German court orders nuclear fuel rod tax to be reimbursed

A court in Hamburg ruled Monday that a nuclear fuel rod tax imposed on Germany's power suppliers must be reimbursed until its compatability with European and domestic law is established.

German tax authorities must repay more than 2.2 billion euros ($3.0 billion) in levies to the country's five biggest power suppliers until Germany's Constitutional Court and the European Court of Justice reach a final ruling on the controversial tax, Hamburg's Finance Court said in a statement.

Power utilities will also not need to pay the tax until the decision is handed down.

The companies believe that the levy on new nuclear fuel rods violates the German constitution and EU rules.

Germany launched a shift towards from nuclear and carbon-based energy toward renewables in the late 1990s -- a process that was accelerated up after Japan's 2011 Fukushima nuclear disaster.

The speed up has hit the country's reactor operators hard.

It has cut their earnings, forced them to book billions of euros in write-downs on nuclear assets and increase provisions for the early decommissioning of their nuclear facilities.

Germany's biggest utility, E.ON, welcomed Monday's decision and said it expected to be refunded 1.7 billion euros by tax authorities.

But it added that the decision would not have any immediate impact on the group's earnings.

"The decision reaffirms the serious doubts about the constitutionality of the nuclear fuel tax and its compatibility with EU law and is therefore expressly welcomed by E.ON," the company said in a statement.