InsiderEconomySupreme Court says VAT reduction on electricity is unconstitutional

Supreme Court says VAT reduction on electricity is unconstitutional

The Supreme Court on Wednesday ruled the law reducing VAT on electricity consumption unconstitutional, as it violates the separation of powers.

According to the Supreme Court decision, the legislation put forward by the Parliament to reduce the VAT for electricity is “an interference with the authority of the executive.”

The law terminated charging VAT on emission costs on electricity charges.

Explaining its decision, the Supreme Court said the Finance Ministry is the sole responsible body which can negotiate with the VAT committee in the EU, and evaluate the financial impact of changing VAT on state funds.

“Only the executive can process this evaluation as it handles VAT collection,” the Supreme Court said.

As this specific tax is collected by other EU member states, it is also a source of revenue for the EU, it concluded.

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