Hydropower project operator files complaint with EC over Swedish taxation

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European utility Fortum has filed a complaint with the European Commission, claiming that the Swedish government is applying a selective tax on hydroelectric power.

According to a Fortum release, Sweden is planning to increase the real estate tax for hydropower projects based on their production volumes, with the tax on the market price of hydroelectricity increasing between 25-30%. In Fortum's case, that could translate to an estimated US$52.6 million in taxes per year.

"Energy taxation should conform with the Energy Taxation Directive according to which electricity is to be taxed at consumption -- not at production," Fortum's Head of Tax Reijo Salo said. "Furthermore, energy taxation should be transparent so that consumers can see how energy is taxed. In Sweden, this is not the case."

Fortum claims the tax is selective as the hydropower sector is the only form of carbon dioxide-free production form being targeted, making it an "indirect state subsidy to production based on fossil fuels and in clear conflict with the Swedish government's climate and energy goals."

The company's complaint filed with the European Commission asks whether the increase real estate tax on hydropower can be based on production values as it is now, considering the EU's regulations on excise duty.

The complaint also asks the Commission to determine whether taxes targeting specific production forms are to be considered as indirect state subsidies to other production forms.

The European Commission is investigating the complaint.

The Finland-based company said it currently pays more taxes in Sweden than any other country.

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