ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (79)261
Vol.1979/0101

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(79)261 final .
Brussels ,22june 1979
COMMUNICATION PROM THE COMMISSION TOTHE COUNCIL
CONCERNING THE MAJOR PROBLEMS RELATING TOTHE
PROPOSED COUNCIL DIRECTIVES TOHARMONISE THE STRUCTURES OF
CONSUMER TAXES ,OTHER THAN VAT ,ONBEER ,WINE ANDALCOHOL
X
COM(79 )261finà *

COMMUNICATION FROM THECOMMI§SION TOTHECOUNCIL
CONCERNING THEMAJOR PROBLEMS RELATING' TOTHE
PROPOSED COUNCIL DIRECTIVES TOHARMONISE THE STRUCTURES OP
CGI .'SUTGR TX.CZ .OTHER THAN VAT ,OKBEER ,WINE ANDALCOHOL
Following "thecommunication from -theCommission totheCouncil ,dated
-7 1977 ,onproblems posed "byexcise harmonisation (COM (77)338FIN),
*hcCouncil recommenced examination oftheproposed directives for
bur on!ninj excises onbeer ,wine andalcohol ,originally submitted on
7"arch 1972 andonwhich theCouncil had suspended work attheendof
- < 1•
Commission communication had originally proposed that the Council
■hoMd give priority totheproposals toharmonise theexcises onalcohol
and "bo^rv ,thedivergent views intheCouncil onthewine excise being such
thu4.r-grccment onthis proposal seemed unlikely for some time tocome .
IJoi;.ithc+anding this suggested approach ,theCouncil elected toexamine all
iin-oe proposals together .Moreover ,during thesubsequent discussions ,a
number ofMember States made itclear ,foravariety ofreasons ,that they
were notprepared todisassociate these three proposals .Itfollows that
'horse proposals must now beadopted asapackage . >. .
Thepresent communication isintended asacompromise solution tothe
r.ain ir.cues ofprinciple posed bythethree proposals ,and setoutin
Section 1ofthereport made inDecember 1978 tothe Committee ofPermanent
Representatives . Itdoes not deal
witii arange ofmore detailed –andlargely technical –issues ,since the
position tobetaken onthese subsidiary points seems likely tobe
determined byasatisfactory solution totheproblems ofprinciple .

PEOrO^D SOLTJTIOITS
I!r.rrr.onir;od excise onvine !
]
The CoT^iscion *noriginal proposal foranexcise onwine was alogical i
consequence ofitsproposal that theCommunity excise system should include j
excises onbeer andalcohol .Excises onthese drinks already generate in i
allMember States considerable tax revenues andareinapy case justified
onsocial grounds .As,intheCommission 'sview ,allalcoholic drinks are
more orlose incompetition ,anexcise onwine isanecessary complement to
excises onbeer and alcohol both from the standpoint ofcompetitive
ne.j -!mlityandfortheprotection oftaxrevenue from excises onbeer and
r.lrohol ,which areoften subject tohigh excise rates .
--VJ"compromise proposal onthis question must safeguard the
uUi"a Jnobjective oftaxharmonisation ,which istheabolition offiscal
"V' -r.t.icrs .Aharmonised excise system isaprecondition fortheachievement
ofthat objective .Thequestion iswhether awine excise isorisnot an
ecrential part ofsuch acommon excise system .Onthe onehand ,there is
political pressure against theintroduction ofawine excise atthe
present time inthose countries where itdoes notyet apply .Inaddition ,
given thecontinuing wine surplus ,theCommunity 'spolicy must betosecure
pome reduction intheoverall level oftaxes levied onwine ,inorder to
improve outlets forwine production . Ontheother hand ,theabolition
oftheexcise inthose countries atpresent taxing wine would itself be
politically delicate butwould inaddition –andmore importantly –involve
massive reductions inthetaxes levied bythose countries onbeer and
alcohol .
Thebasic choice fortheCommunity therefore lies between anexcise system
"based onthetaxation ofallalcoholic drinks ,including wine ,with the
level ofwine taxes rather lower insome Member States than atpresent ,or
asystem without anexcise onwine and inconsequence with beer andalcohol
taxed only atmodest levels .Atthepresent time ,the first course
presents serious political difficulties forcertain Member States .The
/

-3-
second course iahowever simply inconceiveable ,whether now orin -the
long terra .
The Commission therefore proposes the immediate adoption ofthe draft
directive onaharmonised wine excise .However ,derogations should before­
seen whereby ,until theabolition offiscal frontiers atthe latest ,Italy
maydefer introduction ofanexcise ontable andsparkling wines ,Germany
•maydefer introduction ofanexcise ontable wines ,andLuxemboura ,Belgium
andtheNetherlands mayapply theregime foreseen inArticle 1,first para­
graph ,second subparagraph oftheprotocol concerning theGrand Duchy of
Luxembourg towine ofcategory <C)ofArticle 3which isofLuxembourg
origin ,subject totheconditions setout inArticle 1ofRegulation (EEC )
No.3310 /75ofthe Council of16December 1975 .
Lin' vy:ofbeer ar.d wine excise rates
Italy hasmade acceptance oftheprinciple ofawine excise conditional
upon some overall relationship between the levels oftaxation of "beer and
wine .The Commission shares the Italian concern toreduce thehighest
rates ofwine excises :InDecember 1975 »excise cuts were recommended to
certain Member States ;inthereport for thteprogressive establishment of
balance onthemarket inwine ,substantial reductions ofexcise duties were
proposed .
The Corjaission therefore invites theCouncil toadopt theattached draft
.-solution ifhich provides that , " •first ,each Member '
Ctato will apply thesameVATrate toboth beer andtowine ,andsecondly ,
ratio oftheexcise levied onagiven quantity oftypical wine tothe
excise levied onagiven quantity oftypical beer shall notexceed the
i-j.iio(roughly wine 3:beer l)between thealcoholic strength ofthese
drinks .
/

–Α–
Tor.xofnrcnic-1 ■wir.cnandotherfermentedbeveragesofCCT22.05.
2?.05arA2^.07
Article6oftheoriginalCommissionproposalforthealcoholexcise
providedthatliqueurwinesandaromatisedwines(e.g.Vermouth)should "be
taxed"byreferencetotheiralcoholicstrengthandatarateoffrom20%
to5^ofthefullalcoholrate.
ThegreatmajorityoftheMemberStateshaveexpressedstrongreservations
onthisproposal.I-IostoftheseMemberStatestreatsuchbeveragesas
wineandsubjectthemtothewinetaxationregime,whichisfrequently
leviedinvolumetermsandnotbyreferencetoalcoholicstrength.
ThoCommissionproposes thatalltheseproducts,togetherwith
thenc.fermentedbeveragesofCCT22.07whicharegenerallyregardedas
bc-ingcompetitive withthem,shouldnowbetransferred fromthealcoholto
'r.ovrinedirective,wheretheywouldconstituteathirdcategoryfor
taxation(theothertwobeingtablewinesandsparklingwines).Allthree
categorieswouldbesubjecttotaxationbyvolume.However,MemberStates
wouldhavethepossibility oftaxingeachofthesethreecategoriesata
differentrate.MemberStateswouldalsohavethepossibility ofsub­
dividingthethirdcategorybyreferencetoalcoholicstrength.Finally,
+hcrateapplied,expressedintermsofalcoholicstrength,shouldnot
exceedGQffoofthefullalcoholrate.
T'.~ntioyof"beer
TheCommissionhasproposedthatbeerexciseshouldbeleviedonthe
finishedproduct.TheCommissionmaintainsthisproposalandbelieves
thatitofferstheonlysatisfactory meansforthetaxationofbeerin
international trade.
./•

-5-
Tavit .ion ofalcohol
TheCormission maintains itsproposal that thealcohol excise should "be
levied exclusively byreference toalcoholic strength andatasingle
rate perhoctolitre ofpure alcohol .
A-:"]irntion ofindirect taxes ,other than harmonised excises andVAT
TheCommission originally proposed ,ineach oftheharmonisation directives ,
that noindirect taxes ,other than aharmonised excise andVAT ,could "be
applied ,whether towine ,beer oralcohol ,ortowine ,"beer oralcohol
cor/aincd inother products .This has ingeneral proved toorestrictive
anapproach ,particularly inthe case ofalcohol andwine ,which are
frequently contained inother products subject toseparate excises (e.g.
chocolates ,including liqueur chocolates ,aresubject tospecial excise .
inDenmark ).
The Commission isofthe opinion that amore flexible interpretation of
therelevant provisions could beadopted .Corresponding draft for
insertion inthe Council minutes isincluded inAnnex IV.
Tosummarise ,theCommission proposes ,with ,regard tothequestions set
outinSection Iofthereport totheCommittee ofPermanent Representatives ."
C':?"- 1-'on2
-that theCouncil adopt aresolution providing that theVAT rates for
beer andwine should beidentical andthat arelationship should be
established between the excise rates for beer andwine .
Çvior12on r?
-that Article 6bedeleted from thealcohol directive andthat liqueur
wines ,fortified wines andsimilar 22.07 products beincluded ina
special category inthewine directive .
Cr.'.crti nnA
–that derogations from theapplication ofthewine directive inrespect
ofcertain wines should begranted infavour ofGermany ,Italy ,Luxembourg ,
3o!„iuia andtheITetherlands ,until atthelatest thedate oftheabolition
ofthecharging oftaxonimports andtheremission oftaxonexports in
trade between theMember States . /

--thatamoreflexibleinterpretation oftheprovisionsrelatingtoother
taxesshouldbeagreedupon.
Attachedareanumberofamendmentstothedraftswhichareintendedto
implementtheabovesolutions.
«.'3thregardtoquestions3,5and-6andasessentialelementsofthe
compromisesolution,theCommissionmaintainsitsexistingproposals.
T..-Lco:-municationhasbeenpreparedforconsideration ataforthcoming
Cour.cilmootinjonfiscalquestions.Inthelightofdiscussionsat
t'.atnretingoftheCouncil,theCommissionispreparedtoputforward
furtherproposalsontheremainingproblemscoveredbySection2ofthe
reporttothePermanentRepresentatives Committee.

AnnexI(relatingtoQuestionl)
CouncilResolution of........
concerningtaxesontheconsumption of
wineand"beer
Whereas,withoutprejudicetotheleveloftaxonalcoholicbeveragesor
tothesolutiontobeadoptedforthesubsequentharmonisation ofexcise
dutiesonnuch"beverages,applicationofthetaxesontheconsumption of
winoand"beermustnotdistorttheconditionsofcompetition "betweenthe
twoproducts,
'Jhereas.-themeasurestoachievethisobjectivearelikelytofacilitate
convergence ofthenationalsystemsoftaxation.
Whereassuchmeasuresmayhelpgraduallytoachieve "balanceonthe
winemarket,
theCounciloftheEuropeanCommunities hasagreedasfollows:
1.ValueaddedtaxappliedinanyMemberStatetowineandbeermust
bechargedatthesamerateforthetwobeverages.MemberStates
which,atthedateofadoptionofthisResolution ,applydifferent
ratestoimportsorsuppliesofwineandbeershalltakethemeasures
necessarytocomplywiththisprinciple;.
2.MemberStateswhichlevyanexcisedutyonwineshall
takethemeasuresnecessary
•toensurethattheratiooftheexcisedutyleviedonagivenquantity
ofordinarywinetotheexcisedutyleviedonthesamequantityof
ordinarybeerdoesnotexceedtheratioobtainedbycomparingthe
alcoholicstrengthsofthetwobeverages.

Ar.nnxII(relatingtoQuestion2)
WIIIEDIRECTIVE-PROPOSED CHANGES
*
Articio2
ForthepurposesofthisDirectivetheterm"wino"means:
(a)ProductswhichcomeunderheadingNo.22.05oftheCommonCustoms
Tariff.
(b)ProductswhichcomeunderheadingHo.22.06oftheCommonCustoms
Tariffandwhichhaveamaximumactualalcoholicstrengthof22$"by
volume.
(.~0ProductswhichcomeunderheadingNo.22.07oftheCommonCustoms
Tariffandwhichhaveamaximumactualalcoholicstrengthof22$and
aminimumactualalcoholicstrengthof&fo"byvolume.
Ar';olc3'
WinewithinthemeaningofArticle2shallinclude:
(a)ExistingtextofArticle2(2)(a).
(b)Otherwineswhichareeither
(i)liqueurwinesproducedintheCommunityandimportedliqueur
winesasdefinedbyCouncilRegulationNo.816/70of
28April1970andNo,548/70of26May1970respectively ;
(ii)Qualitywinesproducedinspecifiedregions-otherthan
liqueurwines-asdefinedbyCouncilRegulationNo.817/70
withatotalalcoholicstrengthofmorethan15$byvolume,
derivedfromthefollowingwinevarieties:Muscat,Grenache,
Kaccabeo,VermentinoandTourbat;
./

-2-
Arnox II(contd .)
(iii)Products coming within heading No.22.06 oftheCommon Customs
Tariff ;
(iv)Products coming within heading No.22.07 of "theCommon Customs
Tariff ,which have anactual alcoholic strength greater than
12'fo "byvolume .
(c)Cthor wine .
Article 5
1.I'enber States shall fix the rate ofexcise duty perhectolitre ofthe
product .Allproducts within each ofthethree categories in
Article 3shall heliable tothe same r^-te ofduty .However ,Member
States maysub-divide theproducts incategory (b)"byreference to
theactual alcohol content provided that products ofthe same actual
alcohol content "byvolume belonging tothat category shall hesubject
tothe same rate ofduty .
2.The incidence ofexcise duty onthepure alcohol content ofany
products incategory (b)ofArticle 3ofthis Directive shall not
exceed 6ofooftherate ofexcise duty onalcohol provided forin
Article 5of "theDirective ontheharmonisation ofexcise duties on
alcohol .

A'.III(rolaiirgtoQuestion/,)
V-pjS
y.-,..-v.ij„in<vr
1.I;iJorotationfrom-theprovisionsofthisdirectiveanduntiladate
v.hir-V..-.hallhefixed "bytheCouncilonthebasisofaproposalfromthe
C^r„.ion,"butwhichr.hallnothelaterthanthatonwhichthecharging
r-V*.a>:eni.-portsandtheremissionoftaxonexportsintrade "between
Statesarcabolished,theFederalRepublicofGermanyisauthorised
.):!*oapplyexcisedutiestowineofcategoiy(c)ofArticle3;Italy
i-ifhori-cdnottoapplyexcisedutiestowineofcategories(a)and
(0Ar'ic1c31andBelgium,theGrandDuchyofLuxembourgandthe
rlaj-.dnareauthorisedtoapplytheregimesetoutinArticle1,
fir-tparagraph,secondsub–paragraph,oftheprotocolconcerningthe
DuchyofLuxcrVbourg,towineofcategory(c)ofArticle3whichis
ofLuxembourgorigin,subjecttotheconditionssetoutinArticle1of
Regulation(E3C)ITo.331^/75°f*"0Councilof15December1975*
Cnthe"basinofareportfromtheCommission,theCouncilshall
v:-i:thesituationconcerningthederogations mentionedinparagraph 1
ovrvvyyearsand,actingonaproposalfromtheCommission,shalldecide
•..;:^'l.ertheyshall"beabolished.

Ar.r.nx17 (relating toQuestion 7)
Thefollowing interpretation oftheword "indirectly "inArticle 35
(alcohol ),Article 25(wine )andArticle 13(beer )would "beinserted in
the minutos ofthe Council :
"Where the field ofapplication ofataxmakes noreference to
.alcohol (wine )("beer )andthetaxisnotexpressed interms of
thecontent ofalcohol (wine )(beer )then ,notwithstanding that
theproducts subject tosuch ataxmaycontain alcohol (wine )
(beer ),such ataxshall notbeconsidered asindirect taxation
ofalcohol (wine )(beer )inthesense ofthese Articles ".