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Tadeusz Piekłowski

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In the lawmakers' view the amended Renewable Energy Sources Act of 20 February 2015, which entered into force on 1 July 2016, was supposed to clarify the principles of the production and use of electricity from renewable energy sources for own needs. The above applies to the so-called prosumers, that is persons who produce electricity on their own using PV installations which they mostly have mounted on the roofs of their own houses. The amended act stipulates directly that prosumers' actions must not be oriented at profits but at satisfying prosumers' own energy needs. Prosumers may produce electricity from micro-installations for their own needs and feed the unused surpluses into the grid. They will not receive any payments for the electricity fed into the grid but they will be able to exchange it. Under the Act, prosumers will be able to set off the energy fed into the grid against the energy taken from it in the ratio 1 to 0.7 and 1 to 0.8 (for installations with the output under 10 kW). Consequently, for each unit of energy fed into the grid prosumers will get back only a part of it amounting to 0.7 or 0.8, respectively. The remaining amount of energy they feed into the grid free of charge.

This means that we now have two kinds of energy fed by prosumers into the grid: energy that they can claim back and energy for which they will get no compensation. The seller will use the part of the energy which prosumers do not take back to cover the handling costs – the seller can sell this energy to other purchasers at market prices.

The new provisions do not treat the use of free energy as a free of charge benefit. According to the law, the surplus does not constitute the seller's revenue in the meaning of the CIT Act. Please note that the sale of energy produced by prosumers to obligated sellers is exempt from excise duty because it has not been listed as a transaction subject to excise duty in the meaning of Article 9(1)(2) of the Excise Duty Act (this provision provides for the taxation of sales to the end purchaser who has no licence for distribution, transfer, production or sales of electricity while the obligated seller has such a licence). But this does not mean that energy supplied by prosumers is not subject to taxation later if the requirements for the exemption from the excise duty are not met.

Obligated sellers supplying electricity to prosumers who are end purchasers in the meaning of the Excise Duty Act but have no energy production, sales, transfer or distribution license, may not charge the excise duty only on the surplus of the energy supplied by prosumers over the energy generated by his installation and fed into the grid because all electricity supplied by prosumers is subject to excise duty. This standpoint was confirmed by the Tax Chamber in Katowice in its advanced tax ruling of 2 December 2015 (file no. IBPP4/4513-114/15/LG). The Tax Chamber concluded that the seller must charge excise duty on all sold electricity, irrespective of whether the end purchaser is a prosumer who owns the so-called micro-installation (that is a RES installation which does not require an energy license, with a total output of 40kW, connected to a grid with a nominal voltage below 110 kV or with a cogenerated heat capacity of no more than 120 kW)) or an entity with no such installation which uses energy for its own purposes. The tax authority pointed out the fact that "the reducing of the taxable base for the electricity sold to the end purchaser and charging the excise duty on only the difference between the electricity sold and purchased between the above-mentioned entities, which the applicant proposed, had no legal basis in the Excise Duty Act which is in force since 1 January 2016." In its judgement of 11 October 2016 (file no. III SA/Gl 270/16), the Provincial Administrative Court in Gliwice backed the argumentation of the tax authorities and dismissed the taxable person's (obligated seller's) appeal.

To sum up, the amended RES Act of 1 July 2016 introduced changes for prosumers which do not encourage them to produce energy but rather discourage them from doing it. Under the new law, prosumers will never earn revenue from feeding energy into the grid. It is incomprehensible that a seller who receives a part of the energy produced by the prosumer for free does not pay any tax on the free-of-charge benefit. The prosumers' obligation to pay excise duty on the energy that they consume but which they earlier produced themselves is also controversial. An exemption from this duty should be considered.

If you would like to discuss this topic in more detail or if you are interested in a legal advice in Poland, Rödl & Partner experts from Cracow, Gdansk, Gliwice, Poznan, Warsaw or Wroclaw will be glad to help.

03.2017