Significant energy tax increase on electricity and natural gas expected

As from 1 January 2022, a considerable increase of the energy taxes (excise duties) applicable to electricity and natural gas will be introduced in Belgium. This increase results from the Government’s decision to convert the federal contribution for electricity and natural gas into a special excise duty. In addition a degressive energy tax structure for the energy taxes on these products will be introduced. Companies should assess whether they are impacted by these increased energy taxes and determine whether they are eligible for the existing energy tax exemption schemes available for certain industries. If so, they should timely prepare and file a request for an energy tax exemption license.

Increase of special excise duties

The Belgian Government has decided to abolish the federal contribution and to collect the related revenue via the mechanism of energy taxes, whereby a special excise duty will be imposed on natural gas and electricity.

For the business use of electricity, end-users connected to the high-voltage grid connection (exceeding 1 kV) currently benefiting from a zero energy tax rate, will become subject to an increased rate varying between 14,21 EUR per MWh (for the first 25 MWh consumed) and 0,5 EUR per MWh (for the consumption exceeding 100.000 MWh).

Most of the other types of natural gas and electricity supplies will also be subject to a considerable energy tax increase. Similar to the current federal contribution, a so-called “degressive tariff structure” will be implemented. This degressive tariff structure, provides for so-called standard consumption bands whereby the excise duty rate gradually increases whenever a predefined range of annual natural gas or electricity consumption is exceeded.

In below table, we have included the type of energy supplies which are most heavily impacted by the envisaged energy tax increase.

What can companies do to mitigate the impact?

To mitigate the energy tax burden on energy, companies should consider the wide range of energy tax exemption regimes, which may enable them to be partially or fully exempted from the (increased) energy taxes, provided certain conditions are met.

The supplies of natural gas and/or electricity may be exempted in case these products are used in relation to the following processes / activities:

• Chemical reduction or for electrolytic and metallurgical processes (manufacture of iron and steel and of ferro-alloys, production of precious metals, production of aluminum, production of copper…);
• Mineralogical processes (production of  glass, glass fibers and glass products, production of cement, plaster, bricks, tiles and ceramic goods,…);
• Production of electricity and/or energy products (power plants, refineries, …);
• Pilot projects aimed at the technological development of environmentally friendly products or fuels from renewable sources;
• Electricity generated for own consumption from renewable sources or from cogeneration (CHP);
• Cogeneration process (CHP) (electricity and natural gas used as input material);
• Rail transportation (only for electricity).

Companies should assess whether they are impacted by the increased energy taxes and determine whether they could be eligible to certain of the available energy tax exemption schemes. If so, they should timely prepare and file a request for exemption before 1ste of January 2022 to fully benefit from the exemption. Our dedicated EY Energy team, may assist your company to prepare and file a sound application file for an exemption license within short notice.