COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 14.11.1996 
COM(96) 549 final 
96/0263 (CNS) 
REPORT FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 
under Article 8(6) of Council Directive 92/81/EEC, 
on the situation with regard to the exemptions or reductions for specific 
policy considerations as set out in Article 8(4) of Directive 92/81 
and 
concerning the obligatory exemption of mineral oils used as fuel for the 
purpose of air navigation other than private pleasure flying and the 
exemptions or reductions possible for navigation on 
inland waterways other than for private pleasure craft 
as set out in Articles 8(l)(b) and 8(2)(b) of the same Directive 
Proposal for a 
COUNCIL DECISION 
authorising Member States to continue to apply to certain mineral oils, when used for 
specific purposes, existing reduced rates of excise duty or exemptions from excise 
duty, in accordance with the procedure provided for in Article 8(4) of Directive 
92/81/EEC 
(presented by the Commission) 

a 
Commission report to the Council and the European Parliament 
under Article 8(6) of Council Directive 92/81/EEC, 
on the situation with regard to the exemptions or reductions for specific 
policy considerations as set out in Article 8(4) of Directive 92/81 
and 
concerning the obligatory exemption of mineral oils used as fuel for the 
purpose of air navigation other than private pleasure flying and the 
exemptions or reductions possible for navigation on 
inland waterways other than for ptivate pleasure craft 
as set out in Articles 8(1)(b) and 8(2) (b) of the same Directive. 
TABLE OF CONTENTS 
1. THE COMMUNITY EXCISE SYSTEM FOR TAXATION OF 
MINERAL OILS AND SCOPE OF THE REVIEW 
2. REVIEW OF THE EXEMPTIONS GRANTED TO AVIATION FUEL 
3. REVIEW OF THE REDUCTIONS OR EXEMPTIONS GRANTED TO 
FUEL CONSUMED BY SOME MEANS OF SEA TRANSPORT 
4. REVIEW OF THE DEROGATIONS GRANTED FOR 
INDUSTRIAL AND COMMERCIAL REASONS 
5. REVIEW OF THE DEROGATIONS GRANTED FOR 
ENVIRONMENTAL REASONS 
6. REVIEW OF THE DEROGATIONS GRANTED FOR 
REGIONAL POLICY REASONS 
7. REVIEW OF THE DEROGATIONS GRANTED FOR 
OTHER POLICY REASONS 
8. REVIEW OF THE FUNCTIONING OF THE ARTICLE 8(4) 
PROCEDURE 
REVIEW OF THE EXEMPTIONS OR REDUCTIONS AUTHORISED UNDER 
ARTICLE 8(4) OF COUNCIL DIRECTIVE 92/81/EEC AND THE EXEMPTIONS OR REDUCTIONS 
APPLIED UNDER ARTICLES 8(1)(B) AND 8(2)(B) OF THE SAME DIRECTIVE 
1. SCOPE AND OBJECTIVE OF THE REVIEW 
The Community Excise system for taxation of mineral oils 
1.1 Council Directive 92/81/EEC1 which came into force on 1/1/93 as part of a package of 
measures necessary for the abolition of fiscal controls at intra-Community frontiers 
defines the products which are to be regarded as mineral oils for the purposes of 
Community Excise Duty provisions. Member States are required, in accordance with the 
provisions of this Directive, to apply excise duty to a specified range of mineral oil 
products. They are free to decide the rate of duty they wish to apply to each product 
and, in certain cases, for different uses of each product, provided that they respect the 
minimum rates laid down in Council Directive 92/82/EEC2. Moreover, although there 
is provision in the Directive for the application of different rates of duty on different 
uses of specific products, this does not extend to the application of different rates for 
different grades of the same product. In such cases, a derogation under Article 8(4) of 
Directive 92/81/EEC is necessary. 
1.2 The products concerned and existing Community minimum rates are as follows: 
PRODUCTS ECU PER 
1000 LITRES 
Petrol 
leaded 337 
unleaded 287 
Gas Oil 
used as propellant 245 
used for industrial and other uses* 18 
used as heating fuel 18 
LPG and Methane (1000 kg) 
used as propellant 100 
used for industrial and other uses 36 
used as heating fuel 0 
Heavy Fuel Oil (1000 kg) 13 
Kerosene 
used as propellant 245 
used for industrial and other uses* 18 
used as heatinc fuel 0 
Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise 
duties on mineral oils (OJ n° L316, 31/10/92). 
Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duty on 
mineral oils (OJ n° L316, 31/10/92). 
This covers mineral oils used in: 
a) stationary motors; 
b) plant and machinery used in construction, civil engineering and public works; and 
c) vehicles intended for off-road use or which have not been authorised for use on the public 
highway. 
1.3 Any other product used as a motor fuel must be taxed at the same rate as the 
equivalent fuel listed above. Any other hydrocarbon, (except for coal, lignite, peat 
or similar solid hydrocarbons or natural gas) which is used for heating purposes, 
must be taxed at the rate for the equivalent mineral oil. 
Exemptions and reductions 
1.4 Under Article 8(1) of Directive 92/81, Member States are required to exempt mineral 
oils from the harmonised excise duty when they are : 
a) used for purposes other than as motor fuels or as heating fuels; 
b) supplied for use as fuels for the purpose of air navigation other than private 
pleasure flying; 
c) supplied for use as fuel for the purposes of navigation within Community waters 
(including fishing), other than in private pleasure craft; 
d) injected into blast furnaces for reduction purposes. 
1.5 Article 8(2) of Directive 92/81 gives Member States the option to apply total or 
partial exemptions or reductions on mineral oils when used: 
a) in the process of producing electricity and in combined power and heat plants; 
b) for navigation on inland waterways other than for private pleasure craft; 
c) in the field of passenger transport, and the carriage of goods by rail; 
d) in the field of pilot projects for the technological development of more 
environmentally-friendly products and in particular in relation to fuels from 
renewable resources; 
e) in the field of the manufacture, development, testing and maintenance of aircraft 
and ships; 
f) exclusively in agricultural and in horticultural works and in forestry and inland 
fisheries; 
g) in respect of dredging operations in navigable waterways and in ports. 
1.6 In addition to the above compulsory and optional reduced rates and exemptions, 
Member States may apply to the Council for authorisation to introduce further 
exemptions or reduced rates "for specific policy considerations" under a procedure 
laid down in Article 8(4) of Council Directive 92/81. This provision was introduced 
to enable Member States to maintain a number of minor exemptions and reduced 
rates which they had applied prior to 1 January 1993 and which did not affect the 
proper functioning of the Internal Market. It also permitted them to subsequently 
introduce new exemptions or reduced rates designed to achieve certain National 
policy objectives. The requirement to seek Council authorisation was clearly 
necessary in order to permit the Commission and other Member States to evaluate the 
possible effects of such measures and to object to them if they considered that they 
were likely to give rise to distortion of competition or were not compatible with other 
principles of the Internal Market. 
1.7 On 19 October 1992 the Council took its first decision3 granting all Member States 
individual and specific derogations, thus easing the introduction of the Common 
system on 1 January 1993. A second decision was taken on 13 December 1993, 
concerning requests from Belgium, Luxembourg, Greece, Italy and Portugal.4 A 
third formal decision was taken on 22 December 1995, involving requests from 
Belgium, Luxembourg, Denmark, Italy, Austria, Portugal and Finland.5 A fourth 
formal decision was taken on 22 April 1996, involving requests from Italy, Austria, 
Sweden and the United Kingdom.6 A fifth formal decision was taken on 27 June 
1996 on a request from Ireland.7 In addition, since neither the Commission nor any 
national administration requested that certain requests be considered formally by the 
Council, some decisions have been taken tacitly. These decisions have not been 
published. They concern requests from Ireland, the UK, France, Germany, Portugal 
and Spain to be allowed to exempt waste oils used for heating purposes; from Italy to 
be allowed to apply reduced rates to mineral oils consumed in the regions of Udine 
and Trieste; and from France to be allowed to apply reduced rates to mineral oils 
consumed on the Island of Corsica. Furthermore, Austria, Finland and Sweden were 
granted certain derogations at the time of their accession to the Community. These 
are set out in their Act of Accession.8 Further requests from Sweden, France and 
Greece are also currently being processed. A full list of all authorisations granted 
under the procedure is set out in Annex A. 
The review requirements 
1.8 In order to enable the Commission and the Member States to continue to monitor the 
compatibility of the various derogations granted under the provisions of Article 8(4) 
with the requirements of the Internal Market, Article 8(6) requires the Council to 
review, before 31 December 1996, "the situation with regard to the exemptions or 
reductions set out in paragraph (4) on the basis of a report by the Commission and 
[to] unanimously determine on a proposal from the Commission, after consultation of 
the European Parliament, whether any or all of them shall be abolished, modified or 
extended. " 
This document constitutes the report which the Commission is required to make 
under this Article. 
1.9 In addition, no later than 31 December 1997, the Council is required to review the 
obligatory exemption for mineral oils supplied for use as fuels for the purpose of air 
navigation other than private pleasure flying provided for in Article 8(l)(b) of 
Directive 92/81 as well as the optional exemptions or reduced rates permitted under 
Article 8(2)(b) for mineral oils which are used under fiscal control for navigation on 
inland waterways other than in private pleasure craft. This review must take place on 
3 Council Decision 92/510/EEC of 19 October 1992, OJ L316 of 31.10.92. 
4 Council Decision 93/697/EC of 13 December 1993. OJ L321 of 23.12.93. 
5 Council Decision 95/585/EC of 22 December 1995. OJ L327 of 30.12.95. 
6 Council Decision 96/273/EC of 22 April 1996. OJ L102 of 24.04.96. 
7 Council decision 96/418/EC of 27 June 1996. OJ LI72 of 11 07.96. 
8 Annex IX, Chapter XV fiscalily OJ C241 (p 335) of 29.08.1994. 
the basis of a report by the Commission and must take account of the external costs 
entailed in such means of transport and the implications for the environment, and the 
Council must decide unanimously, on a proposal from the Commission whether to 
abolish or modify these exemptions. 
This review clause in Article 8(7) only foresaw a review being carried out, by 
31 December 1997. However, given the interest shown by Member States, the 
Commission indicated in its first review of the minimum rates of excise duty^ its 
willingness to look at these specific exemptions as part of its general review of 
Article 8(4) during the course of 1996. This document therefore constitutes the 
report which the Commission is required to make under Article 8(7). 
Structure of the review 
1.10 Over 70 derogations have now been given under Article 8(4) and for convenience, 
they have been grouped according to the various policy areas in which they fall. In 
some cases there are several possible headings and in these instances the derogation 
has been listed under what is considered to be the primary reason for the request. 
The first area is that of Transport to which can be linked the questions of air and 
inland water navigation. Air transport is dealt with in Chapter 2 and sea and inland 
waterway transport in Chapter 3. A second grouping is the Industrial and 
Commercial sector dealt with in Chapter 4. This includes exemptions on fuel used in 
alumina production, the production of molecular sieves and samples taken for 
analysis. The third group is the Environmental policy area, covered in Chapter 5, 
which is becoming more and more important. Member States who want to use tax 
incentives in their environmental policy are increasingly applying for derogations 
based on environmental arguments. Examples here are the ability to apply different 
rates to different environmental classes for diesel fuel and petrol, exemptions for the 
use of waste oils as heating fuel and reduced rates of duty on fuels - especially gases 
- used in public transport vehicles. The fourth category is Regional policy, covered 
in Chapter 6 where some Member States have been granted derogations for fuel 
consumed in particular regions. The final area is Other policy, dealt with in Chapter 
7, which covers derogations such as those concerned with the taxation of fuel used by 
the armed forces and Government agencies and social policy areas such as reduced 
rates of duty on fuel consumed by vehicles used by disabled persons, fuel used in 
lighthouses, in pumps used for drainage of flooded land and in desalination plants. A 
breakdown of derogations by category is set out in Annex B. 
1.11 As already indicated, it is clear that in evaluating the individual derogations, the main 
focus must be on the criteria laid down in Article 8(5) of the structures Directive : 
compatibility with the Internal Market, fair competition and the protection of the 
environment. However, given that the derogations have also been granted to fulfil 
other policy concerns, such as Transport, Industrial, Regional or Social, the review 
will also have to consider the impact of these derogations in other policy areas and 
evaluate in a number of cases whether a fiscal incentive provides the best instrument 
for such purposes. 
Commission Report, COM(95) 285 Final of 13.09.1995. 
1.12 Finally, the Commission considers that it is necessary to examine the whole 
procedure whereby Member States can apply for, and the Council agrees to, 
derogations from the general regime. Chapter 8 of this report therefore analyses the 
experience to date with the existing system. 
2. REVIEW OF THE EXEMPTIONS GRANTED TO AVIATION FUEL 
2.1 As already outlined in Chapter 1, the Commission has undertaken to review the 
compulsory exemption for commercial aircraft fuel. This chapter deals with this 
obligatory exemption as outlined in Article 8(l)(b) of Council Directive 92/81/EEC, 
and also examines the various national authorisations granted under Article 8(4) of 
the same Directive concerning private aircraft fuel. In reviewing the exemption 
provision it is explicitly stated in the review clause that the review will have to take 
into account the external costs entailed in such means of transport and the 
implications for the environment 
The obligatory exemption, under article 8(l)(b), from the harmonised excise 
duty on mineral oils supplied for use as fuels for the purpose of air navigation 
other than private pleasure flying 
The existing situation 
2.2 There are two types of aviation fuel in current use. Jet fuel (AVTUR or JET - Al) is 
used by jet and turboprop powered aircraft and powers the vast majority of 
international and intra Community flights. Aviation gasoline (AVGAS) is used in 
smaller piston engined aircraft operated by air taxi companies and in virtually all 
private aircraft. The commercial use of aviation fuel can be divided into three areas: 
1) International flights involving departure to or arrival from third countries. 
2) Intra-Community flights involving travel between two or more Member States. 
3) National flights. 
2.3 Aviation kerosene (AVTUR) is currently not subject to taxation. This is largely 
because of international commitments under which all contracting parties to the 
International Civil Aviation Organisation (ICAO) have entered into reciprocal 
arrangements to supply aircraft fuel exempt of all taxes. To be more specific, Article 
24 of the Chicago Convention on International Civil Aviation of 1944, which states: 
"Fuel, lubricating oils, spare parts, regular equipment and aircraft stores on board 
on aircraft of a contracting State, on arrival in the territory of another contracting 
State and retained on board on leaving the territory of that State shall be exempt from 
customs duty, inspection fees or similar national or local duties and charges". 
2.4 Although Article 24 of the Chicago convention only deals with "goods" already on 
board the aircraft, the ICAO Council resolution of 14 December 1993 (Doc 8632-
C/968) confirms that fuel embarked on aircraft destined for another State, shall also 
be exempt. Furthermore, it is made clear that " or similar national or local 
duties and charges" includes for example excise duties and sales and consumption 
taxes. These resolutions are adhered to by all EU Member States and are 
implemented through several bilateral agreements. All Member States of the 
European Union are members of ICAO, while the European Community has had 
observer status since 1989. 
2.5 In the light of this international commitment and also taking into account the problem 
of competition between Community and third country airlines the Council, when 
adopting a harmonised structure for excise duties within the Union, chose to provide 
a compulsory exemption for commercial aircraft fuel (Article 8(1 )(b) of Council 
Directive 92/81/EEC of 19 October 1992). 
The competitiveness of the European air transport industry 
2.6 The air transport industry is more exposed to third country competition than any 
other form of transport with the possible exception of shipping. Taxation of aviation 
fuel used on intra Community or international flights would reduce the 
competitiveness of the European industry in relation to third country carriers. 
2.7 Fuel costs represent 10-15% of the operating costs of European carriers. The Air 
Transport Association of America has calculated the costs of the discontinuation of 
the jet fuel waiver in the United States1^. The supplementary cost for the American 
air carriers would be in the range of 500 million dollars annually in addition to the 
negative effects on airline industry employment. The overall effects would be similar 
for the European industry, the level of cost obviously depending on the level of tax. 
If tax were to be levied in the European Union at the same rate as that agreed (but 
waived) for jet fuel in the United States, the cost for the European air transport 
industry would be in excess of 250 million ECU per year. This would clearly 
constitute a substantial burden for any industry faced with fierce international 
competition. 
Transport and Environment 
2.8 As previously stated, the Council decided in 1992 that the review of mandatory duty 
exemptions for fuel consumed in commercial aviation and navigation should be based 
on the external costs of such modes of transport and their environmental 
implications. Both aspects are discussed here as a number of policy developments 
have taken place since then: 
In its conclusions on transport and the environment of 16 December 1994, the 
Council considered that excluding commercial air traffic from indirect taxation 
cannot be justified on environmental grounds and called on the Commission to 
take this into account in reviewing the tax exemptions concerned. 
The Fifth Environmental Action Programme (COM(92)23 final, 27.3.1992) 
stated that "prices should reflect the full cost to society of production and 
consumption, including the environmental cost. " (Chapter 7.4). In its proposal 
for a European Parliament and Council Decision on the review of the Action 
Programme (COM(95)647 final, 24.1.1996), the Commission proposed to 
develop "measures to achieve a greater internalisation of external costs in 
transport prices " 
10 The United States has established a fuel lax of 4.3 cents/gallon for national carriers but has recently 
waived its application. 
10 
Similarly, the policy paper on transportation presented by Italy on behalf of the 
EU to the ad hoc group on the Berlin Mandate under the UN Framework 
Convention on Climate Change proposed to explore the feasibility on introducing 
aviation fuel taxation in the ICAO framework. At their meeting in Paris on 19 -
20 February 1996, the OECD Environment Ministers "urged the International 
Civil Aviation Organisation (ICAO) and other competent bodies to explore the 
feasibility of introducing different regulatory or fiscal measures, including air 
fuel taxation and efficiency standards; " 
2.9 Action is needed as emissions from aircraft represent an increasing proportion of 
Community production of several major pollutants. A number of studies have 
indicated that the rapid growth in air transport is likely to lead to a doubling of CO2 
emissions from this source by 2005 compared with 1993. This trend undermines the 
achievement of the Community's objectives for stabilising CO2 emissions by the year 
2000 at 1990 levels and reducing them thereafter. 
External costs 
2.10 The Commission has adopted the Green Paper "Towards Fair and Efficient Pricing in 
Transport" (COM(95)691 final, 20.12.1995). The Green Paper states that the 
uncertainty surrounding external cost estimates does not invalidate the need to make 
changes where appropriate as the direction and order of magnitude of the required 
changes is known. In this respect, the figures advanced by the Green Paper are 
relevant for this review, not only in relation tc their overall size, but also on the 
hierarchy they establish between different transport modes. 
2.11 Based on these orders of magnitude, it is worth noting that, although aviation is 
responsible for 6% of the overall cost, which is relatively minor compared to road 
transport, 15.6% of the external cost of air pollution in the EU is attributable to 
aircraft. In comparison, the absolute figures for waterborne transport are negligible. 
2.12 Given the environmental impact of aviation activities, the mandatory exemption 
applied to mineral oils used in aviation (Article 8(1 )(b)) should ideally be abolished. 
However, the practical impact of such an initiative taken solely at a national or 
Community level cannot be ignored: 
Community carriers would find themselves at a competitive disadvantage vis à 
vis third country carriers by having to pay, higher prices for their fuel; 
there would be a risk of third countries acting as "gas stations " for European 
carriers, implying that large amounts of untaxed fuel would be burned over 
European airspace in addition to the problem of a higher fuel burn and extra 
kilometres flown in order to carry the untaxed fuel. This would depend on the 
level of duty charged as the extra costs of diversion would need to be balanced 
against the possible savings but certain carriers could be put at a disadvantage if 
they did not have ready access to untaxed fuel outside the Union. 
11 
costs for consumers would rise, since any increase in fuel prices will invariably 
be passed on by carriers; 
2.13 Besides the problem of competition with carriers from third countries, the 
compulsory tax exemption has so far helped to prevent distortion of competition 
between carriers inside the Community. A unilateral removal would risk creating 
distortions if a common tax-level was not agreed. 
Conclusion 
2.14 The Commission concludes that a clause should be included in Article 8(1)(b) of 
Council Directive 92/81/EEC which would require the Council to extend excise 
duties on mineral oil to aviation kerosene as soon as the international legal 
situation allows the Community to levy such a tax on all carriers including those 
from third countries. This proposal would strengthen the Community's position 
for a corresponding initiative in the framework of ICAO. This conclusion will 
be acted upon when the Commission puts forward proposals later this year for a 
legal framework for the taxation of energy products. At the same time the 
Commission will examine the possibility of amending the wording of the 
exemption to give Member States the option to levy tax on fuel used for national 
flights pending the abolition of the exemption. 
The various national exemptions on aviation fuel used in private pleasure flying, 
granted unfler Article 8(4) of Council Directive 92/81/EEC 
Existing exemptions or reductions 
2.15 Virtually all aviation fuel used in private pleasure flying is aviation gasoline 
(AVGAS). Article 8.1(b) provides for an obligatory exemption from the harmonised 
excise duty on mineral oils supplied for use as fuel^ for the purposes of air navigation 
other than private pleasure flying. Council Decision 92/510/EEC of 19 October 
1992 allows Belgium, Denmark, France, Italy, Ireland, Portugal, and the United 
Kingdom to apply reductions or exemptions from the harmonised excise duty on 
mineral oils, to fuel used in private pleasure flying. Council Decision 96/273/EEC 
of 22 April 1996 gives Sweden the same power and the treaty of Accession provides 
Finland with the same derogation. Only the Swedish derogation is explicitly limited 
in time until the end of 1996. Therefore, a total of 9 out of the 15 Member States 
have been authorised to apply reduced rates or exemptions from duty on aviation fuel 
when used for private flying. In practice, Ireland and the United Kingdom apply a 
reduced rate, while the other seven Member States apply a total exemption. 
2.16 The key issue for transport policy, next to the internalisation of external costs, is the 
creation of a level playing field across transport modes. When the these are not 
priced at their full costs, serious distortions in the transport sector can occur, 
resulting in substantial welfare losses. Although not raising major competition 
concerns and limited in size, the exemption of fuel for private pleasure flying violates 
the goal of efficient pricing. 
12 
2.17 The role of the EU in this field is important, as the impact of efficient pricing in one 
country can have substantial effects on transport allocation in other countries, due to 
increased international integration. If one country gives preferential treatment to one 
mode of transport, neighbouring countries may be forced to do likewise. 
Conceivably, reduced excise duty rates on fuels for some modes of transport could 
be justified, depending on the extent to which they already cover their infrastructure 
costs through other fees and charges. 
Conclusion 
2.18 Many of the environmental arguments relating to commercial aviation, also 
apply to private pleasure flying. Although several Member States have 
expressed reservations concerning the administrative complications of removing 
the exemption for private flying, other administrations already operate this 
policy without major problems. To be consistent in its transport, environment 
and taxation policy, the Commission concludes that the exemptions granted 
should be abolished. 
13 
3. REVIEW OF THE REDUCTIONS OU EXEMPTIONS GRANTED TO FUEL CONSUMED FOR 
SOME MEANS OF WATERBORNE TRANSPORT 
Exemption or reductions of excise duty of fuel used in commercial navigation on 
inland waterways (Article 8(2)(b) of Directive 92/81/EEC) 
The existing situation 
3.1 Article 8(l)(c) of Council 92/81/EEC requires Member States to exempt from excise 
duty mineral oils used as fuel by commercial vessels in Community waters, including 
fishing vessels. Article 8(2) also allows Member States to exempt, wholly or partly, 
such oils used as fuel in commercial navigation on inland waterways. The revision 
clause in Article 8(7) of the Directive only provides for a review of commercial 
navigation on inland waterways and not the obligatory exemption in Article 8(l)(c). 
3.2 The expression "Community waters" covers the territorial waters of the 15 Member 
States, namely the sea zone up to 12 miles from the baseline of the coast, and 
including the "internal waters" of each Member State, that is to say the sea areas 
largely surrounded by land, and ports. The seas outside territorial water are the high 
seas. "Inland waterways" includes lakes and rivers. 
3.3 At present Austria (on the river Danube and lake Constance), Belgium, Denmark, 
Spain, Italy, Luxembourg, Finland, the Netherlands, Germany and Sweden exempt 
fuel used in commercial navigation on inland waterways. France, Ireland and the 
United Kingdom give reductions in the rate of excise duty while Greece and Portugal 
give no exemption or reductions in the rate of duty for this specific use. 
Transport externalities 
3.4 Inland navigation has extremely low external costs; the external costs of accidents 
and noise, for example, are virtually nil, whilst air pollution costs are greatly below 
those incurred by road transport. The inland waterway network also has 
considerable spare capacity and can therefore play a role in diverting traffic away 
from congested parts of the road networks. For these reasons, encouraging a modal 
shift away from road transport to more environmentally friendly modes, such as 
inland navigation forms part of Community transport policy. The aim was outlined 
in the Commission's White Paper "The future Development of the Common 
Transport Policy" which was published in 1992 and the issue of external costs is 
analysed in depth in the Commission's recently published Green Paper "Towards 
Fair and Efficient Pricing in Transport". 
3.5 The Green Paper presents an overview of the mounting evidence which shows that 
present trends in transport are unsustainable and examines various policy options for 
internalising the large external costs of road transport in order to arrive at a 
sustainable and more efficient transport system. This, however, is a long-term aim. 
Until the policies and technologies are in place which would allow the true costs of 
road transport to be internalised, there is a need to ensure that environmentally-
friendly modes of transport are not disadvantaged. 
14 
3.6 Furthermore, since certain waterways are used by vessels also engaged in navigation 
in Community waters, inland navigation should be put on the same footing as all 
other commercial shipping in respect of excise duty. Another element for 
consideration is that inland navigation fuel on the Rhine, by virtue of a special Rhine 
Regulation of 1954, is already exempt from excise duty. In economic terms, the 
Rhine is by far the most important waterway in Europe, and it would therefore be 
logical to harmonise the rules on other waterways with those currently in force on the 
Rhine. 
3.7 With regard to the optional exemption for the carriage of goods and passengers by 
rail (Article 8(2)(c) of Council Directive 92/81/EEC), the above mentioned 
arguments concerning external costs are equally applicable. As such the question of 
the exemption for rail services should be considered in the overall context of 
Directive 92/81/EEC when the Commission puts forward proposals for a new 
general approach to the taxation of energy products. From information available to 
the Commission; Belgium, Denmark, Spain and Luxembourg exempt certain fuel 
types from excise duty when used in rail transport. Austria, Finland, France, Italy, 
Ireland, the Netherlands and the United Kingdom apply a reduced rate. Germany, 
Greece and Portugal do not grant any exemption or reduction in the rate of duty. 
Sweden only exempts fuel used to transport goods by rail, fuel used for passenger 
transport being taxable. 
Conclusion 
3.8 To ensure a level playing field and to pursue environmental and transport policy 
goals the Commission concludes that the optional exemption for inland 
waterways should be made obligatory as is already the case for maritime 
navigation in Community waters. This matter together with the question of the 
exemption for rail services will be addressed by the Commission in its proposal 
later this year for a framework for the taxation of energy products. 
Exemption or reduction in the rate of duty on fuel used in private pleasure craft 
Existing situation 
3.9 Under Council Decision 92/510/EEC of 19 October 1992 Belgium, Greece, Ireland 
and the United Kingdom have the right to exempt from excise duty fuel used in 
private pleasure craft. Finland has the same power under the Accession Treaty (OJ 
C241 of 29 August 1994). Ireland and the United Kingdom apply a reduced rate of 
duty, while Greece limits the tax exemption to vessels not registered in Greece. 
Belgium and Finland apply an exemption. 
3.10 Problems have occurred where private pleasure craft have arrived in a Member State 
not granting any exemption carrying marked low taxed or exempt fuel. The fuel had 
been legally bunkered in a Member State applying a derogation, but the fact that it 
was marked led to investigations and delays. Furthermore, the risk of "cross-
border" shopping between taxing and non-taxing Member States is substantial in 
view of the wide variation in duty rates. 
15 
Conclusion 
3.11 As with private use of aviation fuel, concern has been expressed by several 
Member States about the administrative complications of removing the power to 
grant reductions and exemptions in this area. Nevertheless, to ensure the 
functioning of the Internal Market, and since no environmental or transport 
policy goals support an exemption of this specific use the Commission concludes 
that the derogations already granted be cancelled. 
16 
4. REVIEW OF THE DEROGATIONS EXISTING IN THE INDUSTRIAL AND COMMERCIAL 
SECTOR 
The existing situation 
4.1 As mentioned in paragraph 1.7 a number of Member States have been granted 
derogations for specific Industrial and Commercial policy reasons. These include 
the production of alumina in Sardinia and the Shannon area, samples taken for 
analysis, testing or other scientific purposes, reduced rates of duty for enterprises 
with a very high consumption of energy and the production of molecular sieves in 
Calabria. 
4.2 Council Decision 92/510/EEC of 19 October 1992. gave Ireland the power to 
continue to exempt from excise duty mineral oils used as fuel in the production of 
alumina in the Shannon region. The Irish government requested this derogation 
to assist an Industry in a relatively underdeveloped area. The production of 
alumina in this area uses heavy fuel oil as an energy source, and it was felt that it 
could not compete with other countries industries having lower tax rates on fuel 
oil and possibly also using lower or non taxed natural gas or other energy 
sources. No time limitation was linked to the Irish derogation. Italy obtained a 
similar derogation for the production of alumina in Sardinia by Council Decision 
93/697/EEC of 13 December 1993 until 31 December 1994 for similar reasons. 
This derogation was extended until 31 December 1996 by Council Decision 
96/273/EEC of 22 April 1996. 
4.3 Germany and the Netherlands have a derogation allowing them to exempt from 
taxation samples of mineral oils intended for analysis, tests on production or for 
other scientific purposes (Council Decision 92/510/EEC of 19 October 1992). In 
practice Germany applies a total exemption while the Netherlands does not 
currently use the derogation. At present no distortion of the functioning of the 
Internal Market deriving from the application of these derogations has been 
identified. 
4.4 Denmark and Sweden have both been given derogations which allows them to 
apply a lower taxation for fuel used in the industrial sector. Denmark is allowed 
to apply: "partial reimbursement to the commercial sector, provided that such 
taxes are in conformity with Community provision and provided that the amount 
of the tax paid and not reimbursed at all times respects the minimum rates of duty 
or monitoring charge on mineral oils as provided for in Community law". 
(Council Decision 92/510/EEC of 19 October 1992). Sweden obtained in its 
Accession Treaty a derogation allowing it to apply; "a reduced excise duty rate 
17 
for mineral oils used for industrial purposes, on the condition that such rates are 
at no time set below the minimum rates laid down in Council Directive 
92/82/EEC. Sweden has since applied for an amendment to the existing 
derogation to allow it to apply both a reduced rate for industrial purposes and a 
super reduced rate for heavy energy consuming industry until 31 December 1998. 
4.5 Both countries have introduced CO2 taxes which are calculated as a part of the 
overall excise duty on mineral oils. To avoid harming industry and its 
competitive position unnecessarily, they apply lower rates to industry. Given that 
Sweden has decided to increase its CO2 tax and enlarge its scope it requires 
further support for heavy energy consuming industry. A practice already used in 
Denmark. The Danish system has been notified to the Commission and the State 
Aid aspect examined. Since the exemption is available on the basis of objective 
criteria to all companies, regardless of sector or region concerned and since the 
authorities do not have any discretionary power in the granting of exemptions, 
the scheme can be said to constitute a general measure falling outside the scope of 
Article 92(1) of the Treaty. The new Swedish system has been notified to the 
Commission and is being examined by the Commission Services for its possible 
State aid aspects. The two remaining countries in the Community having 
introduced C02/energy taxes, the Netherlands (which caps the tax paid on the 
basis of annual consumption by heavy industrial consumers) and Finland have not 
applied for any derogation for Industry. 
4.6 The overall question of creating the necessary flexibility for Member States when 
wishing to introduce environmental taxes, such as a C02/energy tax will have to 
be considered within the framework of the Commission proposals on the taxation 
of energy products which will be submitted to Council later this year. 
4.7 Council Decision 95/585/EEC of 22 December 1995 allows Italy to apply a 
"reduction in the excise duty on fuel oil, for the production of steam, and for gas 
oil, used in ovens for drying and activating molecular sieves in Reggio Calabria. 
In no case can the reduced rate fall below ECU 18 per tonne". This derogation 
applies until 31 December 1996. The Italian plant uses mineral oil in its 
production while similar plants in other Member States use natural gas which 
according to the Italian authorities gives them a competitive advantage. The 
Italian authorities requested total exemption, but examination by the Commission 
indicated that natural gas in, for example, Germany and France is also taxed and 
as such the pure energy costs would be comparable if at least the Community 
minimum rate was maintained. The Council therefore agreed, on a proposal 
from the Commission, to authorise a reduced rate rather than an exemption. 
18 
4.8 All the derogations granted in this area have been examined by the Commission 
from an Internal Market viewpoint. In general, an exemption from excise duty 
for certain undertakings, products or the production of certain" goods in a 
Member State constitutes a state aid within the meaning of Article 92(1), 
provided it is capable of distorting competition and affecting trade between 
Member States. Article 92 stipulates that state aid is incompatible with the 
common market and thus prohibited, unless it is approved by the Commission 
pursuant to one of the exemption clauses in Article 92(2) or (3). In Article 92 
the most important exemption clause covers regional aid and aid to facilitate the 
development of certain economic activities, such as aid to SMEs or aid for 
environmental protection. 
4.9 It is clear, therefore, that to the extent the existing exemptions from excise duties 
constitute state aids, they can only be allowed to continue-if exemption under one 
of the relevant clauses in Article 92 is applicable and such exemption is subject to 
the conditions the Commission normally imposes to approve such aid. In the 
light of these considerations and on the basis of the information available it seems 
that several of the existing exemptions give rise to some concern. The 
Commission therefore proposes to examine these derogations to see whether they 
are incompatible with the Common Market. 
Conclusions 
4.10 The Commission concludes that the Italian derogation for alumina 
production in Sardinia be extended until 31 December 1998 subject to the 
relevant Community minimum duty rates being respected. The Irish 
* derogation for alumina production in the Shannon area should, in principle, 
be extended only until 31 December 1998. The Commission would therefore 
expect the Member States concerned to notify the provisions in question 
under Article 93(3) of the Treaty in sufficient time so that it can evaluate 
them in accordance with the appropriate provisions of the Treaty, including 
Article 92(3). 
4.11 The Commission concludes that the German derogation allowing exemption 
from taxation for samples intended for analysis, fest or other scientific 
purposes should be limited until 31 December 1998. The Commission will 
monitor the competitive aspects of the derogation and before 31 December 
1998 will submit proposals to the Council concerning the future of the 
derogation. The same derogation for the Netherlands should be abolished 
since it is not being used. 
4.12 The Commission concludes that the Danish and Swedish derogations 
allowing them to apply reduced rates of duty on fuel used in the industrial 
sector should be limited until agreement is reached on a common Community 
framework for taxation of energy products which should deal with this 
matter at a Community level, or at the latest until 31 December 1998. 
19 
4.13 The Commission concludes that the derogation allowing Italy to apply 
reductions in the excise duty on fuel oil used in the production of steam and 
for gas oil used in ovens for drying and activating molecular sieves in Reggio 
Calabria should be extended until 31 December 1998. The rates applied 
must respect Community minimum rates. The Commission will evaluate in 
detail this derogation to which similar considerations apply as those set out 
in para 4.10. 
20 
5. REVIEW OF THE DEROGATIONS EXISTING IN THE ENVIRONMENTAL SECTOR 
The existing situation 
5.1 As set out in paragraph 1.7, all Member States have been granted derogations for 
specific environmental policy reasons. This heading covers a wide variety of 
derogations which may also overlap with ether policy areas but they have been listed 
under the environmental category as this appears to be the major motivating factor. 
There can be no doubt that this sector will have an increased importance in any future 
requests. Member States have in some cases felt that the existing Directives 
regulating the taxation of mineral oil products were too restrictive when they wanted 
to adopt cost effective measures to achieve environmental policy objectives. Article 
8(4) has, to date, been the only route for such initiatives. For example the ability to 
apply differential tax rates to different environmental categories of fuel products has 
been given to several Member States. 
5.2 Derogations covered in this chapter include those given to the burning of waste oils, 
to LPG, natural gas and methane when used for Commercial or Industrial purposes 
and as motor fuels for public transport, to motor and heating fuels of different 
environmental categories and the use of waste hydrocarbon gases as heating fuel. It 
is also worth mentioning that several of the decisions concerning the burning of waste 
oil have been taken tacitly under the procedure laid down in Article 8(4). This being 
the case, these decisions have not yet been published. 
Public transport 
5.3 Austria, Belgium, Denmark, Greece, Spain, Italy, Ireland, Luxembourg, Portugal 
and the United Kingdom have all obtained derogations allowing them to exempt from 
excise duty fuel used in local public transport. The Austrian and Spanish derogations 
are limited to LPG and the Luxembourg and Portuguese to LPG, methane and natural 
gas. As in other areas, the exemptions are applied differently in the different 
Member States. From information available to the Commission, Denmark limits its 
exemption to certain fuel products, Belgium, Italy and Ireland only allow the 
application of a reduced rate, while Greece and Luxembourg do not apply the 
derogation. The United Kingdom does not apply the derogation as a direct duty 
adjustment, the reimbursement being made by way of a grant based on the amount of 
excise duty paid on fuel consumed. 
5.4 There is mounting evidence which shows that the present growth trends in transport 
are unsustainable. To make public transport more attractive by lowering fuel costs 
could contribute to developing a more sustainable more efficient and less polluting 
transport system. The pollution will of course depend on the fuel used in the 
different means of transport. However seen from a pure economic angle, when 
various transport modes are not priced at their full cost, serious misallocations in the 
transport sector and substantial welfare losses can be the consequence. Therefore the 
tax exemptions applied could be said to violate the goal of efficient pricing. 
21 
Conclusions 
5.5 The Commission concludes that the derogations granted in respect of public 
transport be maintained until a general rule is introduced as part of a common 
Community framework for the taxation of energy products or at the latest until 
31 December 1998. 
General exemptions or reductions in the rate of duty to be applied to LPG. 
Natural Gas and Methane 
5.6 Council Directive 92/82/EEC of 19 October 1992 on the rates of duty on mineral oils 
sets, among others, a tax rate on LPG and methane. Natural gas as such falls outside 
the scope of the Directive. However, if natural gas is used as a motor fuel, Article 
2(3) of the structures Directive requires that it shall be taxed at the rate for the 
equivalent product, i.e. LPG. 
5.7 Austria, Belgium, Greece, Finland, Italy, Ireland, Luxembourg, the Netherlands and 
the United Kingdom have all obtained derogations allowing them to exempt LPG, 
natural gas and/or methane from excise duty. Austria has a derogation until 31 
December 1996 for natural gas and methane only, while Finland has it for LPG and 
methane. For Italy, Ireland and the United Kingdom the derogation is limited to use 
as a motor fuel. From the information available to the Commission, Belgium only 
applies a reduced rate in the Commercial and Industrial sector. So does Greece but 
only for LPG and methane. Ireland applies a reduced rate. Italy in practice only 
exempts methane, Luxembourg exempts natural gas used as a road fuel while a 
reduced rate is applied to LPG and methane. The United Kingdom applies an 
exemption to all gases for off-road motor use while the Netherlands exempts natural 
gas and applies lower rates to LPG and methane. The general impression is that the 
derogations obtained are only used in a limited way by the individual Member States. 
5.8 Viewed from an energy policy angle it appears that the application of exemptions and 
reductions on, for example, LPG creates a distortion vis-à-vis other fuel types. From 
an Internal Market view point, if the derogation is used to promote national 
production, the competition aspect cannot be ignored. 
5.9 Europe is currently devoting a great deal of effort to the development and promotion 
of natural gas vehicles. The arguments in favour of this fuel revolve around the fact 
that it produces less pollution and is an indigenous alternative to gasoline which is 
largely imported. In an initial phase there could be a need for Member States to 
apply a lower rate for natural gas when used as fuel. As already mentioned earlier in 
this chapter, the general rule is that natural gas when used as a fuel will have to be 
taxed at the same rate as that applied to LPG. As such, if a tax-preference should be 
given to this cleaner fuel a derogation is required. The possibility of the addition of 
an optional reduced rate for gases used as a public transport fuel to the existing 
provisions of Article 8(3) of Directive'92/81 will be considered as part of the 
Commission review of the taxation of energy products as will the possibility of a 
reduction in the rate of duty on natural gas when used as a fuel in private vehicles. 
22 
Conclusions 
5.10 The Commission concludes that the derogations granted in respect of the use of 
gases be maintained until a general rule is introduced as part of the 
Commission's proposals for the taxation of energy products or at the latest until 
31 December 1998. The Commission will monitor the competitive and 
environmental aspects of these derogations and will submit proposals to the 
Council concerning their future by the end of 1998. 
Exemption for excise duty on waste oils or waste hydrocarbon gases which are 
re-used as heating fuel, either directly after recovery, or following a recycling 
process in the case of waste oils. 
5.11 A number of Member States have secured derogations allowing them to exempt from 
duty waste oil used for heating whether subjected to a purification process or not. 
Such use is taxable under Directive 92/81. However, according to Article 6(b) of the 
Structures Directive (92/81/EEC), Member States need not to treat as production of 
mineral oils operations by which the user of a mineral oil makes its re-use possible in 
his own undertaking. At present Austria, Germany, Spain, Finland, France, Ireland, 
Portugal and the United Kingdom apply a duty exemption for waste oils used either 
directly after recovery or following a recycling process. The reasoning behind these 
requests was a desire to prevent the dumping of used oils into landfill sites or 
waterways. The quality of heating fuel produced from these waste oils by simple 
heating or filtration processes is generally, poor and the product would not be 
competitive without some form of tax advantage. 
The requests from Germany, Spain, France, Ireland, the United Kingdom and 
Portugal were all agreed tacitly, in 1994. The Austrian and Finish requests were 
both agreed in Council Decision 95/585/EEC of 22 December 1995. Decision 
95/585/EEC is limited until the end of 1996. 
5.12 The disposal of waste oil is regulated by Council Directive 75/439/EEC, Article 3(1) 
of which states that "...Member States shall take the measures necessary to give 
priority to the processing of waste oils by regeneration". The various derogations for 
waste oils used as heating fuels could be seen as being contrary to the thrust of that 
Directive as they encourage combustion rather than regeneration. 
5.13 The individual derogation requests were not detailed and did not specify which 
methods of recycling were to be approved. In practice the Member States charge 
duty on recycled oil that is used as a motor fuel and only apply the derogation to 
waste oil that is used as a heating fuel. In most cases, relief is only applied to simple 
recycling processes involving dewatering the oil and filtering out solid contaminants. 
At present methods such as vacuum distillation exist, effectively creating new oil 
which could be used as a relatively clean heating or motor fuel or reused as 
lubricating oil, but in practice only non dutiable lubricants are likely to be produced 
from this process as other uses would lead to taxation. In addition, irrespective of 
environmental concerns, the advantages of regeneration in terms of improved energy 
security and reduced use of fresh products should not be ignored. 
23 
5.14 The consequences of this duty exemption are already visible. Markets and 
undertakings linked to regeneration of used oils are declining because of diversion of 
the raw materials essential to their activities. The regeneration industry consists of 
some one hundred companies, most of which are SME's. Economic constraints 
make this activity barely profitable without public support. For those Member States 
where data is available it can be inferred that the application of the duty exemption 
will probably phase out regeneration. For instance, in Italy, which is not applying 
the exemption, regenerated oil amounts to 84.6% of oil collected, while only 13.3% 
is burned. By contrast, in the United Kingdom and Spain, the quantities regenerated 
are minor or negligible. Similarly, in France (40.1%) and Germany (65.2%), the 
amount of oil burned has increased dramatically. 
5.15 Exempting re-use in own undertakings recognises the fact that duty is difficult to 
collect in such situations. This is certainly not the case where used oil is subject to 
collection and sale. Indeed, the waste oil Directive requires operators collecting or 
burning used oil to be duly registered, with a record kept of their transactions. It is 
argued that if combustion of used oil was taxed, such oil might be discharged into the 
environment, causing substantial pollution. Deposit or discharge of used oil into 
surface, ground, inland sea water, drainage systems and soil is prohibited by the 
Directive and any person or undertaking found to be involved in such action would 
face legal proceedings. 
5.16 Waste oil recycled in the most technically advanced way is less environmentally 
harmful and, in addition, will contribute.to the preservation of non renewable fossil 
fuels. The Commission Services are presently examining the main obstacles 
hindering the development of regeneration as evidence already available suggests that 
factors other than fiscal considerations are also involved. Nevertheless, it is clear 
that derogations applied in a way where they are seen to contradict the provisions of 
the waste oil Directive should be reconsidered. 
5.17 Germany and Italy have a derogation allowing them to exempt from taxation the use 
of waste hydrocarbon gases as fuel (Council Decision 92/510/EEC of 19 October 
1992). In practice Germany applies a total exemption while Italy, at present, does 
not apply the derogation. Sweden has provision for an exemption in respect of 
biologically produced methane and other waste gases, which was agreed as part of 
the Treaty of Accession. At present no distortion of the functioning of the Internal 
Market, deriving from the application of these derogations has been identified. In 
addition, the use of waste gases for heating purposes can be seen as environmentally 
advantageous. 
Conclusions 
5.18 The Commission concludes that the existing derogations relating to duty 
reductions or exemptions on waste oil and gases should be limited to 31 
December 1998. The Austrian and Finnish derogations should be extended to 
the same date. The Swedish derogation allowing them to exempt from excise 
duty biologically produced methane and other waste gases, should be limited to 
the same date. By 31 December 1998, the Commission will submit proposals to 
the Council suggesting which methods of recycling should qualify for exemption 
and the derogations shall then be amended accordingly. 
24 
Reduction in the rate on heavy fuel oil with a lower sulphur content to 
encourage the use of more environmentally friendly fuel 
5.19 Council decision 93/697/EEC of 13 December 1993 allowed Belgium and 
Luxembourg "to apply a reduction in the rate of duty on heavy fuel oil to encourage 
the use of more environmentally friendly fuels provided that such an incentive is 
specifically linked to sulphur content and provided that the weighted average of duty 
charged on heavy fuel oil respects the minimum rate of duty on heavy fuel oils as 
provided for in Community law; in no case can the reduced rate fall below ECU 6,5 
per tonne" until 31 December 1994. After some opposition in Council this 
derogation was prolonged until 31 December 1996 by Council Decision 95/585/EEC 
of 22 December. From both an energy and environmental view point it was 
important that the derogation should only apply until the entry into force of 
Community arrangements for taxation of low-sulphur heavy fuel oil and* competing 
products. 
5.20 The first Commission report on excise duty rates (COM(95)285 final of 13 
September 1995) states that the specific requirement to review the treatment of heavy 
fuel oil by reference to sulphur content should be covered in the overall review of the 
treatment of heating fuels, following a consultation process. This process is now 
intended to culminate in the Commission's new approach to taxation of energy 
products. 
Conclusion 
5.21 Although, the Commission has not yet come forward with a proposal for a 
Community arrangement for taxation of low-sulphur heavy fuel oil and 
competing products, there is no justification for extending the existing 
derogation applied to low sulphur heavy fuel oil by Luxembourg and Belgium in 
its present form. All derogations given in this area to other Member States are 
limited in that they must respect the Common Community minimum rates. The 
same provision should be made in respect of Luxembourg and Belgium as they 
have now had four years to adapt to the Internal Market. The Commission 
concludes that the derogation should be extended on the condition that the 
common minimum rates are respected and until such time as agreement is 
reached on a common Community framework for the taxation of energy 
products, including arrangements for taxation of low sulphur heavy fuel oil and 
competing products or at the latest until 31 December 1998. 
Reduction in the rate of duty on diesel fuel and heating gas oil to encourage the 
use of more environmentally friendly fuels 
5.22 Under Council Decision 92/510/EEC of 19 October 1992, Denmark and Greece are 
allowed to "apply a reduction in the rate of duty on diesel to encourage the use of 
more environment friendly fiiels provided that such incentives are linked to 
established technical characteristics including specific gravity, sulphur content, 
distillation point, cetane number and index and provided that such rates at all times 
respect the minimum rates of duty on mineral oils as provided for in Community 
25 
law". From information available to the Commission the provision is not applied in 
Greece. In Denmark however three classifications exist; Normal Diesel, Light Diesel 
and Ultra Light Diesel. Normal diesel is taxed at the highest rate. Ultra light diesel 
is taxed as light diesel, except when used in local passenger transport vehicles where 
the tax is reimbursed under the relevant derogation. 
5.23 In the Accession Treaty, Finland obtained a derogation to apply " reduced excise duty 
rates on diesel fuel and gas oil". The rate applied may at no time be below the 
minimum rates laid down in Council Directive 92/82/EEC. Via the same Accession 
Treaty, Sweden obtained a derogation allowing it to apply "reduced tax rates for 
diesel and light heating oil in accordance with environmental classifications ". It is 
worth noting that none of these derogations are explicitly limited in time. For diesel 
and heating gas oil, Finland applies a normal rate and a lower "ecological" rate. 
Sweden operates three environmental classifications on diesel, class 3 being the most 
expensive (ECU 329 per 1000 litres) and class 1, the cheapest +/- ECU 50 below the 
rate applied to class 3. For heating gas oil Sweden only applies one rate. 
Conclusions 
5.24 The Commission concludes that the derogation given to Greece allowing it to 
apply lower rates on environmentally cleaner diesel, be abolished since it is not 
used. The identical Danish derogation should be limited in time, as should the 
Swedish and Finnish derogations concerning diesel and light heating fuel. The 
Commission concludes that the derogations should be extended, on the condition 
that the common minimum rates are respected, until 31 December 1998 or such 
earlier time as agreement is reached on a common Community framework for 
the taxation of energy products. This will include arrangements for taxation of 
diesel and heating oil according to environmental classification and competing 
products. 
Taxation of gasoline according to environmental classification 
5.25 Environmental factors have already been taken into account within the existing 
mineral oil tax framework. For example there is different treatment of leaded and 
unleaded petrol where there is an ECU 50 per 1000 litres differential between the 
minimum rates for these products. Furthermore, Member States are obliged, under 
Article 4 of the rates Directive (92/82/EEC), to apply a lower rate of duty to 
unleaded petrol than to leaded petrol. At the time the Directive was adopted, 
Member States agreed to be guided by the objective of maintaining a differential in 
favour of unleaded petrol of ECU 50 per 1000 litres, though this differential is not 
legally binding on the Member States. There are also parallel measures such as the 
requirement for all new cars to be fitted with catalytic converters. The tax 
differential on leaded and unleaded petrol has been used as an example of the use of 
fiscal instruments in transport and environmental policy. 
26 
5.26 As previously mentioned, Member States must apply a tax differential between 
leaded and unleaded petrol. As a result of this policy and the increasing use of 
catalyst equipped cars, all Member States have experienced a substantial reduction in 
the use of leaded petrol and a increased use of unleaded grades. Such developments 
have effects on revenue yield as well as the environment. 
5.27 Recent experience within Member States has indicated that new unleaded gasoline 
products have been introduced into the market. Some Member States feel that the tax 
should reflect the quality of the product, whether that be based on the presence or 
absence of lead or on different environmental criteria. "Lead Replacement Gasoline" 
and similar fuels are examples of new products developed for use in older cars not 
fitted with catalytic converters and which would normally use leaded petrol. 
5.28 To reflect differing environmental categories and to protect their revenues, four 
Member States currently have the power to apply differential rates on petrol. 
Council Decision 96/273/EEC of 22 April 1996, allows Sweden and the United 
Kingdom to "apply differential rates of tax on unleaded petrol to reflect different 
environmental categories provided that such rates at all times respect the minimum 
rates of duty on mineral oils as provided for in Community law". Ireland has now 
been granted a similar facility under Council Decision 96/418/EC dated 27 June 
1996. Finland in its Accession treaty was allowed to "apply reduced excise duty 
rates on reformulated unleaded and leaded petrol". Finland must also respect the 
minimum rates. Furthermore, all of them, are obliged, under Article 4 of the Rates 
Directive (92/82/EEC), to apply a lower rate of duty to unleaded petrol than to 
leaded petrol. All the derogations are limited to 31 December 1996. 
5.29 Sweden applies two rates on unleaded petrol according to its environmental 
classification. The difference between the two classes is ECU +1-1 per 1000 litres 
(ECU 456 compared to ECU 462). The United Kingdom applies a reduced rate on 
95 octane unleaded petrol, while higher octane unleaded gasoline including Lead 
Replacement Gasoline is liable at an intermediate rate between the leaded and 
unleaded rates. Finland applies a normal rate and an "ecological" rate on both leaded 
and unleaded gasoline. On leaded petrol the tax differential is ECU 8 per 1000 litres 
(ECU 532 compared to ECU 524) and on unleaded petrol the differential is also 8 
per 1000 litres (ECU 457 compared to ECU 449). 
5.30 At a Community level no explicit definition of environmental categories has yet been 
agreed although the Commission has recently put forward a draft Directive laying 
down technical specifications on health and environmental grounds for fuels to be 
used in petrol and diesel vehicles. These could be used by Member States as the 
basis for differential levels of taxation to encourage, by fiscal means, the marketing 
of cleaner fuels. Until these are implemented, there is a risk of distortion of 
competition and fragmentation of the Internal Market. 
27 
Conclusions 
5.31 The Commission concludes that the derogations given to the United Kingdom 
Sweden and Ireland concerning differentials on unleaded petrol should be 
extended. The Finnish derogation concerning leaded and unleaded petrol 
should be limited in time. The derogations may apply until such time as 
agreement is reached on a common Community framework for the taxation of 
energy products, including arrangements for taxation of gasoline according to 
its environmental classification and competing products or at the latest until 31 
December 1998. 
Other types of environmental taxes on fuel 
5.32 Under Council Decision 95/585/EEC of 22 December 1995, Denmark may until 
31 December 1996; "apply differential rates of excise duty to petrol distributed from 
petrol stations equipped with a return system for petrol fumes and petrol distributed 
from other petrol stations, provided that such rates at all times respect the minimum 
rates of excise duty on mineral oils as provided for under Community law". To 
tackle the same problem other Member States have used other measures, such as for 
example, setting standards on station equipment instead of using a tax incentive. The 
purpose behind the Danish request is to provide an incentive for owners of petrol 
stations to install return systems for petrol fumes. The initiative is a part of a whole 
strategy to limit the exhaust of volatile organic compounds (VOCs) to the 
atmosphere. 
Conclusion 
5.33 The Commission concludes that the derogation given to Denmark concerning 
fuel delivered from certain filling stations should continue until such time as 
agreement is reached on a common Community framework for the taxation of 
energy products, including arrangements for taxation of gasoline according to 
its environmental classification and competing products or at the latest until 
31 December 1998. 
28 
6. REVIEW OF THE DEROGATIONS EXISTING IN THE REGIONAL POLICY SECTOR 
The existing situation 
6.1 Three Member States have applied for and been granted regional derogations. 
6.2 Council Decision 92/510/EEC allowed France to exempt mineral oils consumed on 
the island of Corsica from excise duty until 31 December 1994. When the 
derogation expired, the French administration put forward a new request to prolong 
the derogation until 31 December 1996. Since neither the Commission nor any other 
Member State requested that the matter be discussed at Council level within the 
obligatory two month period, the derogation was prolonged tacitly until the end of 
1996. In practice France reimburses 6.63 FF./hi (Normal rate on unleaded petrol = 
357,23 FF./hi) when gasoline is put to consumption on the island of Corsica or the 
gasoline is delivered on Corsica to private pleasure craft. 
6.3 Council decision 92/510/EEC allows Italy to exempt mineral oils consumed in the 
regions of Val d'Aosta and Gorzia from excise duty. In practice the Italian 
administration limits the exemption by imposing an annual quota. The same decision 
also allowed Italy to exempt mineral oils consumed in the regions of Udine and 
Trieste from excise duty until 31 December 1994. This is also limited by an annual 
quota. When the derogation expired, the Italian administration put forward a new 
request to extend the derogation until 31 December 1998. Since neither the 
Commission nor any other Member State requested that the matter be discussed at 
Council level within the obligatory two month period the derogation was extended 
tacitly until the end of 1998. 
6.4 Recently the Italian administration has identified a threat to their mineral oils revenue 
from the importation of low taxed fuel from Slovenia. To reduce the problem the 
Italian authorities submitted a request for a derogation allowing them to apply 
reductions in the rate of duty on gasoline delivered in the Region of Friuli-Venezia 
Giulia. The derogation was granted until 31 December 1996 in Council decision 
96/273/EEC of 22 April 1996. 
6.5 Council decision 95/585/EC allows Portugal to apply reductions in the rate of excise 
duty on fuel oil consumed in the autonomous region of Madeira until 31 December 
1996. This reduction may not be greater than the additional costs incurred in 
transporting the fuel to that region. 
29 
Competition aspects 
6.6 As already mentioned, as a general principle an exemption from excise duty for 
certain undertakings, products or the production of certain goods in a Member State 
constitutes a state aid within the meaning of Article 92(1) of the treaty, provided that 
it is capable of distorting competition and affecting trade between Member States. 
Article 92 stipulates that state aid is incompatible with the common market and thus 
prohibited, unless it may be approved by the Commission pursuant to one of the 
exemption clauses in Article 92(2) or (3). In Article 92 one of the most important 
exemption clauses is regional aid. 
6.7 The existing derogations do not require that the Member States involved respect the 
community minimum rates. Although, some of the regions dealt with here are 
eligible for receipt of support from structural funds, there seems to be little evidence 
that the economy would suffer significantly if the regions in question were allowed to 
apply reduced rates that respected the Community minimum rates. From an Internal 
Market viewpoint and considering that the derogations have existed for some years, it 
seems reasonable that they should be amended to require Community minimum rates 
to be observed. 
Conclusion 
6.8 The Commission concludes that these derogations should be extended or limited 
in time to 31 December 1998 provided they respect the Community minimum 
rates. The Commission will then review the existing regional derogations and 
submit proposals to the Council concerning their future by 31 December 1998. 
30 
7. DEROGATIONS GRANTED FOR OTHER POLICY REASONS 
The existing situation 
7.1 There are a number of other derogations involving a variety of policy reasons, many 
of which have social origins. 
7.2 Greece and the Netherlands have derogations allowing them to exempt from taxation 
the use of fuel in respect of desalination plants. (Council Decision 92/510/EEC of 19 
October 1992). In practice both Member States apply total exemptions. At present 
no distortion of the functioning of the Internal Market, deriving from the application 
of these derogations has been identified. 
7.3 Greece has a derogation allowing them to exempt fuel used in vehicles belonging to 
the President, the National Police Force and the Metropolitan Bishop from excise 
duty. Within certain quantitative restrictions taxis in France are allowed tax-free 
fuel. Ambulances in Italy only have to pay a reduced excise duty on fuel. The 
armed forces in Greece, Italy and the Netherlands are exempt from excise duty. 
Lighthouses in Ireland and the United Kingdom are exempt from tax on fuel. Fuel in 
motor vehicles used by the disabled in Ireland is exempt (in practice within an annual 
quota). Fuel used in pumps to drain flooded land in Belgium, Italy and the 
Netherlands is exempt. 
7.4 Council decision 92/510/EEC, allows France, in the framework of certain policies 
aimed at assisting areas suffering from depopulation, to exempt mineral oil products 
from excise duty. In practice France reimburses the excise duty on motor fuels used 
for commercial purposes by companies registered in a commune with less than 3000 
inhabitants and where part of the turnover comes from retail business. The annual 
consumption per enterprise must be within an annual ceiling of 1500 litres. 
7.5 It seems difficult to justify some of these derogations on pure economic grounds. 
Most could be more efficiently replaced by other means of support which would be 
more transparent and simpler to administer. Areas such as Government vehicles, 
ambulances, national forces and lighthouses appear to fall within this category. It 
could, also, be argued that the principle should be that Governments are only entitled 
to the same exemptions as other sectors. Moreover, although in most areas any 
budgetary impact will be minimal, as the Government both pays and receives the 
revenue, there is, nevertheless a risk, that derogations lead to an inefficient use of 
resources because they send the wrong price signals to those agencies that consume 
the fuels. 
31 
Conclusions 
7.6 The Commission concludes that the derogation allowing Greece and the 
Netherlands to exempt the use of fuel in desalination plants from taxation 
should be limited until 31 December 1998. The Commission will monitor the 
competitive aspects of the derogations and will submit proposals to the Council 
concerning the future of these derogations by the end of 1998. 
7.7 The Commission concludes that the remaining derogations in this area should be 
abolished. 
32 
8. REVIEW OF THE FUNCTIONING OF THE ARTICLE 8(4) PROCEDURE 
The existing situation 
8.1 In the vast majority of cases the Council has given its explicit decision on the 
requests put forward by various Member States. However, in accordance with 
Article 8(4) of Directive 92/81/EEC the Council is deemed to have authorised the 
exemptions or reductions proposed if within two months of the other Member States 
being informed neither the Commission nor any Member State has requested that the 
matter be considered by the Council. Since no Member State nor the Commission 
requested that the matter be raised within the two month period the following 
requests are considered to have been adopted from the following dates: 
1. For reductions in or exemptions from excise duty for waste oils which are re­
used as fuel, either directly after recovery or following a recycling process for 
waste oils, and where the re-use is subject to duty: 
in Ireland from 16 November 1993; 
in the United Kingdom of Great Britain and Northern Ireland from 25 April 
1994; 
in the French Republic from 8 June 1994; 
in the Federal Republic of Germany from 8 June 1994; 
in the Portuguese Republic from 8 June 1994; 
in the Kingdom of Spain from 15 August 1994. 
2. For mineral oils consumed in the regions of Udine and Trieste in the Italian 
Republic from 1 January 1995 for a period of 4 years. 
3. For reductions in excise duty rates on petrol consumed on the island of Corsica 
in the French Republic from 23 February 1995 until 31 December 1996. 
Concerns 
8.2 These tacit or implicit decisions create serious legal problems. In particular there 
may be a lack of discussion and justification and it is impossible to publish an 
unwritten act. One way of avoiding this would be to require a proper and explicit 
decision of the Council on a proposal of the Commission before any exemption or 
reduction of excise duties is granted. This would, however, mean that the Council 
would have to consider a considerable number of individual requests. This leads to 
consideration of how the decision making process could be improved without-
damaging the principle of transparency. One possibility is to grant the Commission, 
assisted by the Member States in the form of the Committee established under Article 
24 of Council Directive 92/12/EEC, (and which takes decisions on the basis of 
majority voting as laid down in Article 148(2) of the Treaty), the power to approve 
requests for a strictly limited period. 
33 
The Council could then be asked periodically to decide whether such authorisation 
should be abolished, modified or extended in time. 
8.3 To aid the Commission and Member States to evaluate derogations, moreover, 
Member States should always assess as accurately as possible, in the notification sent 
to the Commission, the expected impact of the measures they intend to apply. 
Conclusions 
8.4 The Commission recognises the need for Member States to continue to have the 
ability, for very specific policy considerations, to obtain derogations from the 
general excise regime. Such derogations in the form of exemptions or reductions 
in the rates of excise duty should only be considered, however, when Member 
States have provided the Commission with sufficient background material 
including an evaluation of the consequences of such exemptions or reductions. 
The Commission will then examine the requests in the light of the functioning of 
the Internal Market, fair competition and environmental protection policies. 
8.5 Future derogations should always be limited in time and subject to regular 
review. To ensure that the system can operate smoothly, individual requests 
received from Member States should be dealt with according to the procedure as 
outlined in Article 24 of Council Directive 92/12/EEC of 25 February 1992. The 
Council should then review every three years, all derogations which have been 
granted on the basis of a report by the Commission and shall unanimously 
determine on a proposal from the Commission after consultation of the 
European Parliament, whether any or all of them shall be abolished, modified 
or extended for a further period. 
8.6 The Commission will make proposals to amend Article 8 of Directive 92/81/EEC 
to enable this new approach to operate. The proposals will be put forward as an 
integrated part of the new general approach to the taxation of energy products 
before the end of 1996. 
34 
ANNEXA 
AUTHORISATIONS GRANTED AND REQUESTS MADE UNDER ARTICLE $.4 OF 
DIRECTIVE 92/31/EEC 
35 
REQUEST 
& exemption from excise duty for LPG 
used as motor fuel in local public 
transport vehicles 
^ exemption from excise duty on waste oils 
which are re-used as fuel, either directly 
after recovery, or following a recycling 
process, and the re-use of which is 
subject to duty, until 31/12/96. 
^ exemption from excise duty for natural 
gas and methane, until 31/12/96 DECISION 
PROPOSAL NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
ACT OF 
ACCESSION 
JO C 241 du 
29/8/94 
Article 1.4 of 
Council Decision 
95/585/EC of 22 
December 1995 
Article 1.2 of 
Council Decision 
96/273/ECof22 
April 1996 
BELGIUM 36 
REQUEST 
•^For local public passenger transport 
vehicles, 
^ for LPG, natural gas and methane, 
•^ in respect of motors used for the drainage 
of flooded land, 
•^ in respect of air navigation other than that 
covered by Article 8(1) of Directive 
92/81/EEC, 
"^for navigation in private pleasure craft 
^ until 31 December 1994 reduction in the 
rate of duty on heavy fuel oil to 
encourage the use of more 
environmentally friendly fuels provided 
that such an incentive is specifically 
linked to sulphur content and provided 
that the weighted average rate of duty 
charged on heavy fuel oil respects the 
minimum rate of duty on heavy fuel oils 
as provided for in Community law: in no 
case can the reduced rate fall below ECU 
6,5 per tonne. 
^ Extension of the above-mentioned 
Decision until entry into force of the 
Community arrangements for low-sulphur 
heavy fuel oil and competing products (at 
the latest 31.12.96) DECISION 
PROPOSAL NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/1992 
(92/510/EEC) 
Council Decision 
of 13/12/1993 
(93/697/EEC) 
Council Decision 
of 22/12/95 
(95/585/EC) 
37 
REQUEST 
^ for partial reimbursement to the 
commercial sector, provided that such 
taxes are in conformity with Community 
provisions and provided that the amount 
of the tax paid and not reimbursed at all 
times respects the minimum rates of duty 
or monitoring charge on mineral oils as 
provided for in Community law, 
^ for local public passenger transport 
vehicles, 
•^ for a reduction in the rate of duty on 
diesel to encourage the use of more 
environment friendly fuels provided that 
such incentives are linked to established 
technical characteristics including specific 
gravity, sulphur content, distillation 
point, cetane number and index and 
provided that such rates at all times 
respect the minimum rates of duty on 
mineral oils as provided for in 
Community law, 
^ In respect of air navigation other than that 
covered by Article 8(l)(b) of Directive 
92/81/EEC 
^ Application of differential rates of excise 
duty between petrol distributed from 
petrol stations equipped with a return 
system for petrol fumes and petrol 
distributed from other petrol stations, 
provided that such rates at all times 
respect the minimum rates of excise duty 
on mineral oils as provided for under 
Community law, until 31/12/96. DECISION 
PROPOSAL NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/92 
(92/510/EEC) 
Article 1.2 of 
Council Decision 
95/585/EC of 22 
December 1995 
38 
ilî>ERÂL REPUBLIC OF GERMANY 
REQUEST 
^ for the use of waste hydrocarbon gases as 
heating fuel, 
^ on samples of mineral oils intended for 
analysis, tests on production or for other 
scientific purposes, 
^ An exemption from excise duty for waste 
oils which are re-used as fuel, either 
directly after recovery or following a 
recycling process for waste oils, and the 
re-use of which is subject to duty. DECISION 
PROPOSAL 
COM (94) 493 of 
17/11/94 NO DECISION 
TAKEN AT 
COUNCIL 
"Tacit 
Agreement" 
(08/06/1994) DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/1992 
(92/510/EEC) 
39 
OF SPAIN 
REQUEST 
^ for LPG, used as motor fuel in local 
public transport vehicles, 
^ An exemption from excise duty for waste 
oils which are re-used as fuel, either 
directly after recovery or following a 
recycling process for waste oils, and the 
re-use of which is subject to duty. DECISION 
PROPOSAL 
COM (94) 493 of 
17/11/94 NO DECISION 
TAKEN AT 
COUNCIL 
"Tacit 
Agreement" 
(15/08/1994) DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/1992 
(92/510/EEC) 
40 
REQUEST 
^ for use by the armed forces of the State, 
^ for local public transport vehicles, 
•^ in respect of desalination plants, 
^ for a reduction in the rate of duty on 
diesel to encourage the use of more 
environmentally friendly fuels provided 
that such incentives are linked to 
established technical characteristics 
including specific gravity, sulphur 
content, distillation point, certain number 
and index and provided that such rates at 
all times respect the minimum rates of 
duty on mineral oils as provided for in 
Community law, 
^ for navigation in private pleasure craft not 
registered in Greece, 
^ for LPG and methane used for industrial 
purposes, 
^ Exemption from the excise duty on 
mineral oils for fuels intended to be used 
to power the official vehicles of the 
Ministry of the Presidency, the national 
police force and the metropolitan bishops. DECISION 
PROPOSAL NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/1992 
(92/510/EEC) 
Council Decision 
of 13/12/93 
(93/697/EEC) 
41 
REQUEST 
O for fuel used in taxis within the limits of 
an annual quota, 
^ in respect of air navigation other than that 
covered by Article 8(1 )(b) of Directive 
92/81/EEC, 
^ for consumption on the island of Corsica 
until 31 December 1994, 
^ in the framework of certain policies aimed 
at assisting regions suffering from 
depopulation 
^ An exemption from excise duty for waste 
oils which are re-used as fuel, either 
directly after recovery or following a 
recycling process for waste oils, and the 
re-use of which is subject to duty. 
•^Extension of Decision 92/510/EEC for 
Corsica, until 31/12/96 
^ Request for an exemption for certain 
biofuels produced from a limited range of 
raw materials grown only on set aside 
land1 dated 23.03.95 
^ Request for an exemption on LPG and 
natural gas when used as fuel in public 
transport. The exemption will be given 
within the limits of an annual quota. The 
measure is part of a programme to reduce 
pollution, limited to 31 December 1998.2 DECISION 
PROPOSAL 
COM (94) 493 of 
17/11/94 
COM (95) 46 of 
27/02/95 
COM (95) 248 of 
9/06/95 
COM (96) NO DECISION 
TAKEN AT 
COUNCIL 
"Tacit 
Agreement" 
(08/06/1994) 
"Tacit 
Agreement" 
(23/02/1995) DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/1992 
(92/510/EEC) 
Commission Communication to the Council. The request causes substantial problems. The 
Commission requests the matter be brought before Council, in accordance with Article 8(4) of 
Directive 92/81/EEC. 
FR: The request was registered in the Secretariat General on 1/04/96. 
42 
REQUEST 
•^Exemption from excise duty on waste oils 
which are re-used as fuel, either directly 
after recovery, or following a recycling 
process for waste oils and the re-use of 
which is subject to duty, until 31/12/96. 
^ reduced rates for diesel and low 
sulphur gasoil. 
^ reduced rates on reformulated un­
leaded and leaded petrol. 
^ exemption from excise duty for methane 
and LPG for all purposes; 
^ exemption from excise duty for mineral 
oils used for private pleasure craft. DECISION 
PROPOSAL NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
Article 1.6 of 
Council Decision 
95/585/EC of 
22/12/95 
ACT OF 
ACCESSION 
(JO C 241 of 
29.8.94) 
43 
REQUEST 
•^ in local public passenger transport 
vehicles, 
^in respect of air navigation other than that 
covered by Article 8(l)(b) of Directive 
92/81/EEC, 
^in respect of motors used for the drainage 
of flooded land, 
•^ the use of waste hydrocarbon gases as 
fuel, 
^ in respect of ambulances, 
^ for consumption in the regions of Val 
d'Aosta and Gorizia, 
^for consumption in the regions of Udine 
and Trieste until 31 December 1994, 
•^ for methane used as fuel in motor 
vehicles, 
^ in respect of the national armed forces 
O Until 31 December 1994, exemption from 
excise duty on mineral oils used as fuel in 
the production of alumina in Sardinia DECISION 
PROPOSAL NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/1992 
(92/510/EEC) 
Council Decision 
of 13/12/1993 
(93/697/EEC) 
ITALY (cont'd) 44 
REQUEST 
^ Extension on reduction or exemption from 
excise duty for mineral oils consumed in 
the regions of Udine and Trieste 
^ Exemption in the excise duty on fuel oil, 
for the production of steam, and for gas 
oil, used in ovens for drying and 
'activating' molecular sieves in Reggio 
Calabria, until 31 December 1996. 
^ Reduction of excise duty rates for petrol 
consumed on the territory of Friuli-
Venezia Giulia, until 31 December 1996 
^Extension on the exemption from excise 
duty on mineral oils used as fuel in the 
production of alumina in Sardinia, until 
31 December 1996. 
" : 1 •*• DECISION 
PROPOSAL 
COM (94) 493 of 
17/11/94 NO DECISION 
TAKEN AT 
COUNCIL 
Tacit extension 
until 31/12/98 
i DECISION 
TAKEN AT 
COUNCIL 
Article 1.3 of 
Council Decision 
95/585/EC of 
- 22/12/95 
Article 1.1 of 
Council Decision 
96/273/EC of 
22/04/96 
Article 1.1 of 
Council Decision 
96/273/EC of 
22/04/96 
45 
REQUEST 
^ in local public transport vehicles 
^ in motor vehicles used by the disabled, 
•^ in the operation of lighthouses 
^ the production of alumina in the Shannon 
region, 
^ for LPG, natural gas and methane used as 
motor fuel 
^ in respect of air navigation other than that 
covered by Article 8(1 )(b) of Directive 
92/81/EEC 
^ for navigation in private pleasure craft. 
^ Exemption from excise duty on waste oils 
which are re-used as fuel, either directly 
after recovery, or following a recycling 
process for waste oils, and the re-use of 
which is subject to duty. 
^ Differential rates of tax on unleaded 
petrol to reflect different environmental 
categories provided that such rates at all 
times respect the minimum rates of duty 
on mineral oils as provided for in 
Community law, until 31 December 1996. DECISION 
PROPOSAL 
COM (94) 493 of 
17/11/94 
COM (96) 156 of 
15 April 1996 NO DECISION 
TAKEN AT 
COUNCIL 
"Tacit 
Agreement" 
(16/11/1993) DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/1992 
(92/510/EEC) 
Council decision 
of 27.6.1996 
(96/418/EC) 
46 
'* <ÏRÂNl>-ï>UC»YOFJLUXEMBOURC 
REQUEST 
^ in local public transport vehicles 
^ for LPG, natural gas and methane 
^ Until 31 December 1994, reduction in the 
rate of duty on heavy fuel oil to 
encourage the use of more 
environmentally friendly fuels provided 
that such an incentive is specifically 
linked to sulphur content and provided 
that the weighted average rate of duty 
charged on heavy fuel oil respects the 
minimum rate of duty on heavy fuel oils 
as provided for in Community law; in no 
case can the reduced rate fall below ECU 
6,5 per tonne 
^ Extension of the above-mentioned 
decision until entry into force of the 
Community arrangements for low-sulphur 
heavy fuel oil and competing products (at 
the latest 31.12.96) . DECISION 
PROPOSAL NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/92 
(92/510/EEC) 
Council Decision 
of 13/12/93 
(93/697/EEC) 
Article 1.1 of 
Council Decision 
of 22/12/95 
(95/585/EC) 
47 
KlNG!X>MOFniE 
1SWHE»LAN»S% 
REQUEST 
^ in respect of desalination plants, 
^ for LPG, natural gas and methane, 
•^ in respect of the national armed forces, 
^ on samples of mineral oils intended for 
analysis, tests on production or for other 
scientific purposes, 
^ in respect of motors used for the drainage 
of flooded land. DECISION 
PROPOSAL NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/92 
(92/510/EEC) 
48 
ammsxa*mmmHiB*etaMamiB3zsBss 
VÙKtVG&L 
iMitiimitmMààiiMimiimitiiii±^iiiiàiii±±iB±i 
REQUEST 
^ in respect of air navigation other than that 
covered by Article 8(l)(b) of Directive 
92/81/EEC 
^ exemption from excise duty on LPG, 
natural gas and methane when used as fuel 
for local public transport 
^ An exemption from excise duty for waste 
oils which are re-used as fuel, either 
directly after recovery or following a 
recycling process for waste oils, and the 
re-use of which is subject to duty. 
^ Reduction in excise duty on fuel oil 
consumed in the autonomous region of 
Madeira.3. DECISION 
PROPOSAL 
COM (94) 493 of 
17/11/94 NO DECISION 
TAKEN AT 
COUNCIL 
"Tacit 
Agreement" DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/92 
(92/510/EEC) 
Council Decision 
of 13/12/93 
(93/697/EC) 
Article 1.5 of 
Council Decision 
95/585/EC of 
22/12/95 
PT: This reduction may not be greater than the additional costs incurred in transporting the fuel oil 
to that region. 
49 
REQUEST 
•^for local public passenger transport vehicles, 
^ for navigation in private pleasure craft, 
^ for LPG, natural gas and methane used as motor 
fuel, 
^ in respect of air navigation other than that 
covered by Article 8(1 )(b) of Directive 
92/81/EEC, 
•^ in the operation of lighthouses. 
^ An exemption from excise duty for waste oils 
which are re-used as fuel, either directly after 
recovery or following a recycling process for 
waste oils, and the re-use of which is subject to 
duty. 
•^ Differential rates of tax on unleaded petrol to 
reflect different environmental categories 
provided that such rates at all times respect the 
minimum rates of duty on mineral oils as 
provided for in Community law. DECISION 
PROPOSAL 
COM (94) 493 du 
17/11/94 NO DECISION 
TAKEN AT 
COUNCIL 
"Tacit 
Agreement" 
(25/04/1994) DECISION 
TAKEN AT 
COUNCIL 
Council Decision 
of 19/10/92 
(92/510/EEC) 
Council Decision 
of 22/04/96 
(96/273/EC) 
50 
ÏÈ«àib*Mfl*±JSiàaictt*£*±S*= 
REQUEST 
^ reduced excise duty rate for mineral oils 
used for industrial purposes, 
^ exemption from excise duty for 
biologically produced methane and other 
waste gases. 
O reduced tax rates for diesel and light 
heating oil in accordance with 
environmental classifications. 
•^Exemption from excise duty on aviation 
gasoline used for private pleasure flying, 
until 31 December 1996 
^Differential rates of tax on unleaded petrol 
to reflect different environmental 
categories provided that such rates at all 
times respect the minimum rates of duty 
on mineral oils as provided for in 
Community law, until 31 December 1996. 
•^Request to apply a reduced excise duty rate 
for mineral oils used for industrial 
purposes, beyond what has already been 
authorised in the Treaty of Accession.4 
The exemption should be formulated so 
that Sweden can apply the reduced excise 
duty on mineral oils used for industrial 
purposes both by using a lower rate than 
the general level and by using a reduced 
rate for enterprises with very high 
consumption of energy. The rates 
charged will not be less than the minimum 
rates set in Directive 92/82/EEC. 
Limited until 31 December 1996. DECISION 
PROPOSAL 
• 
COM (96) NO DECISION 
TAKEN AT 
COUNCIL DECISION 
TAKEN AT 
COUNCIL 
. ACT OF 
ACCESSION 
(JO C 241 du 
29.8.94) 
Council Decision 
of 22/04/96 
(96/273/EC) 
SE: Request registered in the Secretariat General on 28/03/96 
51 
ANNEXB 
DEROGATIONS PROVIDED FOR IN ARTICLE 8 PARAGRAPHS l.b) AND 2.b) 
AND IN ARTICLE 8 PARAGRAPH 4 OF COUNCIL DIRECTIVE 92/81/EEC 
OF 19 OCTOBER 1992 ON THE HARMONISATION OF THE STRUCTURES 
OF EXCISE DUTIES ON MINERAL OILS 
52 
TABLE OF CONTENTS 
CATEGORIES : 
I. Transport 53 
II. Industrial and Commercial Sector 56 
III. Environmental Policies 57 
IV. Regional Policies 60 
V. Other Policies 61 
I - CATEGORY: TRANSPORT 53 
mm 
mm 
mm AIR TRANSPORT 
a) Exemption on mineral oils supplied for use 
as fuels for the purpose of air navigation 
other than private pleasure flying. Article 
8J.(b) 
}>) Derogations A rticle 8.4 
a) Exempt 
a) Exemption limited to jet fuel (Kerosene) 
b) Exemption in respect of air navigation other 
than that covered by Article 8.l.b) (Article 
1.1 of Council Decision 95/510/EEC of 19 
October 1992) W ATERBORNB TRANSPORT 
a) Exemptions or reductions on rates applied 
to mineral oils supplied for the purposes of 
navigation on inland waterway s other than 
in private pleasure craft. Article 8.2.(b) 
b) Derogations A rticle $.4 
a) Exemption for navigation on the River 
Danube and on Lake Constance 
a) Exemption limited to gas oil and kerosene 
b) Exemption for navigation in private pleasure 
craft (Article 1.1. - of Council Decision 
92/510/EEC of 19 October 1992) 
mm a) Exemption for code CN 2710 0031 and for 
kerosene falling within codes CN 2710 0037 
and 2710 0051 a) Exempt. 
mm a) Exemption limited to jet fuel (Kerosene) 
b) Exemption in respect of air navigation other 
than that covered by Article 8.l.b) (Article 
1.3 of Council Decision 92/510/EEC of 19 
October 1992) a) Recovery of excise duty 
a) Exempt a) No exemptions 
b) Exemption for navigation in private pleasure 
crafts not registered in Greece (Article 1.4 of 
Council Decision 92/510/EEC of 19 October 
1992) 
mm a) Exempt a) Exempt 
mm a) Exempt 
b) Reduction in respect of air navigation other 
than that covered by Article 8. l.b) 
(Accession Act). a) Exemption 
b) Reduction for private pleasure craft 
(Accession Act) 
54 
I - CATEGORY: TRANSPORT (cont'd) 
M,S. AIR TRANSPORT 
a) Exemption on mineral oils supplied for use 
as fuels for the purpose of air navigation 
other than private pleasure flying. Article 
8J,Q>) 
10) Derogations Article 8.4 _ÉHÎÉiiii r n "1 111 r 11 
FR a) 
b) 
• Exemption limited to jet fuel (Kerosene) 
Exemption in respect of air navigation other 
than that covered by Article 8.l.b) (Article 
1.3 of Council Decision 92/510/EEC of 19 
October 1992) 
a) Exempt 
b) Exemption in respect of air navigation other 
than that covered by Article 8.l.b) (Article 
1.8 of Council Decision 92/510/EEC of 19 
October 1992) w ATERBORNE TRANSPORT 
a) Exemptions or reductions in rates applied to 
mineral oils supplied for the purposes of 
navigation on inland waterways outer than 
in private pleasure cmfL Article 8,2.(b) 
b) Derogations A rticle 8.4 
a) Reduction limited to gas oil used by barges 
a) Exempt 
a) Exemption limited to jet fuel (Kerosene) 
b) Exemption in respect of air navigation other 
than that covered by Article 8.l.b) (Article 
1.6 of Council Decision 92/510/EEC of 19 
October 1992) a) Exempt 
b) Reduction for navigation in private pleasure 
craft (Article 1.7 of Council Decision 
92/510/EEC of 19 October 1992) 
LUX a) Exemption limited to jet fuel (Kerosene) a) Exemption limited to gas oil and kerosene 
mm a) Exempt Exempt, except for light 
marker has not been added oils, where a 
wm a) Exempt (codes NC 27100026 and 2710005) 
b) Exemption in respect of air navigation other 
than that covered by Article 8.l.b) (Article 
1.11 of Council Decision 92/510/EEC of 19 
October 1992) a) No exemption 
I - CATEGORY: TRANSPORT (cont'd) 55 
wmm AIRTRANSPORT 
a) Exemption on mineral oils supplied for use 
as fuels for the purpose of air navigation 
other than private pleasure flying. Article 
8.1.(b) 
b) Derogations Article 8.4 WATERBORNE TRANSPORT 
a) Exemptions or reductions in rates applied to 
mineral oils supplied for the purposes of 
navigation on inland waterways other than 
in private pleasure craft. Article 8.2.(b) 
b) Derogations Article 8.4 
mm a) Exemption limited to jet fuel (Kerosene) 
"AVGAS" charged at half rate 
b) Exemption in respect of air navigation other 
than that covered by Article 8.l.b) (Article 
1.12 of Council Decision 92/510/EEC of 19 
October 1992) a) No exemption 
b) For navigation in private pleasure craft 
(Article 1.12. of Council Decision 
92/510/EEC of 19 October 1992). 
mm a) Exempt 
b) Excise exemption for petrol used in private 
pleasure flying (Article 1.3 of Council 
Decision 96/273/EC of 22.4.1996) a) Exempt 
56 
II - CATEGORY: INDUSTRIAL AND COMMERCIAL SECTOR 
Exemption on samples of mineral oils intended for analysis 
(Article 1.2 of Council Decision 92/510/EEC of 19 October 1992). 
a) Partial reimbursement to the commercial sector, provided that such taxes are in conformity with 
Community provisions and provided that the amount of the tax paid and not reimbursed at all 
times respects the minimum rates of duty or monitoring charge on mineral oils as provided for 
in Community law 
(Article 1.3 of Council Decision 92/510/EEC of 19 October 1992). 
m a) Exemption on mineral oils used as fuel in the production of alumina in Sardinia 
(Article 1.3 of Council Decision 93/697/EEC of 13 December 1993) 
(Extended until 31.12.96 by Article 1.1 of Council Decision 96/273/EC of 22.4.1996). 
b) Reduction on fuel oil, for the production of steam, and for gas oil, used in ovens for drying and 
'activating' molecular sieves in Reggio Calabria, until 31 December 1996 
(Article 1.3 of Council Decision 95/585/EC of 22 December 1995). 
mm a) Exemption for the production of alumina in the Shannon region 
(Article 1.7 of Council Decision 92/510/EEC of 19 October 1992). 
mm a) Exemption on samples of mineral oils intended for analysis 
(Article 1.10 of Council Decision 92/510/EEC of 19 October 1992). 
mm a) Reduction for mineral oils used for industrial purposes 
(Accession Act). 
b) Request to apply a reduced excise duty rate for mineral oils used for industrial purposes, beyond 
that already authorised in the Treaty of Accession. The exemption should be formulated so that 
Sweden can apply the reduced excise duty on mineral oils used for industrial purposes both by 
using a lower rate than the general level and by using a reduced rate for enterprises with a very 
high consumption of energy, until 31 December 1996. The rates charged will not be less than 
the minimum rates set out in Directive 92/82/EEC. 
57 
III - CATEGORY: ENVIRONMENTAL POLICIES 
mm 
wm 
lilt a) Exemption for LPG used as motor fuel in local public passenger transport vehicles 
(Accession Act). 
b) Exemption on waste oils which are re-used as fuel, either directly after recovery, or following a 
recycling process, and the re-use of which is subject to duty, until 31 December 1996 
(Article 1.4 of Council Decision 95/585/EC of 22 December 1995). 
c) Exemption from excise duty for natural gas and methane until 31/12/96 
(Article 1.2 of Council Decision 96/273/EC of 22.4.1996) 
a) Partial exemption for gas oil used in local public passenger transport vehicles 
(Article 1.1 of Council Decision 92/510/EEC of 19 October 1992). 
b) For LPG, natural gas and methane 
(Article 1.1 of Council Decision 92/510/EEC of 19 October 1992). 
c) Reduction for low-sulphur heavy fuel ( < = 1 %S) 
(Article 1.1 of Council Decision 93/697/EEC and Article 1.1 of Council Decision 95/585/EC 
of 22 December 1995). 
wm a) Exemption on waste oils which are re-used as fuel, either directly after recovery, or following a 
recycling process, and the re-use of which is subject to duty 
(COM (94) 493 final of 17.11.1994 - Tacit Agreement of 8.6.94) 
b) For the use of waste hydrocarbon gases as heating fuel 
(Article 1.2 of Council Decision 92/510/EEC of 19 October 1992). 
mm a) Exemption for LPG, gas and ultra-light gas oil used for local public passenger transport 
vehicles 
(Article 1.3 of Council Decision 92/510/EEC of 19 October 1992). 
b) Reduction in the rate of duty on diesel to encourage the use of more environmentally-friendly 
fuels provided that such incentives are linked to established technical characteristics including 
specific gravity, sulphur content, distillation point, certain number and index and provided that 
such rates at all times respect the minimum rates of duty on mineral oils as provided for in 
Community law 
(Article 1.3 of Council Decision 92/510/EEC of 19 October 1992). 
c) Application of differential rates of excise duty between petrol distributed from petrol stations 
equipped with a return system for petrol fumes and petrol distributed from other petrol stations, 
provided that such rates at all times respect the minimum rates of excise duty on mineral oils as 
provided for under Community law, until 31 December 1996 
(Article 1.2 of Council Decision 95/585/EC of 22 December 1995). 
mm a) For local public passenger transport vehicles 
(Article 1.4 of Council Decision 92/510/EEC of 19 October 1992). 
b) Exemption for LPG and methane used for industrial purposes 
(Article 1.4 of Council Decision 92/510/EEC of 19 October 1992). 
c) Reduction in the rate of duty on diesel to encourage the use of more environmentally friendly 
fuels provided that such incentives are linked to established technical characteristics including 
specific gravity, sulphur content, distillation point, certain number and index and provided that 
such rates at all times respect the minimum rates of duty on mineral oils as provided for in 
Community law 
(Article 1.4 of Council Decision 92/510/EEC of 19 October 1992). 
58 
III - CATEGORY: ENVIRONMENTAL POLICIES (cont'd) 
.M;S. 
ES W5SCT5SWSSWSWWWPW 1 
lin I a) Exemption for liquid petroleum gas used as motor fuel in local public transport vehicles 
(Article 1.5 of Council Decision 927510/EEC of 19 October 1992). 
b) Exemption on waste oils which are re-used as fuel, either directly after recovery, or following a 
recycling process, and the re-use of which is subject to duty 
(COM (94) 493 final of 17.11.1994 - Tacit Agreement of 15.8.94). 
a) Exemption on waste oils which are re-used as fuel, either directly after recovery, or following a 
recycling process, and the re-use of which is subject to duty, until 31 December 1996 
(Article 1.6 of Council Decision 95/585/EC of 22 December 1995). 
b) For methane and LPG used for all purposes 
(Accession Act). 
c) Reduced rates for diesel and low sulphur gasoil 
(Accession Act). 
d) Reduced rates on reformulated unleaded and leaded petrol 
, (Accession Act). 
sERl 
mil a) Exemption on waste oils which are re-used as fuel, either directly after recovery, or following a 
recycling process, and the re-use of which is subject to duty 
(COM (94) 493 final of 17.11.1994 - Tacit Agreement of 8.6.94). 
b) Exemption for fuels used by taxis within the limits of an annual quota 
(Article 1.6. of Council Decision 92/510/EEC of 19 October 1992). 
c) Request for exemption for LPG and natural gas within the limits of an annual quota when these 
are used as fuels for public transport, in the framework of reducing pollution. 
a) Reduction for vehicles used as local public passenger transport vehicles 
(Article 1.8 of Council Decision 92/510/EEC of 19 October 1992). 
b) For methane used as fuel in motor vehicles 
(Article 1.8 of Council Decision 92/510/EEC of 19 October 1992). 
c) For use of waste hydrocarbon gases as fuel 
(Article 1.8 of Council Decision 92/510/EEC of 19 October 1992). 
mm a) Reduction for vehicles used as local public passenger transport vehicles 
(Article 1.7 of Council Decision 92/510/EEC of 19 October 1992). 
b) LPG, natural gas and methane used as motor fuel 
(Article 1.7 of Council Decision 92/510/EEC of 19 October 1992). 
c) Exemption on waste oils which are re-used as fuel, either directly after recovery, or following a 
recycling process, and the re-use of which is subject to duty 
(COM (94) 49$ final of 17.11.1994 - Tacit Agreement of 16.11.93). 
d) Application of differential rates on unleaded petrol corresponding to different environmental 
categories 
(Council Decision 96/418/EC of 27.6.1996). 
59 
III - CATEGORY: ENVIRONMENTAL POLICIES (cont'd) 
a) Only LPG, natural gas and methane for local public passenger transport vehicles 
(Article 1.9 of Council Directive 92/510/EEC of 19 October 1992). 
b) For LPG, natural gas and methane 
(Article 1.9 of Council Decision 92/510/EEC of 19 October 1992). 
c) Reduction for low-sulphur heavy fuel ( < = 1 %S) 
(Article 1.1 of Council Decision 93/697/EEC and Article 1.1 of Council Decision 95/585/EC 
of 22 December 1995). 
wm a) For LPG, natural gas and methane 
(Article 1.10 of Council Decision 92/510/EEC of 19 October 1992). 
mm 
wm a) Exemption for LPG, methane and natural gas for local public passenger transport vehicles 
(Article 1.4 of Council Decision 93/697/EEC of 13 December 1993). 
b) Exemption on waste oils which are re-used as fuel, either directly after recovery, or following a 
recycling process, and the re-use of which is subject to duty 
(COM (94) 493 final of 17.11.1994 - Tacit Agreement of 8.6.94). 
a) For vehicles used for local public passenger transport 
(Article 1.12 of Council Decision 92/510/EEC of 19 October 1992). 
b) For LPG, natural gas and methane used as motor fuel 
(Article 1.12 of Council Decision 92/510/EEC of 19 October 1992). 
c) Exemption on waste oils which are re-used as fuel, either directly after recovery, or following a 
recycling process, and the re-use of which is subject to duty 
(COM (94) 493 final of 17.11.1994 - Tacit Agreement of 25.4.94). 
d) Application of differential rates on unleaded petrol corresponding to different environ-mental 
categories 
(Article 1.4 of Council Decision 96/273/EC of 22.4.1996). 
mm a) Exemption for biologically produced methane and other waste gases 
(Accession Act). 
b) Request for application of differential rates on unleaded petrol corresponding to different 
environmental categories 
(Article 1.3 of Council Decision 96/273/EC of 22.4.1996). 
c) Reduced rates for diesel and light heating oil in accordance with environmental classifications 
(Accession Act). 
60 
IV - CATEGORY: REGIONAL POLICIES 
m&m 
MI a) Reimbursement of 6.63F/hl for gasoline for consumption on the island of Corsica or gasoline 
delivered from the harbours of Corsica to private pleasure craft, until 31 December 1994 (Tacit 
extension until 31.12.96 - COM (95) final of 27.02.95). 
(Article 1.6 of Council Decision 92/510/EEC of 19 October 1992). 
wm 
wm a) For consumption in the regions of Val d'Aosta and Gorizia 
(Article 1.8 of Council Decision 92/510/EEC of 19 October 1992). 
b) For consumption in the regions of Udine and Trieste, until 31 December 1994 
(Article 1.8 of Council Decision 92/510/EEC of 19 October 1992). (Tacit extension until 
31.12.98 - COM (95) 493 final of 17.11.94). 
c) Reduction in the rate of duty for petrol consumed on the territory of "Friuli-Venezia Giulia" 
(Article 1.1 of Council Decision 96/273/EC of 22.4.1996). 
a) Reduction in the rate of duty on fuel oil consumed in the autonomous region of Madeira, until 
31 December 1996. This reduction should not be greater than the additional costs arising from 
the transport of the goods in question to the place of consumption 
(Article 1.5 of Council Decision 95/585/EC of 22 December 1995) 
61 
V - CATEGORY: OTHER POLICIES 
MS. 
BE 
EL a) For motors used for the drainage of flooded land 
(Article 1.1 of Council Decision 92/510/CE of 19 October 1992). 
WM a) 
b) 
c) Exemption for the armed forces of the State 
(Article 1.4 of Council Decision 92/510/CE of 19 October 1992). 
Exemption for fuels used to power the official vehicles of the Ministry of the Presidency, the 
national police force and the metropolitan bishops 
(Council Decision 93/697/EC of 13 December 1993). 
For desalination plants 
(Article 1.4 of Council Decision 92/510/EEC of 19 October 1992). 
a) Exemption in the framework of certain policies aimed at assisting areas suffering from 
depopulation 
(Article 1.6 of Council Decision 92/510/EEC of 19 October 1992). 
» a) Reduction of 50% on normal rate (petrol and LPG) for ambulances 
(Article 1.8 of Council Decision 92/510/EEC of 19 October 1992). 
b) Exemption for the national armed forces that are part of the NATO forces 
(Article 1.8 of Council Decision 92/510/EEC of 19 October 1992). 
c) Exemption for motors used for the drainage of flooded land 
(Article 1.8 of Council Decision 92/510/EEC of 19 October 1992). 
itRll a) For the operation of lighthouses 
(Article 1.7 of Council Decision 92/510/EEC of 19 October 1992). 
b) For motor vehicles used by the disabled 
(Article 1.7 of Council Decision 92/510/EEC of 19 October 1992). 
mm a) For the national armed forces 
(Article 1.10 of Council Decision 92/510/EEC of 19 October 1992). 
b) Reduction for motors used for the drainage of flooded land, 
(Article 1.10 of Council Decision 92/510W/EEC of 19 October 1992). 
c) Reduction only on gas oil used by desalination plants 
(Article 1.10 of Council Decision 92/510/EEC of 19 October 1992). 
mm a) For the operation of lighthouses, 
(Article 1.12 of Council Decision 92/510/EEC of 19 October 1992). 
62 
Proposal for a 
COUNCIL DECISION 
authorising Member States to continue to apply to certain mineral oils, when used for 
specific purposes, existing reduced rates of excise duty or exemptions from excise 
duty, in accordance with the procedure provided for in Article 8 (4) of Directive 
92/81/EEC. 
63 
Proposal for a 
COUNCIL DECISION ** ! U J 
authorising Member States to continue to apply to certain mineral oils, when used for 
specific purposes, existing reduced rates of excise duty or exemptions from excise 
duty, in accordance with the procedure provided for in Article 8 (4) of Directive 
92/81/EEC. 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community; 
Having regard to Council Directive 92/81/EEC of 19 October 1992 on the 
harmonisation of the structures of excise duties on mineral oils1 and in particular 
Article 8 (4) thereof; 
Having regard to the proposal from the Commission2; 
Having regard to the opinion of the European Parliament3; 
Whereas, pursuant to Article 8 (4) of Directive 92/81/EEC, the Council, acting 
unanimously on a proposal from the Commission, may authorise any Member State to 
introduce exemptions or reductions in the excise duty charged on mineral oils for 
special policy considerations; 
Whereas, the Commission has been informed by Member States of their intention to 
continue to apply certain such exemptions or reductions which are already provided for 
in their taxation law or to introduce exemptions or reductions and to which the 
procedure provided for under the said Article 8 (4) should be applied; 
Whereas, the other Member States have been informed thereof; 
OJ No L 316, 31.10.1992, p. 12 Directive as amended by Directive 94/74/EC (OJ No 365, 
31.12.1994, p. 46). 
64 
Whereas, all of the exemptions and reductions referred to in Article 1 shall continue to 
have effect until 31 December 1998 for specific policy considerations provided they do 
not give rise to distortions in competition or interfere with the working of the internal 
market; 
Whereas, all the exemptions and reductions referred to in Article 2 shall cease to have 
effect from 31 December 1996; 
Whereas, all the exemptions and reductions referred to in Article 3 shall be abolished 
with effect from 1 January 1997; 
Whereasj the reductions or exemptions will be regularly reviewed by the Commission 
to ensure their compatibility with the operation of the internal market and other 
objectives of the Treaty; 
Whereas, pursuant to Article 8 (6) of Directive 92/81/EEC, the Council is required to 
review the situation at the latest by 31 December 1996 on the basis of a report from the 
Commission; 
HAS ADOPTED THIS DECISION: 
Article 1 
In accordance with the provisions of Article 8 (4) and Article 8 (6) of Directive 
92/81/EEC and notwithstanding the obligations imposed by Directive 92/82/EEC of 19 
October 1992 on the approximation of the rates of excise duties on mineral oils<4\ the 
following Member States are authorised to apply or to continue to apply the reductions 
in rates of excise duties or exemptions from excise duty herein specified until 31 
December 1998: 
1. in the Kingdom of Belgium: 
for local public passenger transport vehicles, 
for LPG, natural gas and methane, 
for a reduction in the rate of excise duty on heavy fuel oil to encourage the use 
of more environmentally friendly fuels. Such reduction shall be specifically 
linked to sulphur content and the rate of duty charged on heavy fuel oil shall 
respect the minimum rate of duty on heavy fuel oils as provided for in 
Community law, in force. 
OJ No L 316, 31.10.1992, p. 12 Directive as amended by Directive 94/74/EC, OJ No 365, 
31.12.1994, p. 46 
65 
2. in the Kingdom of Denmark: 
for partial reimbursement to the commercial sector, provided that such taxes 
are in conformity with Community provisions and provided that the amount of 
the tax paid and not reimbursed at all times respects the minimum rates of duty 
or monitoring charge on mineral oils as provided for in Community law, 
for local public passenger transport vehicles, 
for a reduction in the rate of duty on diesel to encourage the use of more 
environment friendly fuels provided that such incentives are linked to 
established technical characteristics including specific gravity, sulphur content, 
distillation point, cetane number and index and provided that such rates at all 
times respect the minimum rates of duty on mineral oils as provided for in 
Community law, 
for the application of differential rates of excise duty between petrol 
distributed from petrol stations equipped with a return system for petrol fumes 
and petrol distributed from other petrol stations, provided that such rates at all 
times respect the minimum rates of excise duty on mineral oils as provided for 
under Community law. 
3. in the Federal Republic of Germany: 
for the use of waste hydrocarbon gases as heating fuel, 
on samples of mineral oils intended for analysis, tests on production or for 
other scientific purposes, 
for reductions in or exemptions from excise duty for waste oils which are re­
used as fuel, either directly after recovery or following a recycling process for 
waste oils, and where the re-use is subject to duty. 
4. in the Hellenic Republic: 
for local public transport vehicles, 
in respect of desalination plants, 
for LPG and methane used for industrial purposes. 
5. in the Kingdom of Spain: 
for LPG, used as motor fuel in local public transport vehicles, 
for reductions in or exemptions from excise duty for waste oils which are re­
used as fuel, either directly after recovery or following a recycling process for 
waste oils, and where the re-use is subject to duty. 
6. in the French Republic: 
for consumption on the island of Corsica, provided that the reduced rates at all 
times respect the minimum rates of duty on mineral oils as provided for under 
Community law, 
for reductions in or exemptions from excise duty for waste oils which are re­
used as fuel, either directly after recovery or following a recycling process for 
waste oils, and where the re-use is subject to duty. 
66 
7. in the Italian Republic: 
in local public passenger transport vehicles, 
for waste hydrocarbon gases used as fuel, 
for consumption in the regions of Val d'Aosta and Gorizia, 
for methane used as fuel in motor vehicles, 
for a reduction in the rate of excise duty on mineral oils used as fuel in the 
production of alumina in Sardinia, provided that the rate of duty respects the 
minimum rates of duty on mineral oils as provided for under Community law, 
for a reduction in the excise duty on fuel oil, for the production of steam, and 
for gas oil, used in ovens for drying and 'activating' molecular sieves in 
Reggio Calabria; provided that the rate of duty respects the minimum rates of 
duty on mineral oils as provided for under Community law, 
for a reduction in excise duty on petrol consumed on the territory of Friuli-
Venezia Giulia, provided that the rates of duty respects the minimum rate 
.provided for under Community law, 
for a reduction in the rate of duty for mineral oils consumed in the regions of 
Udine and Trieste, provided that the rates of duty applied respect the minimum 
rates provided for under Community law. 
8. in Ireland: 
in local public transport vehicles, 
for the production of alumina in the Shannon region, 
for LPG, natural gas and methane used as motor fuel, 
for reductions in or exemptions from excise duty for waste oils which are re­
used as fuel, either directly after recovery or following a recycling process for 
waste oils, and where the re-use is subject to duty, 
for differential rates of tax on unleaded petrol to reflect different 
environmental categories, provided that such rates at all times respect the 
minimum rates of duty on mineral oils as provided for in Community law. 
9. in the Grand Duchy of Luxembourg: 
in local public transport vehicles, 
for LPG, natural gas and methane, 
for a reduction in the rate of excise duty on heavy fuel oil to encourage the use 
of more environmentally friendly fuels. Such reduction shall be specifically 
linked to sulphur content and the rate of duty charged on heavy fuel oil shall 
respect the minimum rate of duty on heavy fuel oils as provided for in 
Community law in force. 
10. in the Kingdom of the Netherlands: 
in respect of desalination plants, 
for LPG, natural gas and methane, 
67 
11. in the Republic of Austria: 
for LPG used as motor local public passenger transport vehicles, 
for an exemption from excise duty on waste oils which are re-used as fuel, 
either directly after recovery, or following a recycling process for waste oils, 
and the re-use of which is subject to duty, 
natural gas and methane. 
12. in the Portuguese Republic: 
to grant relief from excise duty for LPG, natural gas and methane when used 
as fuel for local public transport, 
for a reduction in excise duty on fuel oil consumed in the autonomous region 
of Madeira; this reduction may not be greater than the additional costs 
incurred in transporting the fuel oil to that region, 
for reductions in or exemptions from excise duty for waste oils which are re­
used as fuel, either directly after recovery or following a recycling process for 
waste oils, and where the re-use is subject to duty. 
13. in the Republic of Finland: 
for an exemption from excise duty for methane and LPG for all purposes, 
for an exemption from excise duty on waste oils which are re-used as fuel, 
either directly after recovery, or following a recycling process for waste oils, 
and the re-use of which is subject to duty. 
14. in the Kingdom of Sweden: 
for reduced excise duty rate for mineral oils used for industrial purposes, 
provided that such rates at all times respect the minimum rates of duty on 
mineral oils as provided for in Community law. 
for an exemption from excise duty for biologically produced methane and 
other waste gases, 
for reduced tax rates for diesel and light heating oil in accordance with 
environmental classifications, 
for differential rates of tax on unleaded petrol to reflect different 
environmental categories, provided that such rates at all times respect the 
minimum rates of duty on mineral oils as provided for in Community law. 
15. in the United Kingdom of Great Britain and Northern Ireland: 
for local public passenger transport vehicles, 
for LPG, natural gas and methane used as motor fuel, 
for differential rates of tax on unleaded petrol to reflect different 
environmental categories, provided that such rates at all times respect the 
minimum rates of duty on mineral oils as provided for in Community law, 
for reductions in or exemptions from excise duty for waste oils which are re­
used as fuel, either directly after recovery or following a recycling process for 
waste oils, and where the re-use is subject to duty. 
68 
Article 2 
The following derogations shall cease to have effect from 31 December 1996. 
1. in the Kingdom of Belgium: 
in respect of motors used for the drainage of flooded land, 
in respect of air navigation other than that covered by Article 8(l)(b) of 
Directive 92/81/EEC, 
for navigation in private pleasure craft. 
2. in the Kingdom of Denmark: 
in respect of air navigation other than that covered by Article 8(1 )(b) of 
Directive 92/81/EEC. 
3. in the Hellenic Republic: 
for use by the armed forces of the State, 
for a reduction in the rate of duty on diesel to encourage the use of more 
environmentally friendly fuels provided that such incentives are linked to 
established technical characteristics including specific gravity, sulphur content, 
distillation point, cetane number and index and provided that such rates at all 
times respect the minimum rates of duty on mineral oils as provided for in 
Community law, 
for navigation in private pleasure craft not registered in Greece, 
to grant relief from the excise duty on mineral oils for fuels intended to be 
used to power the official vehicles of the Ministry of the Presidency, the 
national police force and the metropolitan bishops. 
4. in the French Republic: 
for fuel used in taxis within the limits of an annual quota, 
in respect of air navigation other than that covered by Article 8(1 )(b) of 
Directive 92/81/EEC. 
in the framework of certain policies aimed at assisting areas suffering from 
depopulation, 
5. in the Italian Republic: 
in respect of air navigation other than that covered by Article 8 (l)(b)'of 
Directive 92/81/EEC, 
69 
in respect of motors used for the drainage of flooded land, 
in respect of ambulances, 
in respect of the national armed forces. 
6. in Ireland: 
in motor vehicles used by the disabled, 
in the operation of lighthouses, 
in respect of air navigation other than that covered by Article 8 (l)(b) of 
Directive 92/81/EEC, 
for navigation in private pleasure craft. 
7. in the Kingdom of the Netherlands: 
in respect of the national armed forces, 
in respect of motors used for the drainage of flooded land, 
on samples of mineral oils intended for analysis, tests on production or for 
other scientific purposes. 
8. in the Portuguese Republic: 
in respect of air navigation other than that covered by Article 8(1 )(b) of 
Directive 92/81/EEC. 
9. in the Republic of Finland: 
for an exemption from excise duty for mineral oils used for private pleasure 
craft. 
10. in the Kingdom of Sweden: 
for an exemption from excise duty on aviation gasoline and aviation kerosene 
used for private pleasure flying. 
11. in the United Kingdom of Great Britain and Northern Ireland: 
for navigation in private pleasure craft, 
in respect of air navigation other than that covered by Article 8(1 )(b) of 
Directive 92/81/EEC, 
in the operation of lighthouses. 
70 
Article 3 
1. Council Decisions 92/510/EEC5, 93/697/EC6, 95/585/EC7, 96/273/EC8 and 
96/418/EC9are abolished with effect from 1 January 1997. 
2. The following authorisations which were granted following requests made for 
specific policy considerations and which are to be deemed to have been tacitly decided 
by the Council after the expiry of the two month deadline provided for in Article 8.4 of 
Directive 92/81/EEC are abolished with effect from 1 January 1997: 
That granted to Germany following its request of 15 March 1994 which was notified to 
Member States by the Commission on 7 April 1994. 
That granted to Spain following its request of 17 May 1994 which was notified to 
Member States by the Commission on 17 June 1994. 
That granted to France following its request of 13 December 1993 which was notified 
to Member States by the Commission on 7 April 1994. 
That granted to France following its request of 23 November 1994 which was notified 
to Member States by the Commission on 19 December 1994. 
That granted to Italy following its request of 15 March 1994 which was notified to 
Member States by the Commission on 5 April 1994. 
That granted to Ireland following its request of 30 July 1993 which was notified to 
Member States by the Commission on 15 September 1993. 
That granted to Portugal following its request of 11 March 1994 which was notified to 
Member States by the Commission on 7 April 1994. 
That granted to the United Kingdom following its request of 20 January 1994 which 
was notified to Member States by the Commission on 24 February 1994. 
Article 4 
This Decision is addressed to the Member States. 
Done at 
5 of 19 October 1992, OJL 316/31.10. 1992, p. 16 
6 of 13 December 1993, OJ L 321/23.12. 1993, p. 29 
7 of 22 December 1995, OJ L 327/30.12. 1995, p.33 
8 of 22 April 1996, OJ L 102/24.04. 1996, p. 40 
9 of 27 June 1996, OJ L 172/11.7.1996, p. 22 



=>1 
ISSN 0254-1475 
COM(96) 549 final 
DOCUMENTS 
EN 09 02 07 
Catalogue number : CB-CO-96-553-EN-C 
ISBN 92-78-10785-9 
Office for Official Publications of the European Communities 
L-2985 Luxembourg