Act on Excise Duty on Electricity and Certain Fuels: amendments in April
The President of the Republic has on 20 December ratified an Act (1072/2013) amending sections 2 and 4 of the Act on Excise Duty on Electricity and Certain Fuels (1260/1996). The amendment will take effect on 1 April 2014 by government decree.
Changes introduced under the new Act mean that electricity consumption not only in industry, mining and agriculture, but also in data centres will attract a reduced, category II electricity tax rate.
In order to qualify for the reduced rate the data centre must be the operator’s main business. Furthermore the data centre must have a minimum total power output of 5 MW.
Depending on the rate of expansion in data centre operations, the legislative amendment translates into an electricity tax subsidy of some 10 million euros to data centres over the first years of the validity of the subsidy.
The entry into force of the Act was postponed until the European Commission’s examination of the state aid notification.
Initially the entry-into-force provisions said that the Act was to take effect from the beginning of 2014. This was based on the premise that the European Commission had by then concluded its examination of the proposed state aid.
However when the bill came to Parliamentfor discussion, the Commission was still reviewing the state aid notification.
Therefore the entry-into-force provisions were amended so that based on subsection 1, the Act will take affect on a date determined by government. According to subsection 2 of the entry-into-force provisions, the Act will be applied to electricity that is used at a data centre coming under the scope of application of the Act on or after the date on which the Act enters into force (1 April 2014).
The Commission announced on 14 February 2014 that the proposed tax subsidy for data centres falls within the limits and conditions of Commission Regulation (EC) No 800/2008 (General Block Exemption). The Commission’s notification is based on state aid regulations currently in force. EU state aid regulation is in the process of being overhauled. In this connection the legal compatibility of all Finnish energy tax subsidies and state aids will be reassessed.
Further information: Ministerial Adviser Krista Sinisalo, tel. 358 2955 30248.