Adesman & Asociații achieves a historic ruling before the Constitutional Court.
Adesman & Asociații, which represented several electricity producers before the Constitutional Court of Romania, has secured a significant victory.
“This ruling represents an important victory for tax fairness and for the right of economic operators active on the energy market to compete on fair terms and with tax predictability,” stated Diana Adesman, Managing Partner at Adesman & Asociații.
Adesman & Asociații obtains landmark ruling at the Constitutional Court regarding the contribution to the Energy Transition Fund imposed on electricity producers
Adesman & Asociații, which represented several electricity producers before the Constitutional Court of Romania, achieved a significant victory, obtaining the upholding of the objection of unconstitutionality concerning Article 15 of, and Annex no. 6 to, Government Emergency Ordinance no. 27/2022, as amended by GEO no. 119/2022. These provisions impose the obligation to contribute to the Energy Transition Fund for certain categories of energy market participants.
At its sitting on 7 November 2024, the Constitutional Court unanimously declared that these provisions infringe the constitutional principle of the fair distribution of tax burdens, enshrined in Article 56 of the Constitution, as well as the provisions of Article 45 of the Constitution concerning economic freedom and free enterprise. Thus, the Constitutional Court considered that the contribution obligation imposed on certain electricity producers affects fair competition on the energy market and discourages investment in renewable energy sources.
In view of the aspects highlighted by the press release of the Constitutional Court, we consider that this binding decision will undoubtedly have a significant impact on the energy industry, removing, as a result of the finding of unconstitutionality, the obligation to pay the contribution to the Energy Transition Fund for the entities concerned (once the decision is published, we will examine in detail the Constitutional Court’s reasoning behind this ruling and its implications for the entities concerned). In addition, the decision underlines the need for a fair tax framework that supports both economic freedom and the initiative to invest in sustainable energy, without discouraging such investment through discriminatory tax burdens.
„This judgment represents a major victory for tax fairness and for the right of economic operators active in the energy market to compete under fair conditions and tax predictability”, stated Diana Adesman, Managing Partner at Adesman & Asociații. “We are both proud and grateful to have contributed to the clarification and restoration of a legislative framework that supports both industry interests and the fundamental, constitutional principles of economic freedom and initiative in the energy market.”.
Regarding the effects of the Constitutional Court’s decision, on the one hand, this decision will take effect for the future, from the date of its publication in the Official Gazette of Romania (Monitorul Oficial), for entities operating on the energy market. Thus, the provisions of Article 15 of, and Annex no. 6 to, Government Emergency Ordinance no. 27/2022, as amended by GEO no. 119/2022, found to be unconstitutional, cease to have legal effect 45 days after the publication of the Constitutional Court’s decision if, within that period, the legislature does not bring the unconstitutional provisions into line with the Constitution. During that period, the provisions found to be unconstitutional are suspended by operation of law.
On the other hand, strictly as regards electricity producers that have brought actions before the administrative courts challenging the contribution to the Energy Transition Fund and, where applicable, seeking the refund of the amounts paid on that basis – proceedings in which the objection of unconstitutionality was raised –, the situation is different: this decision will take effect in cases currently pending before the courts, which will have to take account of the findings of the Constitutional Court.
