Judgment summary
This is a request for a preliminary ruling under Article 267 TFEU from the Finanzgericht München (Fiscal Court, Munich, Germany), made by decision of 26 June 2025 and received at the Court on 28 July 2025 [1]. The Court of Justice transmitted the request to the General Court on 13 August 2025, pursuant to the third paragraph of Article 50b of the Statute of the Court of Justice of the European Union [preamble].
The request concerns the interpretation of the first indent of Article 2(4)(b) of Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity [1].
The General Court ruled that the concept of use 'as heating fuels' in that provision covers the use of propane during the testing of a burner in real-world conditions for the purpose of producing measurement data, where the combustion heat of the propane is not subsequently used [36].
Background
The applicant in the main proceedings is an energy technology undertaking. It operates, on a plot, test benches for the burners of gas turbines. In that context, it consumed, in 2021, a total of 51 509.279 kilograms of propane, which it acquired by paying the energy tax [10].
On the basis of Paragraph 47(1)(3) of the EnergieStG, the applicant applied for relief from the energy tax in respect of the propane which it consumed in 2021 [11].
By decision of 26 July 2023, the Hauptzollamt München (Principal Customs Office, Munich) rejected that application on the ground that the propane had been used as heating fuel [12]. The applicant lodged a complaint against that decision, which was rejected on 11 October 2023 [13].
Following that rejection, the applicant brought an action before the Finanzgericht München (Fiscal Court, Munich), the referring court [14].
Core dispute
Before the referring court, the applicant submitted that it did not use propane as heating fuel, since the thermal energy resulting from the combustion of that propane in the test benches is neither intentionally produced nor used, but rather constitutes waste. It argued that the purpose of the tests is not to produce or to use thermal energy, and that it is therefore entitled to tax relief [14].
The Customs Office maintained that, in order to be conclusive, the tests must be carried out under conditions simulating actual use. It inferred that the applicant consciously and voluntarily uses the thermal energy produced during the combustion of the propane in order to achieve its economic objective, which is to obtain conclusive results during the tests, and that such use does not give rise to tax relief [14].
The referring court considered that the outcome depends on the interpretation of the expression 'purposes other than as ... heating fuels' within the meaning of the first indent of Article 2(4)(b) of Directive 2003/96 [15]. It asked whether that concept covers propane burnt during real-world testing of a burner to produce measurement data, where the heat of combustion generated is not subsequently used [18].
Court findings
The Court noted that, under Article 1 of Directive 2003/96, Member States are required to tax energy products in accordance with the directive, which seeks to impose minimum levels of taxation at EU level for most of those products [20]. The directive seeks to promote the proper functioning of the internal market in the energy sector by avoiding distortions of competition [21].
The Court observed that propane is an energy product for the purposes of the directive under Article 2(1)(b) [22]. The provisions of the directive apply to products which both are defined as energy products and fall within its scope, and the first indent of Article 2(4)(b) provides that the directive does not apply to energy products used for purposes other than as motor fuels or as heating fuels [23].
The Court found that certain language versions, such as the French and Czech, refer to uses other than heating fuels without further clarification, implying the release of heat alone could suffice, while other versions, such as the German, English, Italian, Spanish, Polish and Slovak, use the expression 'heating fuels', which can be understood as referring to the use of the source of energy for heating a space. It concluded that the literal interpretation did not, in itself, resolve the question [24]. Where language versions diverge, the provision must be interpreted by reference to the purpose and general scheme of the rules of which it forms part [25].
On the scheme of the directive, the Court held that the EU legislature intended to link the application of the tax to the function of the products as motor fuel or heating fuel [26]. The Court described the test bench operation, in which propane is burnt and the process produces heat, but in the absence of a turbine the energy produced is not converted into mechanical energy, and the gases are discharged through a chimney into the atmosphere [27]. The objective of the simulation is to use the properties of dilatation and volume expansion of the gas, seeking a high output, minimum emissions and a stable flame, and without thermal conditions similar to real-world operation the measurements have no significant value [28].
The Court held that, subject to verification by the referring court, the propane is burnt and the thermal energy is transferred to the gas mixture, contributing to the creation of real-world conditions and to obtaining significant measurements, and is used in the industrial testing process as an essential element [29]. The propane is burnt for its energy content, the thermal energy being used for heating purposes to obtain thermal conditions similar to real-world operation of a gas turbine [30].
The Court found that the fact that the thermal energy is not recovered by a turbine does not mean the propane is used other than as heating fuel [31]. It considered that its interpretation is confirmed by the objectives of the directive, which forms part of the general arrangements for excise duty [32]. The objective of the excise duty as a tax on consumption militates in favour of interpreting the expression as relating to all cases where products are burnt and the energy is used for heating, whatever the purpose of that heating may be, including the testing of a burner [33].
The Court held that, in so far as the propane is burnt and consumed to take advantage of its thermal content for simulating real-world operating conditions, which it is for the referring court to ascertain, it is used as a heating fuel, and the purpose of the heating is irrelevant [34]. The fact that the gases are not kept in the test bench but are continuously removed without further use does not call that interpretation into question [35].
Outcome
The General Court ruled that the first indent of Article 2(4)(b) of Council Directive 2003/96/EC must be interpreted as meaning that the concept of use 'as heating fuels' covers the use of propane during the testing of a burner in real-world conditions for the purpose of producing measurement data, where the combustion heat of the propane is not subsequently used [36].
Since the proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court [37].
Major issues / areas of contention
- The interpretation of the concept of use 'as heating fuels' within the meaning of the first indent of Article 2(4)(b) of Directive 2003/96.
- Whether propane burnt during the real-world testing of a burner to produce measurement data falls within that concept.
- Whether the fact that the combustion heat is not subsequently used or recovered affects the classification of the use.
- The relevance of divergence between language versions of the provision and the need for interpretation by reference to the purpose and general scheme of the directive.
- Whether the applicant was entitled to relief from energy tax under Paragraph 47(1)(3) of the EnergieStG for the propane consumed in 2021.