Subsidies and tax concessions

The payments made by extractive companies to government agencies (see Revenues generated by the extractive industry) must be seen in the context of the subsidies and tax concessions with which the State supports companies. Here the financial aid (already partially discontinued in cases) provided to hard coal mining (see section a. and b.) is the only subsidy that specifically relates to the extractive industry.

In general, companies in the extractive industry can benefit from tax concessions without a specific link to the extractive industry (see section c.). An example is concessions granted by the State in respect of energy and electricity taxes for manufacturing companies (see section d.).

There are different definitions of the term subsidies at both national and international level, and several methodological approaches are used to tackle the topic. The term used here is based on the definition of the Subsidy report of the Federal Government¹ in which the Federal Government reports every two years on federal financial aid and tax breaks. The term used here is based on the definition of the subsidy report of the Federal Government in which the Federal Government reports every two years on federal financial aid and tax breaks. The legal basis for this report is Section 12(2) of the Stability and Growth Act (StabG). It covers aid granted from federal funds and special tax arrangements which directly or indirectly favour private companies or sectors of the economy and serve the objectives of economic preservation, adjustment or increased productivity.

However, a comprehensive presentation of all tax breaks from a financial or tax-systematic perspective is not the task of the Federal Government’s subsidy report. Financial aid is defined as financial contributions by the Federal Government to entities outside the Federal Administration that benefit private companies and sectors of the economy. Tax breaks, on the other hand, are special tax exemptions that result in a loss of revenue for the public authorities. Individual Federal States report on their financial aid in their own subsidy reports (see Appendix 5 of the Federal Government’s subsidy report).

Adaption payments

Workers who were at least 50 years of age (underground workers) or 57 years of age (above ground workers) and who, on the occasion of a closure or rationalisation measure, have lost their job before 1 January 2023, receive adaptation payments (APG) for up to five years as interim aid until they become eligible for pension insurance benefits.² The adaptation payments reflect the commitment of the Federal Government and the coal-producing Federal States to social responsibility. The Federal Government granted adaptation payments totalling €38.6 million in 2023, and €26.5 million in 2024. As of 31 December 2024, 864 employees subject to social security contributions were employed in the coal mining industry. No employees have left the adaptation payment scheme since 1 January 2023. The APG guidelines are valid until 31 December 2027 to ensure the transition of the affected employees to the old-age pension. A small number of employees are still needed to deal with the contaminated sites.

Control measures

In addition to the monitoring of the intended use of funds by the German Federal Office of Economics and Export Control in cooperation with external auditors, the German Federal Audit Office also randomly reviews individual adaptation payment cases within the framework of the Federal Office’s annual budget review.

Transparency of State Financial Aid and Support

Extractive companies can also receive non-specific financial help from the state that is not related to the natural resources sector, if they meet the appropriate criteria for the support programme. Financial aid can be granted as a subsidy, loan or help servicing debt, although nowadays the majority of financial help is in the form of subsidies. For a long time now loans granted directly from the Federal budget have played a secondary role. The reason for this is that the Federal Government uses banks to award the loans and they generally receive an interest subsidy for implementing the programme. The Federal Government’s subsidy report provides information about the financial aid, the extent of the aid and the support objectives. There is no information in the report about the amount of financial aid paid out to the individual recipients.

State subsidies for companies are also the subject of the Treaty on the Functioning of the European Union, as this may reduce competition in the common internal market.

Instead of the term “subsidy”, EU law uses the term “state aid”, which has a legal definition that differs from the term “subsidy”.³ Government support does not only mean direct financial contributions to undertakings, debt write-offs or subsidised loans, but may also cover guarantees, tax breaks or the provision of land and goods and services on special terms which confer an advantage on the undertaking concerned. In order to guarantee fair competition in Europe, the Treaties and corresponding secondary legislation determine the conditions under which such state aid is permissible. The member states of the European Union are required each year to disclose information on any government support granted. Depending on the legal basis under state aid law, this obligation applies to each individual aid above a specific threshold of €100,000 per company. The respective member state has to disclose this information on a detailed state aid website (see Subsidies and tax concessions d.). From 1 January 2026, this obligation will also apply to “de minimis” aid, i.e. small amounts of aid that do not exceed a threshold of €300,000 per company in three years in the sense of state aid law.⁴

The name of the recipient, the amount and the purpose of the state aid together with the legal basis must be published. Where companies in the extractive industry receive state aid, e. g. in the form of reduced-rate loans above the threshold, these can be viewed by the public.

Concessions for electricity and energy taxes

There are various tax concessions for both electricity and energy taxes. Tax concessions include tax exemptions, tax reductions and tax relief. The Electricity Tax Act (StromStG) provides concessions for certain types of use or electricity generation. The Energy Taxation Act (EnergieStG) also covers uses in which energy products are tax-favoured. A part of these concessions is mandatory under the Energy Tax Directive (EU) 2003/96/EC of 27 October 2003.

As manufacturing companies, extractive sector enterprises can particularly profit from the different tax relief possibilities provided by energy and electricity tax legislation.

The following regulations are particularly relevant here for the reporting years 2023 and 2024:

• Tax relief for companies (Section 54 EnergieStG, Section 9 b StromStG): If a manufacturing company applies for electricity and energy tax concessions and its application is approved, it is granted a reduction of 25% of the tax rates on electricity, heating and the fuels used in its production facilities eligible for tax concession. In the area of electricity tax law, tax relief is possible for electricity consumed in 2024 and 2025 up to the EU minimum commercial rate (relief from €20/MWh to €0.5/MWh). A relief within the framework of the so-called “electricity price package” that exceeds the level of individual peak compensation in any case.⁵
• Tax relief in the form of so-called peak compensation (Section 55 EnergieStG, Section 10 StromStG): The statutory relief provisions expired at the end of 2023. Before that time, the additional burden of the “ecological tax reform” on manufacturing companies could be lightened by a reduction in their energy and electricity taxes. Since the increase in revenues generated by the ecological tax reform also served to reduce the factor of “work” and contributed to companies paying less for employers’ contributions to pension insurance schemes in comparison to 1999, a comparative peak compensation calculation is carried out for companies in question. In order to avoid double relief for the employers’ pension insurance as well as for the energy used, saved pension contributions are taken into account in the calculation of the tax relief. The amount of relief is therefore calculated individually depending on the company, and is also capped at a maximum of 90% of the electricity tax paid and 90% of the tax share pursuant to Section 55(3) of the EnergieStG.
• Certain processes and procedures/manufacturer privilege (Section 9a StromStG, Section 51 EnergieStG, Section 26, 37, 44 and 47a EnergieStG): Companies in the manufacturing industry can use electricity or energy products for specific, energy-intensive purposes (such as electrolysis, metal production, manufacture of glassware, etc.). and reduce their tax bills by 100%. In addition, companies that produce energy products on their own premises (refineries, gas extraction and coal mining companies) can use these self-produced energy products tax-free (or obtain tax relief) for the purposes of maintaining operations within their own companies.

The subsidy report of the Federal Government contains the total subsidies for the entire manufacturing industry; they are not shown separately for each sector such as the extractive sector. Where the concessions in the field of electricity and energy constitute state aid, these come under the reporting and transparency obligations of the European Union for state aid (see Transparency of state financial aid and support).

In Germany, the data on tax concessions that are to be published under EU law are collected and forwarded in accordance with the regulation on the implementation of publication, information and transparency obligations in the Energy Tax and Electricity Tax Act (EnSTransV). Under this regulation, the customs administration collects and transmits data relating to energy and electricity tax concessions to the extent prescribed by the EU. The corresponding data can be accessed on the European Commission’s website on state aid.⁶

According to data from the Federal Statistical Office concerning the use of energy in manufacturing companies⁷, the electricity consumption of the “Mining and quarrying sector” (WZ 8-B) totalled 5,366,512 MWh in 2023. Multiplied by the electricity tax tariff of €20.50/MWh without taking account of possible concessions, this figure results in an electricity tax revenue of €110 million.

The companies in the natural resources extraction industry are generally entitled to relief under Section 9b StromStG as companies of the manufacturing industry. In 2023, the tax relief amounted to €5.13/MWh (25%). In relation to the theoretical tax burden mentioned above, this leaves a tax liability of around €90 million or €15.37 electricity tax per MWh after deduction of the tax relief under Section 9b StromStG. The second stage of the relief is the so-called peak compensation according to Section 10 StromStG (until the end of 2023). This is calculated individually for each company depending on the electricity consumption and the pension insurance contributions paid and amounts to a maximum of 90% of the remaining electricity tax. In the absence of individual company figures, a flat-rate relief of 50% of the remaining tax burden can be assumed for all extractive companies as a result of the peak equalisation.

This estimate indicates electricity tax payments from the extractive sector of about €50 million in 2023.⁸ For electricity consumed in 2024, the electricity tax relief under Section 9b StromStG amounts to €20/MWh (see above), so that after deduction of the tax relief, an electricity tax of €0.5/MWh remains. After deduction of the electricity tax relief, the electricity tax burden in 2024 would therefore be in the range of €2 to 3 million assuming electricity consumption comparable to 2023.

¹ Report of the Federal Government on the development of federal financial aid and tax breaks for the years 2023 to 2026

² A comparable model for making adaptation payments is also planned to cushion the social consequences of phasing out coal mining. See Effects of the energy transition for more information on phasing out coal mining

³ European Commission (2024): State aid

⁴ That is, a group of companies which must be regarded as a single economic entity (cf. Commission Regulation (EU) 2023/2831)

⁵ The Federal Government (2024): Keeping energy affordable – electricity price package for manufacturing companies

⁶ European Commission (2025): Public search in the state aid transparency database

⁷ Destatis (2025): Electricity generation, electricity supply, electricity output, electricity consumption: Germany, years, economic sectors; table code 43531-0002

⁸ It should be noted that, under certain conditions including the generation of renewable energy and highly efficient combined heat and power (CHP) systems under 2 megawatts, producers of their own energy are exempt from electricity tax.