ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (81)806
Vol.1981/0226

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COMMISSION OFTHEEUROPEAN'COMMUNITIES
FOURTHREPORTBYTHECOMMISSION TOTHECOUNCIL
onthederogation accordedtotheKingdomofDenmarkrelating
totherulesgoverningturnovertaxandexcisedutyapplicable
ininternational travel(CouncilDirective No69/169/EECof
28May1969amendedbyDirectives Nos72/230/EECof12June1972,
78/1032/EECand78/1033/EECof19December1978)COM(81)806 final
Brussels.7January1982
C0M(81)806final

COM fOCo
Fourth report "bytheCommission
onthederogation accorded ,totheKingdom ofDenmark
relating totherules governing turnover taxand
excise duty applicable ininternational travel
(Council Directive No.69/169/EEC (l)of28May1969
amended "byDirectives Nos.72/230/EEC (2)of12June 1972 ,
78/1032/EEC (3)and78/IO33/EEC (3)of19December 1978 )
I,Introduction
On19December 1977 1"theCouncil adopted adirective according toDenmark
anewderogation from theCommunity system ofallowances .
s Ï
Onthis occasion ,theCommission undertook todraw upypach year ,starting .
in1978 ,areport ontheevolution oftheprices ofa$,soholic drinks and S
tobacco products inDenmark andGermany ,"ontheevolution offares for
travellers inDenmark ,andonthefiscal policy ofth^.^Danish Government . ■-
Afirst report (COM(78 )774)covering theperiod toend-September 1978 was •
submitted on17January 1979j asecond report (C0M(80 )*33)covering the
period from 1October 1978 toend-September 1979 wassubmitted on
1February 1980 ,andathird report (C0M(80 )880)covering theperiod
from 1October 1979 "toend-September I98O wassubmitted on22December 1980 .
«
This fourth report fulfils theundertaking forthe12months ,1October
1980-30 September 1981 ,
II.The derogating provisions
1.Annex VII ,Part V(Taxation )oftheActofAccession totheEuropean
Communities oftheKingdom ofDenmark ,Ireland andtheUnited Kingdom of
Great Britain andNorthern Ireland authorised Denmark ,until 31December
1975 .toexclude from thetaxallowances relating toturnover taxes and
(1)OJNo.L133cf4,6*1969
(2)OJNo.L139of17.6.1972
(3)OJNo.L366of28.12.1978 .
•A

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excisesapplicableininternational passengertravel,thefollowinggoods:
-tobaccoproducts;
-distilledbeveragesandspirits,ofaaalooholiostrengthexceeding
22%volj
-beer,onlyforquantitiesexceeding2litres,
2.Ontheexpirationofthisperiod,inaccordancewithparagraphl(c)of
partVoftheAnnexconcerned,theCouncilprolongedtheauthorisation ontwo
occasions(l),firstuntil31December1976andthenuntil31December1977•
3.TheDanishGovernmentsubsequentlyrequestedafurtherperiodinorder
fullytoadapttheCommunitysystemofallowances.Incontrasttothetwo
previousderogations,whichwerelimitedtooneyear,t|j.eCounciladopted
on19December1977»aDirectivegrantingaderogationtoDenmarkfromthe'
regimeinquestionuntil31December1982(2),Thisderogationprovides
foraprogressivealignmentoftheDanishsystemwitht^eCommunityrules.
III.Quantitiesofthetaxallowancessince1January1978
Danishresidentshaving
stayedinanotherMember
State
lessthan
72h(3)morethan
72h(1)(3)Co|imunityresidentsstsiringinDenmark
legsthan
24%■(2)morethan
24h(1)
cigarettes
or
cigarillos
or
cigars
or
smokingtobacco
(grams)
distilledbeverages
(litres)
beer(litres)40(4)
20
20
t
100300
150
75
400
1.5
noquantîty
limit4°
20
20
100300
150
75
400
1.5
noquantîty
limit
(1)ThesequantitiesarethoseapplicableundertheCommunitysystem.
(2)From1.1.1980the24hourconditionnolongerapplies.
(3)Prom1.1.1981to31.12.1982,the72hourconditionhasbeenreducedto
48hours.
(4)From1.1.1982 the40cigaretteallowancewillbe
increasedfrom40to60.
(1)Directive76/134/EECof20.1.1976(OJNo.L21of29.1.1976);Directive77/72/feof18.1.1977(OJNo.L23of27.1.1977).
(2)Directive77/800/EECof19.12.1977(OJNo.L336of27.12.1977).'
•A

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Prom 1.1.1981 thespecial 72–hour condition forDanish residents staying in
another Member State wasreduced to48hours *.TheDanish Government have
reported that nostatistical material exists asyet ,from which conclusions
can "bedrawn onthesize oftheeffect oftheeasing ofthis condition ,
17.Tax legislation
1.Denmark
Nochanges intherates oftaxes relating totheproducts which arethe
subject ofthepresent report took place during theperiod under examination#
2.Germany
On1April 1981 theexcise duty rate onspirits wasincreased from 1950 DM
to2250 DMperhipure alcohol *This increase of(say)|15$means ,fora .
bottle ofspirits ,(0,71with analcoholic strength of40 byvolume )an •
automatic price increase of0,84 DM+13$VATor0,95 MIintotal .
Neither theexcise duty rates onbeer andtobacco products northeVAT rate
were changed intheperiod under report .
V. Danish crown /German mark
There have been noofficial changes intheexchange rates ofthetwo
currencies intheperiod under report ..Theaverage exchange rate in
September I98O was309,59 DXr»100DM,but313 »85DKr*100DMin
September 1981 .This means that theDanish crown vis-U-vistheGerman
mark weakened by1,4 /&•
(On4October 1981 –after theperiod under report –afurther realignment
ofparities within theEMStook place .TheGerman mark (andthe
Dutch guilder )wasrevalued by5»5 against theDanish crown ).
VI.Relative evolution ofretail prices oftheproducts inDenmark and in
Germany
Following thepattern established inthefirst three reports ,theprice
comparison hasbeen made between end–September 1980 andend–September I98I .
./•

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TheevolutioninDenmarkandinGermanyofthepricesoftobaccoproducts
andofalcoholicdrinksbetweenend-September 1979andend-September I98O
issummarisedinTableI.Theproductsusedasthebasisforcomparison
arethesameproductsasshowninthesametableinthefirstthreereports.
ThepricesshownhavebeenfurnishedbytheDanishGovernment.Theyare
basedonaveragepricesinDenmarkoftheproductsconcernedandontypical
pricesforthesameproductsonsaleinGermanyintheregioncloseto
theDanishborder.
1.Tobaccoproducts
TheexcisedutiesontobaccoproductswereunchangedfromSeptemberI98O
toend-September 1981.InDenmark,aminorincreaseinretailpricesof
cigarettesof1,1$tookplace,whereastheGermanprioesremained
unchanged.Thispriceincreasewasmoreorlessoffsetbytheweakening
oftheDanishcrown,sothatthesituationforoigarettes maybesaidto
beunchanged.
Forpipetobaoco,aminorincreaseinretailprioestookplaceinDenmark
andamoresubstantial oneinGermany.Afterthisincrease,Danishpipe
tobaccoisagaincheaperthanGerman.
2.Spints
Intheperiodunderobservationalltheretailpricesonthespirits
producedmentionedinTable1changedontheGermanandtheDanishmarkets,
butallchangeswerelessthan10$.Thepricedifferencesbetweenwhisky
andaquavitdecreased,butincreasedforgin.Theretailpricesofcognac
increasedmoreorlessequallyinGermanyandDenmark,sothatthe
considerable relativepriceadvantageforDanesofbuyinginGermanyre­
mainedunchanged,offeringasavingof67$>•
Asmentionedin-fethirdreport,animportantconsequenceofthenewmixed
taxationsystemforspiritsinDenmarkwasthatthegapbetweenDanishand
Germanspiritspriceswidenedforexpensiveproductsbutnarrowedforother
products.Thistendencyseemstohavebeenmaintainedasfarasthe
absolutepricedifference'sareconcerned.

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TABLE 1
Evolution of "theretail prices oftypioal tobacco products and
alcoholic drinks inDenmark andGermany
PRODUCTS
Cigarettes (300)Danish brand
Change I98O-I98I
Smoking tobacco .50g
Change I98O-I98I
Coenac *** 70cl
Change I98O-I98I
Whisky (5years )70cl«
Change I98O-I98I
Gin ,70cl
Change 1980-1981
Acruavit .70cl(Danish }
Change 1980-1981
Beer Pilsen 6bottles of
0,33 1(Danish beer )
Change 1980-19811 2 3 4
Date
Sept·Danish
price
inDkrGerman price
in
Dkr* DMDiff .
in
Dkr .3as
$
of1
1980
1981253,80
256,50
1,1$139,32
141 »32
1,4$45,00
45,00
0,0$114,48
115,28
0,7$45,1$
44,9f-0,2$
1980
19818,90
9,10
2,3$8,67
12,2$2,80
3,10
10,7$0,23
-0,632,6$
-6,9yo
-9,5$
1980
1981188,00
204,00
8,5$61,86
67,79
9,6$19,98
21,60
8,1$126,14
136,21
8,0$67,1$
66,8f,
-0.35&
1980
1981115,00
108,00
-6,1$49,07
53>228,6?.15,85
16,98
7,1$65,93
54'7i,-17,0$57,3$
50,7$
–6,6$
1980
1981113,00
123,00
8,9$55,60
51,63
-7,117,96
16.45
–8¡4
t
17,98
1-9,20
6,8$57,40
71,37
24,3$50,85S
58,0$
7,2$
1980
198185,00
87,00
2,4$55,66
60,268¡3$29,34
26,74
-8,9$34,5 1°
30,7$
-3,8$
1980
198120,40
21,6014,09
13,974,55
4,456,31
7,6330,9$
35,3i
5,9$ -0,9$-2,2$ 20,9$ 4,4$
«Exchange rate used :
end–September I98O s100DM»309,59 Dki
•' » 198I :100DM-313,85 Bkr

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3»-Beer
Theretailpriceofbeerincreased "by5,97°on"theDanishmarket,whereas
pricesintheGermanbordershopsdroppedby2,2Thismeansthatthe
relativepricedifferencewidened,andthepriceinGermanyisnow35»3$
lowerthanthatinDenmark.
VII.RelativeevolutionoftaxesontheproductsinDenmarkandGermany
ChapterVIdealtwiththeevolutionofretailpricesintheperiodunder
report.Butassomeoftheretailpricesareaffectedbytemporaryor
atypicalfluctuations ,suchasdiscountsales,specialoffersandthelike,
acomparisonef"totaltax"oneachproductcategoryinthetwocountriesis,
intheCommission'sview,amorereliableguide.
ThebasicdataaretheexcisedutyplustheVATleviedonthatrate.The
"totaltax"thusdeterminedinGermanyforeachproductcategoryhasbeen
convertedfromDMtoDKronthebasisoftheaverageexchangerates
applyinginthemonthsreferredtoinTable2.ThetotaltaxinGermany
equals100ineachcase.ThefiguresshowninTable2arethetotaltax
inDenmarkasapercentageofthatinGermany.
Table2
Indexforthe"totaltax"inDenmarkcomparedwithGermany(Germany»100)
Jan.Sept.Sept.Sept.Sept.Sept.I98I
197819781979I98O1981
Cigarettes 22121825524Ο231 267
Cognac) (5IO448 517
Whislky <511502486>373305 352
Gin) (371327 378
Aquavit 333327316315271 313
Beer 833818792750739 853
100DM» 272Kr277Kr289Kr309.59Kr313,85Kr272Kr
Asstressedinthetwopreviousreports,Table2offersausefuladditional
referencepointinindicatingwhatchangesinthedifferences betweenDanish
andGermantaxlevelswillberequiredinorderthatthepresentlarge
differencesinretailpricesmaybesubstantially reduced.
./•

1
ι -7-
Theindex shows that therelative taxdifferential forcigarettes in
September 1981 hadmore orless returned tothestarting level at
1January 1978 .Forallthespirits products ,theindices dropped inthe
period "by10–20$mostly duetotheincrease intheGerman excise duty .
Therelative taxdifferential for "beer remained more orless unchanged .
Thelast column inTable 2show3 howthesituation would have been ,ifthe
exchange rate between DMard hadremained unchanged from January 1978
until September 1981 .Inthissituation ,cigarettes would have been
about 20%more heavily taxed inSeptember I98Ithan theywere inJanuary
1978 .Thesituation forbeer ,ac[uavit andexpensive spirits would have
remained more orless unchanged ,whereas therelative taxdifferential for
other spirits would have been about 30$less .
VIII .Transport costs inDenmark
Table 3:Transport costs
Departure
pointDistance
from the
frontier
inkm.Return prices inDKr , Typical
petrol
costs bycar*
Sept . Sept .
I98O I98Ibyorganised bus
Sept .Sept .
I98O I98Ibytrain
Sept .Sept .
I98O I98I
Aalborg 27O 1 10 202 251 Í257 297
Aarhus 175 1 10 I50 191 166 192
Odense 150 1 10 116 155 143 I65
Fredericia 100 1 5 74 105 95 110
Vojens 50 7 10 34 59 48 55
♦Based onacarusing 11petrol (4»75 Kr/lin
September 1980 and5*50 Kr/linSeptember 1981 )per10km.
Table 3shows that prices fororganised day–trips or"shopping excursions "–
even though they went upintheperiod tinder report –arestill very low ,
compared with thecosts ofusing alternative means oftransport .
Intheperiod under report fthepetrol costs foraprivate carincreased oy
16 fo*whereas thecosts bytrain inoreased by24–74%*
./•

-8-
IX,Conclusions
Duringtheperiodunderexamination ,thedifferencebetweenthepricesof
whiskyandaquavitinDenmarkandthoseinGermanydecreasedveryslightly,
whereasthedifference "betweenthepricesoftheotherproductsunderreport
remainedunchangedorincreased.
ι
Afterfouryearsofthefive-yearderogationperiod,onlyveryminor
reductionshave"beenachievedinthepricegapswhichexistedin
January1978*Onlyoneyearremainsinwhichto"bringthepricesin
DenmarkandGermanyclosertogether,thusmakingitlessattractivefor
DanishtravellerstogotoGermanyto"buyspiritsandcigarettesfor
importation intoDenmarkunderthetravellers 1allowances.Ifnofurther
stepsaretaken"before1January1983f(whenthederogationexpires)a
personmakingaday-tripfromDenmarktoGermanyand,fqrexample,buying
Il.n_«»i •«I1^ «i«i »300cigarettesand1-g-1of,spiritswillbeabletosavesomethingofthe
orderof2-300DKrbycomparisonwiththecostofmakingthesamepurchases
inDenmark,leavingoutofaccountanyadditionalpurchasesof,forexample,
wineandbeer.
Withinthederogationperiod,Denmarkhasalreadymadetwosmallmoves
towardstheCommunityrulesfortravellers.Prom1January1980,the
special24-hourconditionforCommunityresidentsstayinginDenmarkwas
abolished,andnonegativeeffectsresultingfromthisfirststepwere
reported.Prom1January1981,thespecial72-hourconditionforDanish
residentsstayinginanotherMemberStatewasreducedto48hours.Asstated
onpage31theDanishGovernmenthavereportedthatnostatisticalmaterial
existsasyet,fromwhichconclusions canbedrawnonthesizeoftheeffect
oftheeasingofthiscondition.TheCommissionthereforeconcludedthatit
isunlikelythatthisstephashadserious .negativeeffects.
Throughouttheperiodofthederogationtodate,theretailpricesin
GermanyandDenmarkforsmokingtobaccoremainedverysimilar.Quantitative
restrictionsonthisproductthereforeseemunnecessary^"^.
^'Thesituationisprobablythesameforcigarsandcigarillos.
./•
»

-9-
Asregards thecoming year ,thelimitatidn oftheallowance to40
cigarettes will ,from 1January 1982 ,beincreased to60cigarettes (see
page 2).
Therealignment oftheGerman mark against theDanish crown by5,5$which
took place on4October 1981 ,will reduce thegapbetween Danish andGerman
retail prices .
4
TheCommission understands that Germany intends toincrease theexcises
onspirits andtobacco on1April 1982. I
On3November 1981 theDanish Government proposed animmediate adjustment
ofanumber ofexcise duties .Asregards the excises;' ontheproducts
dealt with inthis report theproposed increases were :,7,8$onbeer ,40*fo
onnormal pipe tobacco and60$0onfine cuttobacco forpolling cigarettes .7
This adjustment was subsequently tobefollowed byageneral indexation of
excise rates .Theproposals were notadopted bytheD^ish Polketing before
itsdissolution forageneral election .However ,iftb^above-mentioned .
proposals were tobeadopted bythenewParliament theip effect ,viewed
narrowly inthis context ,would almost certainly betoipad torelatively
greater excise increases ,andsubsequently toamarked increase inthe
excise gap .
TheCommission must express itsgrowing concern that ,ingeneral ,andas
inthethree previous years ,nosignificant progress hasbeen made during
1931 towards reducing thedifferences between theDanish andGerman prices
oftheproducts concerned .'Ifpresent trends arecontinued thesituation
bytheendof1982 ,when the5-year derogation expires ,will bebroadly
the same asitwas in1977 *