Offshore Wind Farms: A Special Tax Regime

Abstract

AbstractThe considerations presented in this chapter have shown the difficulty of finding a solution that would, on the one hand, remove the loophole preventing the taxation of offshore wind farms and, on the other hand, remain compliant with the constitutional standards of tax lawmaking. The adopted solution allows legislators to achieve their objective of similar tax treatment for all electricity production methods. This goal has been achieved first by fixing concession fees to an amount which corresponds with the load of an onshore wind farm. The resultant constitutional problems were primarily caused by the de facto concealment of the tax under the name of a ‘concession fee’. Meanwhile, based on the Polish Constitution, the name of the service is not important but, rather, its features. Since this fee bears the features of a tax, it should first be regulated by a statute, whereas the adopted solution enables the fee amount to be determined by way of regulation. A moderate risk of recognising the regulation as violating the constitution has resulted from this approach. Another effect of replacing the real estate tax with a concession fee is to change the beneficiary of the income in question. While the real estate tax contributes to a municipal budget, the concession fee contributes to the central budget. Therefore, for taxpayers, the introduction of this fee is an economically neutral solution. (The amount has been established to correspond to the amount of the real estate tax paid for onshore wind farms.) But municipalities that counted on revenues from taxing offshore wind farms are disadvantaged by the adopted solution.KeywordsOffshoreOffshore windfarmConcession feeExclusive economic zone