TaxWatch:

Electricity tax: There may still be a need for secondary meters

03 May 2021

Mette Lund Hansen, Director, Duties |

The distinction between electricity consumption for heating or cooling and for process purposes has been abolished for most companies. But there are still cases where electricity consumption will have to be distributed, and where metering therefore can be an advantage.

Since January 1st, 2021, most companies have been able to reimburse electricity tax on their energy consumption for heating, comfort cooling and hot water at the same rate as for energy for process purposes. And this is not without significance. It is thus estimated that about 30% of the companies’ electricity consumption is used for electricity heating.

Therefore, it is also expected that the relaxation will give companies a total financial gain of no less than DKK 160 million per year. The savings make up just over DKK 20,000 per 100,000 kWh, that is used for heating, comfort cooling and hot water.

The Danish Tax Agency hast not implemented any information campaign regarding the changes. Therefore, some companies may not be aware of the new opportunities. They, however, can still attain it via a post-declaration.
 

Exceptions

However, there are still cases where measuring a specific electricity consumption is an advantage or necessary to obtain reimbursement of the electricity tax, e.g. in the following cases:

1. Certain Liberal professions

Architects, engineers, land surveyors, lawyers and some other liberal business can be reimbursed for electricity tax on their electricity consumption for heating, comfort cooling and hot water, but not for lighting, computers, ventilation, etc. The latter will only be possible by January 1st, 2023. Until then, reimbursement of electricity tax will presuppose that the consumption for space heating, etc. is measured separately.

2. Mixed activities

The opportunity of reimbursement of electricity tax only applies to activities subject to VAT. Companies and others that have activities both subject to VAT and exempt from VAT – including banks, insurance companies, zoos, municipalities and regions – will thus continue to benefit from distributing their energy consumption via a metering. And full reimbursement of the electricity tax on consumption for the activities subject to VAT requires measurement via a main meter, for which a separate settlement is received.

3. Rental of premises

Distribution of electricity consumption is also required when renting out premises, and the rent also covers the tenant’s electricity consumption. The electricity consumption must be distributed between the tenant and the landlord either by metering or by an agreement between the parties on how much kWh the tenant pays for via the rent. Only by doing one of the two options, the landlord and the tenant can have their respective share of the total electricity tax reimbursed.

4. Business at the home address

Farmers, garden centers and other business connected with a private home will still need a division of the electricity consumption into a private and an occupational part. This can be done either after a concrete measurement or by using the tax distribution methods.

5. Charging stations for electric cars

Companies that operate charging stations for occupational charging of electric cars will still have to make a concrete measurement of the stands’ electricity consumption in order to be able to obtain the electricity tax rebate.