Biogas companies suffer from tax shock - "hard blow"

In recent years, Swedish companies that sell or consume biogas have been supported with a tax exemption.

Either the companies have been able to make a deduction on the declaration or they have applied for a refund of the energy and carbon dioxide tax.

In total, it has been about SEK 1.5 billion a year in reduced tax for around 700 companies, municipalities or other biogas users, according to the Swedish Tax Agency.

But now the companies are losing this tax exemption overnight due to an EU ruling.

The European Court of Justice announced its ruling back on December 21, but it became final last weekend as no party appealed.

- Now we will not approve any refunds or deductions from tomorrow (Tuesday), says Titti Campalto, acting head of unit at the excise unit at the Swedish Tax Agency.

Landwärme appealed

The background is the German biogas company Landwärme, which in the summer of 2020 appealed a decision by the European Commission to approve tax exemptions for Swedish companies that sell, manufacture or consume biogas for motor vehicles and heating.

The tax exemption was extended for a ten-year period, until 2030.

Landwärme considers the aid to be overcompensation which leads to a distortion of the market and affects competition.

This is because biogas producers are increasing their exports to Sweden to take advantage of the tax exemptions.

The European Commission wanted Landwärme's action to be dismissed.

The Swedish government also intervened.

But when the verdict was handed down on December 21, the court ruled in favor of the company because it considered that the European Commission had not investigated the consequences of the aid carefully enough.

Now many Swedish companies risk ending up in a difficult position.

The industry and employer organization Transportföretagen warns that the hauliers and regions that invested in biogas may suffer a tax shock.

According to the hauliers, the cost increase can amount to ten more kroner per mile, or around kroner 30 million per year for a company with around 150 biogas trucks.