thereby permanently establishing the electricity tax relief for companies in the manufacturing sector as well as agriculture and forestry down to the EU minimum tax rate. The relief introduced by the Budget Financing Act 2024 (Haushaltsfinanzierungsgesetz 2024) would otherwise have expired on 31 December 2025. Companies will therefore continue to receive relief of EUR 20.00 per megawatt hour, meaning that the electricity tax effectively amounts to only EUR 0.50 per megawatt hour, representing a reduction of 97.5%. This is the maximum reduction permitted for Member States under the EU Energy Taxation Directive (Council Directive 2003/96/EC of 27 October 2003).

The requirements for relief under Sec. 9b of the Electricity Tax Act (Stromsteuergesetz, "StromStG") appear clear at first glance, however recent case law demonstrates that significant interpretative questions exist in practical application - particularly in determining the person withdrawing electricity. Especially in operational management models and on-site facilities, the question arises as to who exercises direct factual control over the electricity-consuming installations and is therefore entitled to relief. For energy-intensive companies, erroneous assumptions can lead to substantial financial consequences.

1. Requirements for Tax Relief (Sec. 9b StromStG)

Tax relief is granted where 

(i) an application is filed, 

(ii) the electricity has demonstrably been taxed pursuant to Sec. 3 StromStG, and 

(iii) a company in the manufacturing sector or agriculture and forestry 

(iv)has withdrawn the electricity for operational purposes.

Only the person who has withdrawn the electricity is entitled to relief if they fulfil the stated requirements. Special provisions apply for the withdrawal of electricity for generating light, heat, cold, compressed air or for electromobility.

The relief amounts to EUR 20 per megawatt hour and is only granted where the annual relief amount exceeds EUR 250. Relief applications may be submitted after the end of a calendar year until 31 December of the following year, after which time the claim becomes time-barred. The application must be submitted online to the competent main customs office.

2. Who Is the Person Withdrawing Electricity within the Meaning of Sec. 9b StromStG?

a) Principles of Case Law

• Withdrawal as Physical Act: The withdrawal of electricity is a physical act that coincides temporally with consumption. The person who withdraws electricity from the supply network is the one who has direct factual control over the installations in which the electricity is consumed. The concept of direct factual control is synonymous with the concept of actual physical control in Sec. 854 para. 1 of the German Civil Code (Bürgerliches Gesetzbuch).

It is irrelevant on what contractual basis direct factual control over the installations has been granted or who owns the electricity-consuming installations. Merely indirect factual control is insufficient.

The degree of automation of the processes and installations is also irrelevant, as factual control over the installations remains decisive even in largely automated processes.

• Attribution to a Company: This physical act of withdrawal must be attributed to a company, as only the company withdrawing the electricity is entitled to relief pursuant to Sec. 9b para. 3 StromStG. The "smallest legally independent entity" is always decisive (Sec. 2 no. 4 StromStG). Neither VAT or income tax group treatment nor group considerations are relevant for electricity tax purposes.

• Electricity Withdrawal by Third Parties: This attribution becomes problematic when third parties operate within a company's installation. Where electricity is made available to a contractor or subcontractor on the company premises, their activities cannot be attributed to the commissioning company for electricity tax purposes. This applies regardless of integration into the production process or contractual arrangements, and irrespective of the type and extent of integration or the design of the respective service or works contract. The same applies to affiliated companies.

Tax relief may only be considered in such cases where the exception pursuant to Sec. 17b para. 4 of the Electricity Tax Regulation (Stromsteuerverordnung, "StromStV") applies. Accordingly, electricity withdrawn by other companies is deemed operational where the other company only operates temporarily, the service can only be provided on the company premises, the electricity is not usually separately invoiced, and the company entitled to relief is the service recipient (e.g. craftsmen, cleaning companies). The characteristic of "temporary" service provision is contentious.

On the other hand, withdrawal by employed staff members is "attributable" because they are to be regarded as possession servants of the employer and confer direct factual control upon them.

b) Recent Case Law on Withdrawal

Last year, the Munich Tax Court (Finanzgericht München, "FG München") had the opportunity to rule on (fully) automated on-site installations in three cases. These rulings are highly relevant particularly for the structuring models popular in practice, whereby certain areas and activities of a company are separated and transferred to operational management companies:

• FG München, Ruling of 20 March 2025 (14 K 2087/22): Equal Co-possession Leads to Half-and-Half Division

X was the owner of a fully automated bio natural gas installation but had no operating staff of its own. It had concluded two parallel contracts: an operational management contract with Y for maintenance and servicing, and an operational management agreement with the claimant from 1 January 2018 for technical operations management including overarching operational management.

The claimant provided the operational manager for X, who was granted special rights under the contract with Y.

The installation operated 24/7 with a high degree of automation, with both Y's staff and the operational manager provided by the claimant having access to all installation areas and the ability to log into the control module. Essential operating mode settings were made either by the operational manager or on their instructions or in coordination with them by Y's staff. Y's staff were present around the clock in part due to on-call duties, whilst the operational manager attended regularly on weekdays from 8 a.m. to 4 p.m. and also during evenings and weekends in case of major malfunctions.

According to case law principles, FG München held that it is generally possible for multiple users to exist in the operation of an installation on company premises, with the consequence that the quantity of electricity withdrawn can be divided amongst various companies entitled to relief.

Unlike cases where distinguishable usage periods can be attributed or possession exists over different installations, in cases of equal co-possession (i.e. where multiple companies exercise equal factual control), the electricity withdrawn cannot be divided according to who triggered which electricity consumption. The Act contains no provisions for such cases. If factual control alone is decisive and no evaluation is to be made in this regard - neither with respect to reporting relationships nor the number of persons working on site nor attendance times - where co-possession exists continuously, the electricity withdrawal must be attributed to both co-possessors in equal parts (one half each).

The FG rejected any contrary statements in the General Directorate of Customs' (Generalzolldirektion) information letter "Frequently Asked Questions (FAQ) on the Concept of User" of 30 April 2021 (Question No. 8), according to which only one person should be decisive in cases of overarching control.

• FG München, ruling of 10 April 2025 (14 K 527/24): Remote Control and Access for Maintenance Can Establish Factual Control of the Operational Manager

B constructed an air separation installation on the claimant's factory premises, which remained in B's ownership. It was contractually agreed that the claimant would provide the electricity supply for operating the installation. B was responsible for maintaining operations, servicing including all repair work, and recurring inspections.

The installation operated fully automatically and required no operating staff for regular operation. B had started the installation upon commissioning and restarted it following regular maintenance work. The installation was in standby mode 24/7 and only operated upon specific quantity requests from the claimant's melting tank requiring oxygen supply.

B's staff were not located at the claimant's site, with the installation being remotely monitored by B via their control centre. Intervention in the control system by the claimant's employees was not possible. No on-site instruction of the claimant's employees took place. The claimant's employees merely had physical access to the installation to enable action in emergencies.

FG München decided that B had withdrawn the electricity. Although the claimant's staff were engaged temporally and spatially closer to the installation located on their company premises, they had no actual access to the installation control. The access possibility provided for emergencies is irrelevant, as retaining a spare key does not prevent the transfer of sole possession where no co-use is intended.

In contrast, B and their staff had access to the installation at all times. Such access was necessary for maintenance purposes and such maintenance did take place. Moreover, the programmed installation was switched on by B. All necessary work regarding ongoing operations (particularly programming and switching on) as well as maintenance and servicing were performed by B's employees. These activities resulted in the installation operating and consuming electricity. The mere fact that staff were not continuously on site did not terminate either their possession or their direct factual control.

• FG München, ruling of 10 July 2025 (14 K 1870/23): Factual Control of the Operational Manager Cannot Be Attributed Even Where Rights of Instruction Exist

The claimant was the owner of two bio natural gas installations and had engaged T's legal predecessor with operational management. According to the contract, the claimant was the responsible "operator" of the installations. It performed commercial operational management (marketing and invoicing of energy generated, purchase of input materials and associated services) and enabled the operational manager unhindered access to the installation at all times.

The operational manager was responsible for monitoring the installation, deploying an operational manager to organise internal operational processes, on-site staff scheduling, and planning, monitoring and evaluating maintenance and repair operations. Exclusively the operational manager's employees were saved as "users" in the control module and could intervene in the control system. The operational manager acted upon fault notifications. Manual start-up and shutdown procedures were performed on average once per month, otherwise the installations operated 24/7. At night, the installations operated without supervision.

The claimant employed no staff of its own at the bio natural gas installations. Its technical managing director was closely informed of special incidents. Major interventions were discussed with or ordered by him.

In the FG's view, the claimant had no direct factual control over the installations. Even though its technical managing director regularly attended the installation site for discussions, he was neither registered as a user of the installation nor did he have direct control capabilities. Furthermore, he was not authorised to exclude the operational manager from accessing the installation without terminating the operational management contract.

Rather, actual factual control was exercised exclusively by the operational manager's staff. Their staff were on site daily, had direct access to all installation components, were registered as users, and could modify installation parameters. All work to be performed at the installation was carried out by the operational manager's staff. No integration of the operational manager's staff into the claimant's operations existed, even though the claimant was regularly informed about installation operations and significant decisions were made in close coordination with them. Rights of instruction alone - which in this case were not contractually agreed - do not lead to the attribution of a withdrawal act.

3. Practical Guidance

The case law makes clear that electricity tax relief pursuant to Sec. 9b StromStG raises significant interpretative questions in practical application and leads to legal uncertainty. Companies entitled to relief should pay particular attention to the following points:

• Clearly Structure Operational Management: When engaging external operational managers, examine who exercises actual factual control. The actual access and control capabilities are decisive - not ownership, contractual designations or rights of instruction.

• Correctly Assess Automation: Even with high automation or remote control, factual control can rest with the operational manager if they programme, switch on, service and maintain the installation.

• Risk of Co-possession: Co-possession with an operational manager should be avoided, as they are regularly not entitled to relief. However, even where the installation is actually divided (e.g. in an industrial park), equal co-possession leads to flat-rate divisions. Where possible and appropriate, agree temporally separate usage or spatial delimitations to ensure clear attribution.

• Observe Deadlines: Relief applications must be filed by 31 December of the following year at the latest. In cases of doubt, a time-preserving application is recommended to avoid losing the claim.

The question of actual factual control always requires careful case-by-case analysis and regularly leads to disputes with the customs administration. We would be pleased to support you with all arising questions in this regard and are at your disposal as a reliable partner with our comprehensive expertise in energy and electricity tax law.

***