Proposal for a COUNCIL DIRECTIVE amending Council Directive 92/12/EEC of 25 February 1992 as regards temporary quantitative restrictions for products subject to excise duties brought into Sweden from other Member States

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Background

In accordance with the principles governing the Internal Market, private persons are entitled to bring excisable goods from one Member States into another without any restrictions provided that the goods are acquired for their own use and are transported by the private individuals themselves. It is a fundamental principle of the Internal Market that citizens have the right to transport goods purchased for their own use throughout the Community without further payment of VAT and excise duties.

A temporary derogation from these basic principles exists for Denmark, Finland and Sweden, which are entitled to apply restrictions to the quantity of certain excise goods that may be brought into these countries by private persons. On quantities exceeding those limits, they are entitled to charge excise duties and to carry out the necessary checks with respect to the products concerned.

The derogations authorised to Finland and Denmark by Directive 96/99/EC of 30 December 1996 expire at the end of 2003 and provide that they have to remove the restrictions progressively. The same Directive authorised Sweden to apply quantitative restrictions for tobacco products and alcoholic drinks only until 30 June 2000, "subject to a review mechanism similar to that laid down in Article 28l of the Sixth VAT Directive". The Commission had proposed the same approach as for Finland and Denmark but, at that time, Sweden could not sign up to a definitive date of expiry for its derogation and obtained a compromise text providing for an earlier expiry date than Denmark and Finland but with a review mechanism.

2. The request by Sweden

The Swedish Government has requested a prolongation of the right to apply restrictions from 1 July 2000 until 31 December 2003, aligning the expiry date of the Swedish derogation to the expiry date of the Finnish and Danish derogations. The request is based on public health concerns. Due to specific Swedish circumstances, the Government needs more time to adapt its alcohol policy and, in the meantime, feels that a limited continuation of the intra-Community restrictions for travellers is necessary. At the same time, the Swedish Government is proposing to increase the quantitative limits progressively between 1 July 2000 and 31 December 2003.

3. Analysis

The restrictions applied by Sweden, as well as those applied by Finland and Denmark, derogate from the principles of free movement of persons and goods. In addition, their application may lead to double taxation: a Swedish citizen who has bought alcoholic drinks or tobacco products tax inclusive during his stay in another Member State may have to pay excise duty again when he takes these goods to Sweden. The scope and the duration of such derogations should in principle be limited to what is strictly necessary to enable the Member State concerned to adapt to the requirements of the Internal Market.

The Commission shares the public health concerns raised by the Swedish Government linked, in particular, to alcohol abuse, but is of the opinion that these concerns do not justify the temporary extension of the restrictions for travellers. Abuse of alcohol should be combated with preventive measures, educational measures and by measures focusing on problem groups rather that by general measures penalising all consumers.

The Council, which discussed this issue at the ECOFIN meeting of 13 March 2000 at the request of the Swedish Government, supported the Swedish request, provided that it meant that the situation of Sweden was aligned to the Finnish and Danish situations. Having regard to the position of the Council and to the fact that the Swedish request provides for a final date of expiry (end of 2003) and excludes any further extension after that date, the Commission can propose a limited extension of the Swedish derogation. The extension of the derogation should be accompanied by a gradual increase in the quantitative limits, as suggested in the Swedish request, so as to ensure a gradual adaptation of Sweden's health and excise policy to the requirements of the Internal Market.

2000/0118 (CNS)

Proposal for a COUNCIL DIRECTIVE amending Council Directive 92/12/EEC of 25 February 1992 as regards temporary quantitative restrictions for products subject to excise duties brought into Sweden from other Member States

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 93 thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C ...

Having regard to the opinion of the European Parliament [2],

[2] OJ C ...

Having regard to the opinion of the Economic and Social Committee [3],

[3] OJ C ...

Whereas:

(1) Article 26(3) of Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products [4], grants Sweden the right to continue to apply, until 30 June 2000, the same restrictions as laid down in the Act of Accession of Sweden on the quantity of alcoholic drinks and tobacco products, which may be brought into Swedish territory without further excise duty payment by private individuals for their own use.

[4] OJ L 76, 23.3.1992, p. 1; Directive as last amended by Directive 96/99/EC (OJ L 8, 11.1.1997, p. 12).

(2) This derogation was granted because in a Europe without frontiers where excise rates vary widely, an immediate, total removal of excise limitations would have caused an unacceptable diversion of trade and revenue and distortion of competition in Sweden, which has traditionally applied high excise duties to the products concerned both as an important source of revenue and for health and social reasons.

(3) Finland and Denmark have been authorised to apply similar restrictions until 31 December 2003.

(4) Sweden has requested authorisation to continue to apply such restrictions for the same period as Finland and Denmark, as more time is needed to adjust their alcohol policy to a situation without restrictions.

(5) At the same time, Sweden undertakes to raise the current quantitative limits for alcoholic drinks and tobacco products brought into Swedish territory from other Member States in several steps in order to align Sweden gradually with the Community rules laid down in Articles 8 and 9 of Directive 92/12/EEC and to ensure a complete removal of intra-Community restrictions for these products by 31 December 2003.

(6) The provisions of Article 26 represent a derogation from a fundamental principle of the internal market, namely the right of its citizens to transport goods purchased for their own use throughout the Community without incurring liability to new duty charges, so it is necessary to limit its effects as far as possible.

(7) It is therefore appropriate to provide further time for adjustment in Sweden by extending the deadline laid down in Article 26(3) of Directive 92/12/EEC for a non-renewable period until 31 December 2003 and to fix the steps of the gradual liberalisation of the restrictions prior to their complete removal at that date.

HAS ADOPTED THIS DIRECTIVE:

Article 1

Directive 92/12/EEC is amended as follows:

(1) In Article 26, paragraph 3 is replaced by the following:

"3. Without prejudice to Article 8, Sweden shall be authorised to apply the restrictions set out in the Annex on the quantity of alcoholic drinks and tobacco products.

The authorisation shall concern the quantity of alcoholic drinks and tobacco products which may be brought into Swedish territory without further excise duty payment by private individuals for their own use.

It shall apply until 31 December 2003."

(2) The Annex in the Annex to this Directive is added.

Article 2

Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 1 July 2000 at the latest. They shall forthwith inform the Commission thereof.

When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

Article 3

This Directive shall enter into force on the third day following that of its publication in the Official Journal of the European Communities.

Article 4

This Directive is addressed to the Member States.

Done at Brussels,

For the Council

The President

ANNEX

"Annex Article 26(3)

Quantity of alcoholic drinks and tobacco products which may be brought into Swedish territory without further excise duty payment by private individuals for their own use

Alcoholic drinks

>TABLE>

Tobacco products

// From 1 July 2000

Cigarettes or

cigarillos or

cigars or

smoking tobacco // 400

200

100

550 g