Electricity Tax
Reliefs
In addition to the relief for electricity for household use there is also relief from taxation for electricity generated:
- from renewable sources
- from environmentally friendly heat and power cogeneration
- on board a craft
and relief from taxation for electricity used:
- for chemical reduction or in electrolytic or metallurgical processes
- for combined heat and power generation
- for, or in connection with, the production of electricity.
It is envisaged that, in most cases, the relief will be claimed at source by the supplier when making the tax return and the return form is designed accordingly. Relief for chemical reduction or, in electrolytic or metallurgical processes will be applied by way of repayment to the consumer.
Relief for electricity generated from renewable sources
The relief for electricity from renewable sources is to be determined on the basis of the percentages of total units, supplied by a supplier during an accounting period, that were subject to tax at the business and non-business rates. Those percentages are then to be applied to the total units from renewable sources supplied by that supplier in that accounting period, at the relevant rate. A formula for this calculation is set down in section 63(4)(a) of the Finance Act 2008.
In the absence of clear traceability of renewable supply from the producer to the consumer a determination of the total units from renewable sources is to be based on the fuel mix data for that supplier in the last year for which data have been published by the Commission for Regulation of Utilities.
The percentage of the total fuel mix that is, according to such data, from renewable sources, is to be taken as the percentage of the total supply that was from renewable sources. The data to be used are the most recently published data, at the time when the return is due.
Although this relief will normally be claimed by the supplier when making the tax return, there is provision for repayment.
Formula for calculation of relief for electricity generated from renewable sources
For this relief, electricity shall be considered to have been generated from renewable sources if it is —
- of solar, wind, wave, tidal or geothermal origin
- of hydraulic origin produced in a hydroelectric installation
- generated from biomass or from products produced from biomass
- generated from fuel cells.
The amount of the relief shall be determined by the formula —
A x P1 x R1 + A x P2 x R2
where
- A is the total units from renewable sources, supplied by the claimant during the payment period
- P1 is the percentage of the total units, supplied by the claimant during the payment period, that was subject to tax at the rate for business use
- P2 is the percentage of the total units, supplied by the claimant during the payment period, that was subject to tax at the rate for non-business use
- R1 is the rate for business use
- and
- R2 is the rate for non-business use
The 'total units' figure to be used for calculating the percentages is the figure for 'total units supplied' on the return form
Where the total units produced from renewable sources cannot otherwise be determined, a determination shall be made by reference to the data on the fuel mix in respect of the supplier concerned, as published by the Commission for Regulation of Utilities (CRU). The data on the fuel mix should relate to the most recent year for which the Commission for Regulation of Utilities has published that data.
- Example 1 *
Total units supplied 100,000 MWh
| |
Non-taxable uses (household, electricity production or CHP generation) | Business use rate €o.5 per MWh R1** | Non-business use rate €1 per MWh R2 |
| No. of units supplied MWh |
40,000 |
45,000 |
15,000 |
|---|
| Gross Electricity Tax |
nil |
€22,500 |
€15,000 |
|---|
Total units supplied for renewable sources (A) - 5,000 MWh
| |
Non-taxable uses (household, electricity production or CHP generation) | Business use rate €0.5 per MWh R1** | Non-business use rate €1 per MWh R2 |
| Percentage for business and non-business use of 'total units supplied' |
- |
45% (P1) |
15% (P2) |
|---|
| Amount of relief |
- |
€1,125 |
€750 |
|---|
| Net Electricity Tax |
nil |
€21,375 |
€14,250 |
|---|
Total Electricity Tax due: €35,625
* A similar method applies to the relief for electricity produced from environmentally friendly heat and power cogeneration.
** Up to and including 31 December 2019, the rate was €0.50 per unit (megawatt hour) for electricity supplied for business use. From 1 January 2020 the rate is €1.00 per megawatt hour.
Relief for electricity produced from environmentally friendly heat and power cogeneration
This relief is conditional on approval by the competent authority- Commission for Regulation of Utilities (CRU) that the cogeneration satisfies EU 'high efficiency' criteria. A formula for calculation of this relief (similar to that for relief for electricity from renewable sources) is set down in section 63(4)(b) of the Finance Act 2008.
As with the relief for electricity from renewable sources, this relief will normally be claimed by the supplier when making the tax return. However, there is also provision for repayment.
Formula for calculation of relief for electricity produced from environmentally friendly heat and power cogeneration
The amount of the relief shall be determined by the formula —
C x P1 x R1 + C x P2 x R2
where
- C is the total units produced from environmentally friendly heat and power cogeneration, supplied by the claimant during the payment period
- P1 is the percentage of the total units*, supplied by the claimant during a payment period, that was subject to tax at the rate for business use
- P2 is the percentage of the total units*, supplied by the claimant during a payment period, that was subject to tax at the rate for non-business use
- R1 is the rate for business use
- and
- R2 is the rate for non-business use
Where the total units produced from environmentally friendly heat and power cogeneration cannot otherwise be determined, a determination shall be made by reference to the data on the fuel mix in respect of the supplier concerned, as published by the Commission for Regulation of Utilities (CRU). The data on the fuel mix should relate to the most recent year for which the Commission for Regulation of Utilities has published that data.
Relief for electricity used for chemical reduction or in electrolytic or metallurgical processes
This relief is operated by repayment to the consumer. The consumer should submit the claims to the Revenue Office of the consumer using the Claim for repayment of tax on electricity used for chemical reduction or in electrolytic or metallurgical processes form together with bills or invoices for the electricity supplied during the accounting period.
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