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V3912-15 7 December 2015 · SG de Impuestos Especiales y de Tributos sobre el Comercio Exterior Criterion in force
OTRO · alcohol etílico

Right to alcohol tax refund for hydrogen production from ethanol

The Spanish Navy has requested a ruling on the tax regime for ethyl alcohol used to produce hydrogen via reforming for ship propulsion. The Directorate-General for Taxes (DGT) has determined that a refund of the alcohol tax may be requested and that the process is not subject to hydrocarbon tax.

The question raised

Legal regime applicable to ethyl alcohol used in the indicated operations, in relation to excise duties.

The DGT's ruling

The manufacture of hydrogen through the reforming of ethyl alcohol, where the alcohol is completely consumed in the process, entitles the holder to a refund of the amounts paid under the Tax on Alcohol and Derived Beverages. This process does not constitute combustion, as the alcohol is neither used as a propellant nor as a fuel. Consequently, the undenatured ethyl alcohol used as a raw material for the manufacture of hydrogen is not subject to the Hydrocarbons Tax. Likewise, the use of hydrogen in a fuel cell to generate electricity is not considered a combustion of hydrogen.

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