Under EU law, excise duty on electricity is chargeable at the time of supply by the distributor or re-distributor, making them liable to pay the tax. In Poland, however, excise duty on electricity is charged to the producer at the time of supply.

According to the European Commission (EC), Poland was allowed a transitional period until January 1, 2006 to align its electricity taxation system to the European Community framework by shifting the tax liability from the producer to the distributor or re-distributor.

The commission said that by not aligning its electricity taxation system by this date, Poland has failed to meet its obligations under the Energy Tax Directive, which was one of the conditions placed on Poland’s accession to the EU.

Poland was warned of its noncompliance in March 2007 and the EC said that, as it failed to take action to amend its electricity taxation system, the case has been referred to the European Court of Justice.