Headwind or Tailwind - Taxation Issues of Wind Parks - GBV
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Headwind or Tailwind – Taxation Issues
of Wind Parks
A thesis submitted to the Bucerius/WHU Master of Law and Business Program
in partial fulfillment of the requirements for the award of the Master of Law and
Business (“MLB”) Degree
Lynn Waffenschmidt
August 7, 2012
13,920 words (excluding footnotes)
Supervisor 1: Prof. Dr. Birgit Weitemeyer
Supervisor 2: Florian Lechner
Table of Contents
1 Introduction to the Topic ..................................................................................................... 1
2 The Liability for Wind Parks to Pay Taxes in Germany ....................................................... 8
2.1 Jurisdiction to Tax in General .................................................................................. 8
2.2 The German “Inland” in the Course of Time ............................................................ 8
2.3 Consequences for Offshore Wind Parks ................................................................ 11
2.4 Selected Issues ..................................................................................................... 15
2.4.1 The Wind Park “RIFFGAT” and the German-Dutch Border Issue ............ 15
2.4.2 Floating Wind Turbines ........................................................................... 20
2.4.2.1 The Technological Development ................................................ 20
2.4.2.2 Taxing Floating Wind Turbines ................................................... 23
3 Trade Tax Issues...............................................................................................................26
3.1 Levy of Trade Tax ................................................................................................. 27
3.1.1 When Does a Trade Tax Liability Arise? ................................................. 27
3.1.2 How Much Trade Tax Is to Be Paid? ....................................................... 31
3.1.3 Which Municipality Is Entitled to the Trade Tax Revenues? .................... 32
3.2 Allocation of Trade Tax.......................................................................................... 35
3.2.1 Which Municipality Is Entitled to How Much of the Trade Tax
Revenues? ............................................................................................ 35
3.2.2 Which Allocation Formula Should Be Used? ........................................... 39
3.2.2.1 Do Wind Parks Call for an Exception of the Regular Rule
of §29 GewStG? ..................................................................... 39
3.2.2.2 Which Possibilities for Alternative Rules Exist? .......................... 43
4 Conclusion ........................................................................................................................45
References ...........................................................................................................................48
Appendices ..........................................................................................................................54
Appendix A: Offshore wind parks in the North and Baltic Sea...................................... 54
Appendix B: Emsmündung and course of borders as depicted in the Ems-Dollart-
Treaty of 1960......................................................................................... 56
Appendix C: List of floating wind turbine projects ........................................................ 57
Appendix D: Overview of interview partners ................................................................ 59
Table of Figures
Fig. 1: Water depth and distance to coast of European offshore wind parks, sorted by
country...................................................................................................................... 3
Fig. 2: Drivers of revenue and cost of offshore wind parks.................................................. 4
Fig. 3: Cumulative installed capacity of offshore wind turbines in selected European
countries ................................................................................................................... 5
Fig. 4: Total offshore wind capacity installed, under construction, consented, planned
as of 30 June 2011, in MW ....................................................................................... 6
Fig. 5: The zones of the sea according to the UNCLOS...................................................... 9
Fig. 6: Germany’s and the Netherland’s perception of their borders in the Ems-
Dollart-Area ............................................................................................................ 16
Fig. 7: The location of the wind park “RIFFGAT” ................................................................17
Fig. 8: Distance and depth of online, consented and under construction offshore wind
farms ...................................................................................................................... 20
Fig. 9: Floating support structure types ..............................................................................21
Fig. 10: Sample calculation of a business’ amount of trade tax due .....................................32
Table of Abbreviations
AO Abgabenordnung (General Tax Code)
BFH Bundesfinanzhof (Federal Finance Court)
BFM Bundesfinanzministerium (Federal Ministry of Finance )
BGBl. Bundesgesetzblatt (Federal Gazette)
BMU Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (Federal
Ministry for the Environment, Nature Conservation and Nuclear Safety)
BR-Dr Bundesratsdrucksache (Federal Council Print Matter)
BSH Bundesamt für Schifffahrt und Hydrographie (Federal Office for Navigation
and Hydrography)
BT-Dr Bundestagsdrucksache (Bundestag Print Matter)
BWE Bundesverband WindEnergie e.V. (Federal Association Wind Energy )
CO2e CO2 Equivalent
DEWI Deutsches Windenergie-Institut (German Wind Energy Institute)
EEG Erneuerbare-Energien-Gesetz (Renewable Energies Law)
EEZ Exclusive Economic Zone
EStG Einkommensteuergesetz (Income Tax Code)
EWEA European Wind Energy Association
FG Finanzgericht (Finance Court)
GewStG Gewerbesteuergesetz (Trade Tax Code)
GG Grundgesetz (Basic Law)
GHG Greenhouse Gas
IWES Fraunhofer Institut für Windenergie und Energiesystemtechnik (Fraunhofer
Institute for Wind Energy and Energy System Technology)
JStG Jahressteuergesetz (Annual Tax Reform)
KfW Kreditanstalt für Wiederaufbau (Credit Institute for Reconstruction)
KStG Körperschaftssteuergesetz (Corporate Tax Code)
nm nautical mile (= 1,852m)
PwC PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft
Rn. Randnummer (Recital)
Rz. Randziffer (Recital)
SeeAnlV Seeanlagenverordnung (Offshore Installations Ordinance)
UNCLOS United Nations Convention on the Law of the Sea
UNFCCC United Nations Framework Convention on Climate Change
VDMA Verband Deutscher Maschinen und Anlagenbau e.V. (German Engineering
Federation)
1 Introduction to the Topic
It is not only the polar bear that is in danger of losing his habitat. The climate change
we are currently witnessing is affecting everyone on this planet: Heavy storms destroy the
homes of thousands of Americans, prolonged drought periods leave rural Indians and
Pakistani fighting against death from starvation of both livestock and men, the rising sea-
level threatens to swallow up New Zealand and other archipelagos.
The Kyoto Protocol, adopted in 1997, so far has been the largest joint political effort
to fight climate change and mitigate its consequences. One of the biggest levers to reach the
goal of the United Nations Framework Convention on Climate Change (UNFCCC), the
“stabilization of greenhouse gas concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic interference with the climate system”1, is the transition
from using fossil fuels to renewable energy sources.
As a pioneer in fighting climate change, Germany already made big steps towards its
goal for renewable energies to reach a share of 35% in electricity supply by 20202: In 2011,
the share rose to approximately 20%, compared to 17% in 20103. According to the
Bundesverband WindEnergie e.V. (BWE) and the Deutsches Windenergie-Institut (DEWI),
thanks to renewables, Germany could save 120m t CO2e in 2010; one third of this reduction
could be attributed to wind energy4. However, there is still a lot of potential to be tackled: If
wind energy alone would reach a share of 25% in electricity supply by 2025, as is planned by
the German federal government, GHG emissions could be reduced by 20% compared to
20105.
1
Article 2 of United Nations Framework Convention on Climate Change, The Convention on Climate Change, 1992, retrieved
from http://unfccc.int/essential_background/convention/background/items/1349.php (23 June 2012).
2
Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit, Questions and answers about transforming our energy
system, 2011, retrieved from http://www.bmu.de/english/transformation_of_the_energy_system/faq/doc/47589.php (23 June
2012).
3
Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit, Erneuerbare Energien wichtiger Pfeiler für die
Energieversorgung, press release no. 170/11, 29 December 2011, Berlin, retrieved from http://www.erneuerbare-
energien.de/pressemitteilungen/aktuelle_pressemitteilungen/pm/48231.php (23 June 2012).
4
Bundesverband WindEnergie e.V. (Ed.), BWE Branchenreport: Windindustrie in Deutschland 2012, 2nd ed., Berlin 2012, p.
29.
5
Bundesverband WindEnergie e.V. (Ed.), BWE Branchenreport 2012 (fn. 4), p. 29.
1
So far, wind energy only covers 7.7% of Germany’s electricity demand, but still, up
from 6.2% in 20106, with an output of 47 TWh in 20117. Last year, wind turbines with a
capacity of over 2,000 MW were installed on- and offshore, leading to a total of 22,200 wind
turbines with a capacity of nearly 29,000 MW in Germany8. With this installed base, Germany
ranks third behind the USA, who displaced Germany in 2008, and China, who displaced the
USA in 20109.
The worldwide development of wind energy is even more dynamic than in Germany
alone: With an additional 41,000 MW in 2011, there now is an installed capacity of
approximately 215,000 MW as of end 2011, a plus of 21% compared to 201010.
Offshore wind energy however is still dwarfed by the onshore development. Only
4,000 MW of the aforementioned 215,000 MW can be attributed to offshore wind turbines
worldwide and 200 MW11 of the 2,051 MW additional capacity installed in Germany in 201112.
Although the first offshore wind park has already been built in 1991, near Vindeby, Denmark,
until now only comparably few wind parks have since been installed – 62 worldwide –,
approximately half of which far-shore13, half near-shore14.
The trend though points towards wind parks being constructed further away from the
coast. Germany once more is a pioneer in this regard: the average German wind park is
installed 51 km away from the coast, in a water depth of approximately 28 m compared to a
worldwide average of 13.2 km and 14.5 m respectively15:
6
Fraunhofer Institut für Windenergie und Energiesystemtechnik (IWES), Windenergie 2011, 2011, retrieved from
http://windmonitor.iwes.fraunhofer.de/bilder/upload/Windreport_2011_de.pdf (18 June 2012), p. 9.
7
IWES, Windenergie 2011 (fn. 6), p. 7.
8
IWES, Windenergie 2011 (fn. 6), p. 7.
9
IWES, Windenergie 2011 (fn. 6), p. 34.
10
Bundesverband WindEnergie e.V. (Ed.), BWE Branchenreport 2012 (fn. 4), p. 11.
11
The 200 MW (rounded) come from the offshore wind parks alpha ventus (60 MW), Baltic 1 (48.3 MW) and Bard Offshore (90
MW). Cf. Windenergie Agentur WAB, Branchenbericht 2011: Offshore-Windenergiemarkt in Deutschland, 2011, retrieved
from http://www.windenergie-agentur.de/deutsch/PDFs/WAB-Branchenbericht2011.pdf (18 June 2012), p. 3.
12
IWES, Windenergie 2011 (fn. 6), pp. 7, 35.
13
Using the criterion of the EEG, „far-shore“ means further away from the coast than three nautical miles: cf. IWES,
Windenergie 2011 (fn. 6), p. 35.
14
IWES, Windenergie 2011 (fn. 6), p. 35.
15
IWES, Windenergie 2011 (fn. 6), pp. 42–43.
2
16
Fig. 1: Water depth and distance to coast of European offshore wind parks, sorted by country
The subordinate role of offshore wind has several causes: Offshore wind turbines are
exposed to rougher external conditions; wind and waves put high pressure on the whole
installation and furthermore make the materials corrode more easily than those of their
counterparts onshore. The resulting different technical requirements increase costs.
Production is more expensive as well, since economies of scale have not been reached yet
due to the slower development of the technology. Transport costs are higher due to the
larger distances and the aggravated accessibility of offshore wind parks. Maintenance is also
affected by the aggravated accessibility: waves and storms make it harder and more
expensive to get to the turbines and can result in longer standstills in case of a dysfunction.
Furthermore, the grid connection is harder to achieve than on shore, longer and more
resistant cables are needed.
In contrast, there are also advantages of offshore wind turbines over onshore ones:
Depending on the actual location, wind yield can as much as double17, to 4,000 full load
hours18. Additionally, wind yields are steadier on the high sea. There are also more locations
available at present than on shore and offshore wind parks do not disturb tourists’ or
resident’s ears and eyes alike, if they are far out.
16
IWES, Windenergie 2011 (fn. 6), p. 43.
17
Bundesverband WindEnergie e.V., BWE Branchenreport: Windindustrie in Deutschland 2011, 2011, retrieved from
http://www.wind-energy-
market.com/fileadmin/Bilder_und_Logos/Marktuebersicht/Windindustrie_in_Deutschland_DE_Branchenreport.pdf (18 June
2012), p. 18.
18
E.ON, E.ON Offshore Wind Energy Factbook, 2011, retrieved from
www.eon.com/de/downloads/EON_Offshore_Wind_Factbook_en_December_2011.pdf (11 April 2012), p. 11.
3
19
Fig. 2: Drivers of revenue and cost of offshore wind parks
For these reasons, offshore wind energy is firmly rooted in the German federal
government’s energy concept. In September 2010, the government passed a new guideline,
wherein the goal of renewable energies gaining a share of 35% of energy supply by 2020,
50% by 2030, 65% by 2040 and 80% by 2050 is established20. Due to the catastrophe in
Fukushima in March 2011, the role of nuclear plants in the aforementioned energy concept
was revised and in June 2011 an “energy package” was passed with the aim of accelerating
the implementation of the measures previously decided upon.
The goal stated in the Strategie der Bundesregierung zur Windenergienutzung auf
See21 of 2002 was reinforced in 2010’s energy concept: the installed capacity of offshore
wind turbines is supposed to reach 25,000 MW by 203022. Considering that 2011’s capacity
was only 200 MW, this means the installation of approximately 1,000 MW every year, which
could generate a yearly added value of €3bn in the German economy, according to the
VDMA23.
But for Germany as an export nation, it is not only the German market that counts.
According to the BWE, wind turbine producers achieve two thirds of their revenues through
19
Graph by author. Photo retrieved from www.virginiaenergy.org (23 June 2012).
20
Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit, Transforming our energy system (fn. 2).
21
In English: “The Federal Government’s Strategy for the Utilization of Offshore Wind Energy”.
22
Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit et al., Strategie der Bundesregierung zur Windnutzung auf
See im Rahmen der Nachhaltigkeitsstrategie der Bundesregierung, 2002, retrieved from http://www.erneuerbare-
energien.de/files/pdfs/allgemein/application/pdf/windenergie_strategie_br_020100.pdf (22 June 2012), p. 7;
Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit, Das Energiekonzept der Bundesregierung 2010 und die
Energiewende 2011, 2011, retrieved from
http://www.bmu.de/files/pdfs/allgemein/application/pdf/energiekonzept_bundesregierung.pdf (23 June 2012), p. 8.
23
Verband Deutscher Maschinen und Anlagenbau e.V., VDMA-Positionspapier: Offshore-Windenergie, 2011, retrieved from
http://www.vdma.org/wps/wcm/connect/c21ba2004dd25050bcb8fcd1f693e3d9/2011_04_01_Offshore+Windenergie.pdf?MOD
=AJPERES&CACHEID=c21ba2004dd25050bcb8fcd1f693e3d9 (18 June 2012), p. 2.
4
their export business24. In Europe, Great Britain is leading the offshore market with 1,660
MW installed capacity25 by end 2011 and is expected to keep this position:
26
Fig. 3: Cumulative installed capacity of offshore wind turbines in selected European countries
The German wind energy industry can only use its potential if there are the right
political and economic framework conditions. Currently, the most severe problems for the
offshore wind industry in Germany are the following: The process of obtaining an official
permit to build an offshore wind park takes far too long. There are considerable problems of
obtaining funding. According to KPMG, average investment costs for one MW amounts to
€3.7m27. Due to the financial crisis, incertitude resulting from only few project experiences, as
well as a not overly attractive feed-in compensation, it is hard to find investors. Additionally,
the slow grid expansion is still a problem. After all, it is Northern Germany where there is
most wind yield and Southern Germany where most electricity is needed. According to the
BWE, “[a]lone in 2010, 150 GWh of electricity were lost in the German wind industry,
because turbines had to be switched off due to a grid overload.”28 Further problems are the
availability of the infrastructure for building more offshore wind parks, such as special
vessels, as well as a shortage of skilled labour.
24
Bundesverband WindEnergie e.V., BWE Branchenreport 2011 (fn. 17), p. 11.
25
IWES, Windenergie 2011 (fn. 6), p. 40.
26
PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft (PwC), Volle Kraft aus Hochseewind, 2012, retrieved from
http://wab.biz/atest/images/stories/PDF/studien/Volle_Kraft_aus_Hochseewind_PwC_WAB.pdf (18 June 2012), p. 42.
27
KPMG AG Wirtschaftsprüfungsgesellschaft, Offshore-Wind – Potenziale für die deutsche Schiffbauindustrie, 2011, retrieved
from http://www.kpmg.de/docs/offshore_wind_copyright_230511.pdf (18 June 2012), p. 30.
28
Bundesverband WindEnergie e.V. (Ed.), BWE Branchenreport 2012 (fn. 4), p. 11. Translated from German by author.
5
The German government is already dealing with some of these challenges. Two of
the most important achievements are the special program of the KfW that sponsors the first
ten offshore wind parks with €5bn worth of loans at the market interest rate29 as well as the
EEG amendment improving the conditions of feed-in compensation30.
These initiatives lay the foundation of Germany becoming a leading force in the
offshore wind industry. Germany already is the country that authorized the highest capacity
in offshore wind parks: 8,800 MW on an area of 1,160 km2 31:
Fig. 4: Total offshore wind capacity installed, under construction, consented, planned as of 30 June
32
2011, in MW
Belgium 1,857 Online
Denmark 2,472 Under construction
Finland 4,293 Consented
Estonia 1,000 Planned
France 6,000
Germany 31,246
Greece 4,889
Ireland 3,780
Italy 2,700
Latvia 200
Malta 95
Netherlands 5,992
Norway 11,394
Poland 900
Portugal 478
Spain 6,804
Sweden 8,279
UK 48,596
Until December 2011, a total of 30 wind parks were authorized by the BSH, 25 in the
German North Sea, five in the German Baltic Sea33. This development is in line with the
federal government’s goals stated above and an important part of the financial development
of the German offshore wind industry. PwC estimates that the offshore wind industry’s
revenues across the whole value chain could reach €22.4bn by 2021, up from €5.9bn in
29
Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit, Das Energiekonzept der Bundesregierung 2010 und die
Energiewende 2011, 2011, retrieved from
http://www.bmu.de/files/pdfs/allgemein/application/pdf/energiekonzept_bundesregierung.pdf (23 June 2012), p. 8.
30
Gesetz zur Neuregelung des Rechtsrahmens für die Förderung der Stromerzeugung aus erneuerbaren Energien vom 28. Juli
2011, (BGBl. 2011 I, 1634).
31
IWES, Windenergie 2011 (fn. 6), p. 37.
32
Data from European Wind Energy Association, Wind in our Sails: The coming of Europe's offshore wind energy industry,
2011, retrieved from
http://www.ewea.org/fileadmin/ewea_documents/documents/publications/reports/23420_Offshore_report_web.pdf (18 June
2012), p. 16. Illustration by author.
33
IWES, Windenergie 2011 (fn. 6), p. 37. See also Appendix A.
62010, its number of employees from currently 6,000 to 33,00034. This of course also has a
huge impact on the tax revenues: The same study projects trade tax revenues of €240m in
2021 for Germany, up from €64m in 2010 and €190m in 201635.
For the reason of the above elaborated importance of wind energy for the fight
against climate change as well as for the German economy, this thesis deals with selected
topics in the taxation of wind parks. In the second chapter following this introduction to the
topic, I will explain when Germany is authorized to levy taxes in general on both on- and
offshore wind parks and elaborate on the changing definition of the German “Inland”. After a
historic discourse, I will scrutinize the definition and role of the continental shelf and dedicate
a sub-chapter to the German-Dutch border dispute that arose anew due to the instalment of
the wind park “RIFFGAT” that is supposedly on both German and Dutch territory –
depending on the respective country’s definition of the national border. Based on the
previous analyses the chapter ends with a sub-chapter solely about the special case of
taxing floating wind turbines that are far out in the sea and not necessarily very firmly
grounded on the seabed in order to answer the question of how existing German law is to be
applied to this future technology.
The third chapter deals with trade tax as one example of the taxes Germany levies on
wind parks. I will examine both the question of which preconditions have to be satisfied so
that trade tax becomes due and the question of distributing the trade tax between the
municipality where the operating company has its registered seat and the municipality where
the park is operated.
In order to answer these questions, I will review literature, discuss with several
experts to include the perspectives of a lawyer, an operating company, the German
municipalities and financial authorities, as well as interpret the applicable German laws.
34
PwC, Hochseewind (fn. 26), pp. 5, 13.
35
PwC, Hochseewind (fn. 26), p. 14.
72 The Liability for Wind Parks to Pay Taxes in Germany
2.1 Jurisdiction to Tax in General
In order to be liable to pay taxes to the German state you either have to be a resident
in Germany, which means for a company to have its registered seat within the German
national territory or its effective management taking place there (§10 AO), or you earn
income in Germany that falls under the category of source income as defined in §49 EStG –
for a corporation especially important in this regard are earnings attributable to a German
permanent establishment (§49 (1) No. 2 EStG, §12 AO).
If the first possibility applies, the German tax authorities have the right to claim taxes
on the taxpayer’s world-wide income; the corporation then has an unlimited tax liability (§1
(1) KStG; §1 (1)-(3) EStG). If the second possibility applies, only the part of the taxpayer’s
income that was actually earned in Germany can be taxed by the German authorities; the
taxpayer has a limited tax liability36 (§2 KStG; §1 (4) EStG).
To determine on what exactly the German tax authorities can claim taxes, the
question now is, where exactly does German national territory start and where does it end?
2.2 The German “Inland” in the Course of Time
A liability to pay taxes only arises on German national territory37. All borders onshore
are very clear, so the issue of defining that territory moves to the borders offshore. The sea is
governed by the United Nations Convention on the Law of the Sea (UNCLOS), the
“fundamental order of the sea […] [that] divides the sea into different zones and assigns
various sovereign rights and duties to the coastal states”38.
36
This may cause a certain part of the income to be taxed several times, for example if someone is a tax resident in more than
one country or if someone’s world-wide income is taxed in his home country and at the same time income he earned as a
non-resident in another country is taxed by that country as source income. Double taxation treaties deal with this problem of
legal double taxation. Since this issue is not the focus of the paper at hand, it will not be discussed in more detail here.
37
The national territory definition used for determining a tax liability may differ from the general definition of national territory.
This is due to the functionality of the term “national territory” in tax law (Waldhoff/Engler, Die Küste im deutschen
Ertragssteuerrecht – am Beispiel der Besteuerung von Offshore-Energieerzeugung, in: Finanz-Rundschau 6/2012, 254–262,
p. 255).
38
Markus/Maurer, Windenergie und Gewerbesteuer: Zur Lückenhaftigkeit des Rechts der Offshore-Windenergie-Besteuerung,
in: Neue Zeitschrift für Verwaltungsrecht – Extra 2012, Vol. 31(10), 1–10, p. 2.
8The UNCLOS defines five different zones (see Fig. 5), of which I chose the three that
are most important for wind parks in Germany as I will further explain in the next subchapter:
the territorial sea (Art. 2 ff. UNCLOS), the exclusive economic zone (Art. 55 ff. UNCLOS) and
the continental shelf (Art. 76 ff. UNCLOS).
39,40
Fig. 5: The zones of the sea according to the UNCLOS
According to Art. 2 (1) UNCLOS, an “adjacent belt of sea” of a coastal state, the
territorial sea, belongs to the national territory of the same as does its land territory and
internal waters. Thus, the state’s sovereignty does not stop at the coast, but up to 12 nautical
miles41 from the baselines42 in the sea (cf. Art. 3 UNCLOS) and covers the air space, the
seabed as well as the subsoil (cf. Art. 2 (2) UNCLOS). Germany has proclaimed such a zone
of approximately 12 nautical miles in the North and the Baltic Sea in 199443.
39
http://en.wikipedia.org/wiki/File:Zonmar-en.svg (1 March 2012).
40
Even though not depicted in Fig. 5, “all parts of the sea that are not included in the exclusive economic zone, in the territorial
sea or in the internal waters of a State, or in the archipelagic waters of an archipelagic State” (Art. 86 UNCLOS) are defined
as the high seas.
41
According to Graf Vitzthum, this can be traced to the original zone of 3 nautical miles, which is a canon’s range of fire. After
the Second World War however, coastal states expanded this zone on their own authority. Art. 3 UNCLOS institutionalizes
this customary international law. (Graf Vitzthum, Staatsgebiet, in: Isensee/Kirchhof (Eds.), Handbuch des Staatsrechts der
Bundesrepublik Deutschland, Band II: Verfassungsstaat, 3rd ed., Heidelberg 2004, §18 Rn. 30)
42
The so-called „normal baseline“ (Art. 5 UNCLOS) is defined as the “low-water line along the coast as marked on large-scale
charts officially recognized by the coastal State” (ibid.). In case it is impractical to measure the base line in the
aforementioned way, due to the physical shape of the coast for example, the “straight baseline” (Art. 7 UNCLOS) is used that
takes “lighthouses or similar installations which are permanently above the sea level” (ibid.) as points of orientation.
43
Cf. Bekanntmachung der Proklamation der Bundesregierung über die Ausweitung des deutschen Küstenmeers vom 11.
November 1994, (BGBl. 1994 I, 3428).
9Any area in excess of the territorial sea is under international law not part of a state’s
national territory. However, pursuant to the Geneva Convention on the Continental Shelf of
1958, the coastal states have a certain, functionally limited, sovereignty, namely the
“sovereign rights for the purpose of exploring it [i.e., the continental shelf] and exploiting its
natural resources”44. Germany utilised this right in 1964 by publishing its Proklamation der
Bundesregierung über die Erforschung und Ausbeutung des deutschen Festlandsockels on
20 January 196445. A law on the Preliminary Regulation of the Rights to the Continental
Shelf46 followed in the same year and was changed ten years later, in 197447.
The UNCLOS builds on the Geneva convention of 1958 and, in principle, involves the
same thought of a coastal state’s “functionally sovereign territory”48 in excess of the territorial
waters, does however further refine what was previously called “continental shelf”49.
The exclusive economic zone (EEZ) is defined as “an area beyond and adjacent to
the territorial sea” (Art. 55 UNCLOS) where the coastal state has “sovereign rights for the
purpose of exploring and exploiting, conserving and managing the natural resources,
whether living or non-living, of the waters superjacent to the seabed and of the seabed and
its subsoil, and with regard to other activities for the economic exploitation and exploration of
the zone, such as the production of energy from the water, currents and winds” (Art. 56 (1)
(a) UNCLOS). Germany has established such an EEZ in both the North and the Baltic Sea
with its proclamation of 25 November 199450. The EEZ is, however, not part of the German
44
Art. 2 (1) of International Law Commission, Convention on the Continental Shelf. 29 April 1958, United Nations, Treaty Series,
Vol. 499, p. 311, retrieved from http://www.unhcr.org/refworld/docid/3ddb8e6a4.html (24 June 2012).
45
Proklamation der Bundesregierung über die Erforschung und Ausbeutung des deutschen Festlandsockels vom 20. Januar
1964, (BGBl. 1964 II, 104).
46
Gesetz zur vorläufigen Regelung der Rechte am Festlandsockel vom 24. Juli 1964, (BGBl. 1964 I, 497). Translated from
German by author.
47
Gesetz zur Änderung des Gesetzes zur vorläufigen Regelung der Rechte am Festlandsockel vom 2. September 1974, (BGBl.
1974 I, 2149).
48
Erbguth, Die Abstimmung von Nutzungsansprüchen und Schutzerfordernissen in marinen Räumen, lecture held as part of the
series "Räume - Ein Schlüsselbegriff der Geistes-, Sozial- und Naturwissenschaften", University of Rostock, 24 January 2008,
retrieved from http://www.iuk-verbund.uni-
rostock.de/fileadmin/IUK/Ringvorlesungen/Raeume/080124_Erbguth_Marine_Raeume.pdf (11 April 2012), p. 3. Translated
from German by author.
49
The continental shelf was defined differently back then compared to the more current UNCLOS, as “the seabed and subsoil of
the submarine areas adjacent to the coast but outside the area of the territorial sea, to a depth of 200 metres” (Art. 1
Convention on the Continental Shelf). However, according to Art. 311 (1) UNCLOS, the UNCLOS’ definition prevails over the
Geneva convention’s.
50
Proklamation der Bundesrepublik Deutschland über die Errichtung einer ausschließlichen Wirtschaftszone der
Bundesrepublik Deutschland in der Nordsee und in der Ostsee vom 25. November 1994, (BGBl. 1994 II, 3770).
10national territory. The sovereign rights assigned to Germany as coastal state are functionally
limited to the ones listed in Art. 56 (1) UNCLOS.
Neither is the continental shelf part of a state’s national territory. It “comprises the
seabed and subsoil of the submarine areas that extend beyond its territorial sea throughout
the natural prolongation of its land territory to the outer edge of the continental margin, or to a
distance of 200 nautical miles from the baselines from which the breadth of the territorial sea
is measured” (Art. 76 (1) UNCLOS), whichever is greater. Also the sovereign rights a coastal
state has here are fairly similar: it “exercises over the continental shelf sovereign rights for
the purpose of exploring it and exploiting its natural resources.” (Art. 77 (1) UNCLOS)
Although the rights “do not depend on […] any express proclamation” (Art. 77 (3) UNCLOS),
Germany did proclaim their part of the continental shelf in 196451.
However, the “legal status of the superjacent waters or of the air space above those
waters” (Art. 78 (1) UNCLOS) are not affected by the sovereign rights the coastal state has
with regards to the continental shelf. Thus, with its proclamation, Germany did not obtain a
possessive entitlement to any area, whether to soil or water, and both exclusive economic
zone and continental shelf do not form part of Germany’s national territory. Germany’s
national territory is restricted to its land territory, internal waters and territorial waters.
2.3 Consequences for Offshore Wind Parks
For wind parks this means that taxes become due for income earned by onshore wind
parks anywhere on Germany’s land territory as well as by offshore wind parks located in the
territorial waters. Due to national parks as well as fairways being located in Germany’s
coastal area52, most of its wind parks however are not within territorial waters but in the area
of the exclusive economic zone. Does this mean then that no taxes become due?
Not necessarily. According to Art. 56 (1) (a) UNCLOS, Germany has “sovereign rights
for […] the economic exploitation and exploration of the zone, such as the production of
51
Proklamation Festlandsockel (fn. 45).
52
Wustlich, Das Recht der Windenergie im Wandel: Teil 2: Windenergie auf See, in: Zeitschrift für Umweltrecht 2007, Vol. 18(3),
122–130, p. 123. See also: Waldhoff/Engler, Küste (fn. 37), p. 255.
11energy from the […] winds” as well as according to Art. 56 (1) (b) (i) UNCLOS “jurisdiction
[…] with regard to the establishment and use of artificial islands, installations and structures”.
This jurisdiction includes questions regarding “customs, fiscal, health, safety and immigration
laws and regulations.” (Art. 60 (2) UNCLOS) Therefore, a wind turbine as an installation to
exploit the exclusive economic zone’s wind with the goal of producing energy is subject to
German taxes.
The same holds for the continental shelf. Although Germany’s sovereign rights there
are functionally limited to the exploration of natural resources (Art. 77 UNCLOS) – in contrast
to the explicit mentioning of the exploitation of renewable energy in the EEZ’s applicable Art.
56 UNCLOS –, Art. 60 UNCLOS “applies mutatis mutandis to […] installations […] on the
continental shelf” (Art. 80 UNCLOS) and therefore also to wind parks installed on the
continental shelf.
Still, not every wind park’s revenues are automatically subject to taxes. In case the
turbine is owned by a company that is a German tax resident, the income of this turbine (or,
in the case of several turbines, of the wind park) is subject to the company’s unlimited tax
liability. It will be taxed as part of the taxpayer’s world-wide income. In case the turbine or
wind park is owned by a non-resident company however, its income is not source income as
defined in §49 EStG since the EEZ is not part of the German national territory. For a
corporation that only has a limited tax liability this means that it can simply pocket any
revenues generated in the EEZ without paying taxes to the German authorities. This was the
case until recently that is.
The German legislative has dealt with the problem of defining German national
territory with regards to taxation three times: In 1974, the Bundestag, with the approval of the
Bundesrat, passed a law that would include “the part of the continental shelf that Germany is
entitled to”53 in its definition of the German inland – but only “as far as the exploration and
53
Zweites Steueränderungsgesetz 1973 vom 18. Juli 1974, (BGBl. 1974 I, 1489), p. 1489. This change did not only apply to the
EStG (p. 1489), but also to the KStG (p. 1494) and the GewStG (p. 1495). Translated from German by author.
12exploitation of natural resources of the seabed or its subsoil”54 is concerned. Thus, non-
resident corporations’ wind parks that are located in Germany’s EEZ or on its part of the
continental shelf were still not subject to German taxes, since the exploitation of wind to
produce energy does not fall under this qualifier. As Wustlich pointed out, “the use of wind
energy is an indirect utilization of the sun’s radiation energy that causes temperature and
pressure differences by warming the earth’s surface that themselves cause airflows that are
called winds.“55 Thus, a turbine producing energy from wind cannot be characterised as an
installation that exploits the natural resources of the seabed or its subsoil and therefore does
not fall under the new definition of inland.
In 2006, the Bundesrat tried to correct that and explicitly include “the production of
energy and the utilisation of renewable energies”56 in the utilisations of the continental shelf
that would constitute activities in the German inland for §1 (1) EStG, §1 (3) KStG and §2 (7)
No. 1 GewStG. The reason for this resolution was that they thought it “unfair that the
realization of profits through exploration and exploitation of the German continental shelf’s
seabed would lead to domestic income while other activities with the goal of realizing profits
in the same spatial area would not.”57 The Bundestag however voted down the Bundesrat’s
proposal. They suggested that the question of taxing the utilization of renewable energies to
produce energy would be dealt with in one of the future tax laws, “because this proposal’s
economic consequences on the development of renewable energies and especially the
offshore wind energy in the short and medium term cannot be evaluated conclusively”58 at
that point in time.
In 2007, the Bundesrat again proposed the same amendment. They argued that in
the meantime, it became clear that more and more corporations started activities in the area
above the continental shelf with the goal of realizing profits. It was unfair that German
companies had to pay taxes on revenues generated with wind parks while non-residents did
54
Zweites Steueränderungsgesetz 1973 (fn. 53), p. 1489. Translated from German by author.
55
Wustlich, Windenergie auf See (fn. 52), p. 129. Translated from German by author.
56
Stellungnahme des Bundesrates: Entwurf eines Jahressteuergesetzes 2007 (JStG 2007), BR-Dr 622/06 (Beschluss), p. 1.
Translated from German by author.
57
Bundesrat JStG 2007 (fn. 56), p. 3. Translated from German by author.
58
Unterrichtung durch die Bundesregierung: Entwurf eines Jahressteuergesetzes 2007 (JStG 2007) - Stellungnahme des
Bundesrates und Gegenäußerung der Bundesregierung, BT-Dr 16/3036, p. 19. Translated from German by author.
13not59. This differing treatment clearly resulted in a competitive advantage of foreign over
German companies, which were both operating within the same spatial area, where
Germany has functionally limited sovereign rights.
This time, the Bundestag did not reject the Bundesrat’s proposal, but declared to
further look into it60. The EStG, KStG and GewSt were finally changed accordingly within the
framework of the Annual Tax Act 200861. German source income for non-resident taxpayers
with limited tax liability thus, from the assessment period 2008 forward, includes revenues
generated by exploiting the German continental shelf to produce energy from renewable
sources, i.e., also by wind parks located in the areas defined by the UNCLOS as exclusive
economic zone and continental shelf as far as they concern the coastal state Germany.
Still, another tax, namely the insurance tax, managed to slip through the reform. Until
this day, establishments that are located outside of Germany’s territorial waters but are still
on Germany’s continental shelf, are not subject to insurance tax. Only recently, on 25 May
2012, the federal government submitted a draft law to the Bundesrat62
(Verkehrsteueränderungsgesetz) with the aim of including the exclusive economic zone in
the scope of the insurance tax code from 1 January 2013 forward. Contrary to the
government’s view, according to Behrendt et al., this law’s aim is not simply to clarify the
scope of the insurance code that is supposed to have included the EEZ even before 201363.
It is rather a “first-time justification of a national tax claim in this area”64. Only if this law
actually is passed, another loop hole will be closed and offshore wind parks are subject to
the same taxes as onshore wind parks.
59
Stellungnahme des Bundesrates: Entwurf eines Jahressteuergesetzes 2008 (JStG 2008), BR-Dr 544/07 (Beschluss), p. 3.
60
Cf. Unterrichtung durch die Bundesregierung: Entwurf eines Jahressteuergesetzes 2008 (JStG 2008) - Stellungnahme des
Bundesrates und Gegenäußerung der Bundesregierung, BT-Dr 16/6739, p. 31.
61
Cf. Jahressteuergesetz 2008 (JStG 2008), (BGBl. 2007 I, 3150), pp. 3150, 3165, 3168.
62
Cf. Gesetzesentwurf der Bundesregierung: Entwurf eines Gesetzes zur Änderung des Versicherungsteuergesetzes und des
Kraftfahrzeugsteuergesetzes (Verkehrsteueränderungsgesetz – VerkehrStÄndG), BR-Dr 301/12.
63
Behrendt et al., Praxisfragen zu deutschen Besteuerungsrechten im Zusammenhang mit Offshore-Windparks in der
deutschen ausschließlichen Wirtschaftszone, in: Betriebs-Berater 30/2012, 1827–1835, p. 1834.
64
Behrendt et al., Besteuerungsrechte (fn. 63), p. 1834.
142.4 Selected Issues
After the exploration of the general rules and their historical development, I will now
focus on two special issues: the border dispute between Germany and the Netherlands who
never clearly defined a certain border section of their continental shelf, which is now a
problem for a wind park in construction, as well as the next generation technology floating
wind turbines and the question of taxing their revenues in the light of the previous remarks.
2.4.1 The Wind Park “RIFFGAT” and the German-Dutch Border Issue
As discussed in chapter 2.2, “[t]he sovereignty of a coastal State extends […] to an
adjacent belt of sea, described as the territorial sea.” (Art. 2 UNCLOS) A problem only arises
if the territorial waters of two adjacent or opposite countries overlap. In that case, the
UNCLOS determines that the states concerned need to agree on a course of the border, or
in absence of such an agreement, “neither of the two States is entitled […] to extend its
territorial sea beyond the median line every point of which is equidistant from the nearest
point on the baselines from which the breadth of the territorial seas of each of the two States
is measured.” (Art. 15 S. 1 UNCLOS) A boundary line deviating from this provision is only
legal if there is a “historic title or other special circumstances” (Art. 15 S. 2 UNCLOS).
A conflict between Germany and the Netherlands arose because, while Germany
claims to have a historic title on the whole Ems, based on a deed of enfeoffment of 155865,
the Netherlands claim the above described compromise of the median line of Art. 15 S. 1
UNCLOS (the so-called Thalweg Theory66), which would make two thirds of the River Ems
Dutch67. Both countries are dependent on the Ems for an access to their harbours and thus
have an interest in a peaceful regulation of this area.
65
Emperor Ferdinand I claimed in this deed: “The Ems is part of the county East Frisia!” (Bundesverband der See- und
Hafenlotsen e.V., INFO - Nachrichten für See- und Hafenlotsen, 2004, No. 45, retrieved from
http://www.bshl.de/downloads/info45.pdf (26 June 2012), p. 6; translated from German by author). Aubin/Menzel argue that
the exercise of its rights by Germany and its predecessors in title during the following centuries establish Germany’s
“immemorial possession” (Aubin/Menzel, Die niederländischen Ansprüche auf die Emsmündung, Hamburg 1949, p. 53) of
this area in a powerful way that is hardly comparable to any other case, since it stems from a time even before the states
existed in today’s form (ibid.).
66
Cf. Bundesverband der See- und Hafenlotsen e.V., INFO (fn. 65), p. 6.
67
Treviranus, Der deutsch-niederländische Ems-Dollart-Vertrag, in: Zeitschrift für ausländisches öffentliches Recht und
Völkerrecht 1963, Vol. 23, 536–553, p. 540.
15On 8 April 1960, the bilateral treaty Ems-Dollart-Vertrag was signed. Its goal, “to
ensure the seaward accessibility of their harbours”68 (Art. 1 S. 169) was supposed to be
reached with pragmatic regulations, while upholding each country’s understanding of the
course of the border70 (Art. 1 S. 2, Art. 46 (1)), “in the spirit of good neighbourhood”71 (Art. 1
S. 1).
72
Fig. 6: Germany’s and the Netherland’s perception of their borders in the Ems-Dollart-Area
Their pragmatic solution included the functional allocation of sovereign rights that
were only partly linked to a geographic separation of the area. Germany, for example, was
responsible for all water engineering works except for those that were solely beneficial to
Dutch harbours (cf. Art. 8-11). A binding geographic border in the Ems-Dollart-Area was not
part of the agreement and neither of any of the subsequent treaties of 1962, 1975, 1980,
1984 and 199673.
68
Translated from German by author.
69
The article numbers refer to the Vertrag zwischen der Bundesrepublik Deutschland und dem Königreich der Niederlande
über die Regelung der Zusammenarbeit in der Emsmündung (Ems-Dollart-Vertrag), (BGBl. 1963 II, 602) from this point
forward, unless otherwise stated.
70
Cf. Fig. 6. See also Article 2 of Vertrag zwischen der Bundesrepublik Deutschland und dem Königreich der Niederlande über
die seitliche Abgrenzung des Festlandsockels in Küstennähe, (BGBl. 1965 II, 1142) and Appendix B.
71
Translated from German by author.
72
http://commons.wikimedia.org/wiki/File:Deutsch-Niederl%C3%A4ndische_Grenzfrage.svg (18 June 2012).
73
Zusatzabkommen zu dem zwischen der Bundesrepublik Deutschland und dem Königreich der Niederlande am 8. April 1960
unterzeichneten Vertrag über die Regelung der Zusammenarbeit in der Emsmündung (Ems-Dollart-Vertrag), (BGBl. 1963 II,
653); Abkommen zur Änderung des Vertrages vom 8. April 1960 zwischen der Bundesrepublik Deutschland und dem
Königreich der Niederlande über die Regelung der Zusammenarbeit in der Emsmündung (Ems-Dollart-Vertrag), (BGBl. 1978
II, 310); Vertrag zwischen der Bundesrepublik Deutschland und dem Königreich der Niederlande über die gemeinsame
Information und Beratung der Schifffahrt in der Emsmündung durch Landradar- und Revierfunkanlagen, (BGBl. 1982 II,
1016); Vertrag zwischen der Bundesrepublik Deutschland und dem Königreich der Niederlande über die Zusammenarbeit im
Bereich von Ems und Dollart sowie in den angrenzenden Gebieten (Kooperationsvertrag Ems-Dollart), (BGBl. 1986 II, 511);
Ergänzendes Protokoll zu dem am 8. April 1960 unterzeichneten Vertrag zwischen der Bundesrepublik Deutschland und
dem Königreich der Niederlande über die Regelung der Zusammenarbeit in der Emsmündung (Ems-Dollart-Vertrag) zur
Regelung der Zusammenarbeit zum Gewässer- und Naturschutz in der Emsmündung (Ems-Dollart-Umweltprotokoll), (BGBl.
1997 II, 1703).
16According to Treviranus, such a definition would not even make much sense due to
the natural unevenness of the river bed and associated difficulties for ships to stay within a
certain fairway, which in turn would lead ships to pass a German-Dutch border several times,
intentionally or not.74
The border issue came up again in 2010, when a discussion about the legitimacy of a
wind park in the area with competing understandings of the German-Dutch border within the
Ems-Dollart-Area flared up. The wind park “RIFFGAT”, operated by a consortium of EWE
ENERGIE AG and ENOVA Energiesysteme GmbH & Co. KG, was supposed to be
established 15 km north-west of the island of Borkum, “within the 12 nautical mile-zone of
Lower Saxony”75.
76
Fig. 7: The location of the wind park “RIFFGAT”
Since the German operators firmly believed that only German territory was affected,
they only applied to the German authorities for a permit to build the park. The Netherlands
however were of the opinion that part of the three lines of ten wind turbines each, occupying
a total area of 13.2 km2 including a security zone77, were on Dutch territory and thus needed
a Dutch permit as well. After having waited for the German permit for three to four years78,
another authorization process would further shift the date of the park’s entry into service.
74
Cf. Treviranus, Ems-Dollart-Vertrag (fn. 67), p. 546–547.
75
Offshore-Windpark RIFFGAT GmbH & Co. KG, RIFFGAT_factsheet_10_gesamt.pdf, retrieved from
http://www.riffgat.de/presse/informationsmaterial/ (18 June 2012).
76
http://www.riffgat.de/uploads/pics/lageplan_kabeltrasse_640.jpg (18 June 2012).
77
Offshore-Windpark RIFFGAT GmbH & Co. KG, RIFFGAT factsheet (fn. 75).
78
According to a taz.de article of 23 December 2010, they waited for three years (taz.de, Deutsch-Niederländische
Nachbarschaft: Grenzkrieg fällt aus, article of 23.12.2010, taz.de, retrieved from http://www.taz.de/!63337/ (18 June 2012)),
according to a De Gelderlander article of 14 January 2011, they waited for four years (De Gelderlander, Nederland en
Duitsland praten over zeegrens, article of 14.01.2011, De Gelderlander, retrieved from
http://www.gelderlander.nl/nieuws/algemeen /binnenland/7971679/Nederland-en-Duitsland-praten-over-zeegrens.ece (18
June 2012)).
17Furthermore, to apply for a permit under a different national law would have meant to expose
oneself also to different regulations regarding the participation of the public and the hearing
of environmentalists79 and Dutch environmentalists already voiced their concerns: “The
tideland association is anxious about [the wind park] having a negative effect on flora and
fauna in that area.”80 Therefore, bilateral diplomatic talks started in November 201081, without
any result until 1 June 201282. However, it seems the issue has been solved in the
meantime, since on 15 June 2012 – with nearly one year delay83 – works started on the high
sea and the first monopiles were rammed into the seabed84.
Due to the secrecy of the diplomatic meetings, there is no public information available
about on what basis a solution was found and with which process. It would have been better
to apply for a permit in both countries from the very beginning, as for example was the case
with the power cable NorNed85 that connects Norway’s and the Netherland’s electricity grids.
But there is no point crying over spilt milk. In my opinion, a solution could have been found
by drawing parallels to existing bilateral treaties.
First, there is the Ems-Dollart-Treaty itself86. On two occasions, the German
authorities are responsible for German residents and the Dutch authorities for Dutch
residents – in the whole disputed area: that holds for vessels and for fishing and hunting. In
Art. 32 (1) it is stated that “[r]egarding the mouth of the Ems […] German vessels are
considered as within the scope of German law, Dutch vessels as within the scope of Dutch
79
NWZonline, Für Politiker ist Grenze erreicht, article of 19.03.2012, Nordwest Zeitung, retrieved from
http://www.nwzonline.de/Region/Artikel/2827783/F%FCr-Politiker-ist-Grenze-erreicht.html (18 June 2012).
80
Savelberg, Grensruzie met Duitsers, article of 11.08.2011, De Telegraaf, retrieved from
http://www.telegraaf.nl/binnenland/10350965/__Grensruzie_met_Duitsers__.html (18 June 2012). Translated from Dutch by
author.
81
NiederlandeNet, Grenzstreit: Streit um Windpark zwischen Deutschland und den Niederlanden, article of 15.08.2011,
NiederlandeNet, retrieved from http://www.uni-
muenster.de/NiederlandeNet/aktuelles/archiv/2011/august/0815grenzstreit.shtml (18 June 2012).
82
De Telegraaf, 'Gaatje' in slepend conflict met Duitsland, article of 1 June 2012, De Telegraaf, retrieved from
http://www.telegraaf.nl/binnenland/12267353/___Gaatje__in_conlict_Duitsland__.html (18 June 2012).
83
Bauchmüller, Bizarrer Streit um Nordsee-Windpark: Rotoren in der Rätselzone, article of 10.08.2011, Süddeutsche Zeitung,
retrieved from http://www.sueddeutsche.de/politik/bizarrer-streit-um-nordsee-windpark-rotoren-in-der-raetselzone-1.1129806
(18 June 2012).
84
Cf. Offshore-Windpark RIFFGAT GmbH & Co. KG, EWE: Erster Gründungspfahl für Offshore-Windpark "Riffgat" ragt aus der
Nordsee, press release, 15 June 2012, Oldenburg, retrieved from http://www.riffgat.de/presse/pressemitteilungen/pm-
display/article/ewe-erster-gruendungspfahl-fuer-offshore-windpark-riffgat-ragt-aus-der-nordsee/ (23 June 2012).
85
Ministerie van Economische Zaken, Landbouw en Innovatie, COBRAcable: Entwurf des Berichts zu Reichweite und
Detailniveau des Umweltverträglichkeitsberichts, 2010, retrieved from
http://www.agentschapnl.nl/sites/default/files/sn_bijlagen/bep/60-
Hoogspanningsverbindingen/COBRAcable/Overig/Duits/Cobra-Reichweite-DE-341015.pdf (18 June 2012), p. 29.
86
Ems-Dollart-Vertrag (fn. 69).
18law”87. Art. 35 (1) S. 2 reads “the German fishery and hunting superintendence officers are
responsible for the German fisher- and huntsmen, the Dutch ones for the Dutch fisher- and
huntsmen.”88 One could deduce from the underlying thought of these two sections that
German authorities could be responsible for German project sponsors and Dutch authorities
for Dutch project sponsors89. Thus, it would have been legal for the Offshore-Windpark
RIFFGAT GmbH & Co. KG to only apply for a permit in Germany.
Second, the 1996 Ems-Dollart-Umweltprotokoll90 further emphasises this thought
through its Art. 6 (2) S. 2: “This approval [for intended actions that are scientifically harmful to
the area’s environment] is given to Dutchmen and Dutch residents by Dutch [authorities], to
Germans and German residents by German authorities.”91
Third, and most importantly, there is the supplementary treaty of 196292, which was
ratified due to the discovery of a considerable deposit of natural gas in Groningen, the
Netherlands, that suggested another deposit under the Ems River. In this treaty, Germany
and the Netherlands agreed upon the equal division of both exploration costs and revenues
of the findings (Art. 5 (1), (3)). Furthermore, in Art. 4 (2) they manifest: “The treaty parties
may grant authorizations [to explore and exploit natural resources] that are valid for the
whole area [i.e., the border area that is in dispute], based on their domestic law.”93 As
explained on page 13, producing energy from wind cannot be seen as the exploitation of
natural resources as for example defined in Art. 1 of the said treaty. However, this section
shows that for some administrative tasks, it was agreed upon – by both parties – that one
country itself could authorise works in the disputed area, based on its domestic law. And this
is exactly what Germany had done for the wind park RIFFGAT.
Concerning the process of finding a solution: the Ems-Dollart-Commission would
have had to be asked for arbitration, in my opinion, to determine on whose territory the wind
87
Translated from German by author.
88
Translated from German by author.
89
Within clearly defined borders, this would not be possible according to Art. 56 (1) UNCLOS; the coastal State alone would
have jurisdiction. However, since the area discussed here does not clearly belong to the one or the other state, in my opinion,
a new way to come to a solution for this wind park could be a possibility.
90
Ems-Dollart-Umweltprotokoll (fn. 73).
91
Translated from German by author.
92
Zusatzabkommen Ems-Dollart-Vertrag (fn. 73).
93
Translated from German by author.
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