Proposal for a COUNCIL DECISION authorising Germany to apply a differentiated rate of excise duty to certain mineral oils, when used for specific purposes, in accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC

(presented by the Commission)

EXPLANATORY MEMORANDUM

Under Article 8(4) of Council Directive 92/81/EEC on the harmonisation of the structures of excise duties on mineral oils [1], the Council, acting unanimously on a proposal from the Commission, may authorise any Member State to introduce exemptions from, or reductions in, excise duties on grounds of specific policy considerations.

[1] OJ L 316, 31.10.1992, p. 12. Directive as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

The German authorities informed the Commission that a new law on the continuation of environmental tax reforms, brought into force on 1 January 2000, provided for differentiating levels of mineral oil duty on fuels according to their sulphur content. The purpose of this preferential tax treatment is to speed up the introduction of sulphur-free fuels.

The new law provided for mineral oil duty on petrol and diesel fuel with a sulphur content of over 50 ppm (parts per million) to be increased by 3 pfennigs per liter from 1 November 2001. It provides further that, from 1 January 2003, this higher tax is to be applied to fuels with a sulphur content of over 10 ppm.

Germany therefore requested authorisation to apply to fuels with a maximum sulphur content of 50 ppm, a mineral oil tax of 3 pfennigs per liter less than that on fuels with a higher sulphur content from 1 November 2001 to 31 December 2002, and from 1 January 2003 to apply the reduced rate to fuels with a maximum sulphur content of 10 ppm.

In accordance with Directive 92/81/EEC, the other Member States were informed of this request.

Because of some concerns regarding the implications of a differentiated duty rate on 10 ppm fuels, the Commission divided the request into two parts and dealt with them separately. Firstly by drafting a proposal for a Council Decision that would authorise the derogation in relation to 50 ppm fuels and secondly by drafting a Communication to Council that effectively suspended action on the question of 10 ppm fuels.

Council accepted the draft proposal and authorised the introduction of a tax differential from 1 November 2001 to 31 December 2002 in relation to fuels with a maximum sulphur content of 50 ppm. At the same time, Council accepted the Communication from the Commission, which explained that more time was required to examine the question of 10 ppm fuels.

The Commission has resolved the outstanding questions and concerns about granting a derogation for 10 ppm fuels and considers that the tax differential requested by the German authorities would not be contrary to existing Community policies. Accordingly a proposal for a Council Decision authorising such a tax differential has been prepared.

The proposal for Council Decision authorises a differentiated rate of excise duty for fuels with a maximum sulphur content of 10 ppm from 1 January 2003 until 31 December 2005.

Directive 92/81/EEC provides for the Commission to review such exemptions and reductions periodically. If the Commission considers that they may no longer be applied because they distort competition or the operation of the internal market or are incompatible with Community policy on protection of the environment, it is to present appropriate proposals to the Council. However, this decision does not prejudice the outcome of any future state aid procedures that may be undertaken in accordance with Articles 87 and 88 of the Treaty [2].

[2] Commission Decision of 15.2.2000. State aid case N/575/99 - Germany, "Ökosteuer".

In any event, this derogation must be reviewed no later than 31 December 2005, when the authorisation granted by the Decision expires. The Council will review the situation on the basis of a Commission proposal and decide whether the authorisation should be withdrawn, amended or extended.

Proposal for a COUNCIL DECISION authorising Germany to apply a differentiated rate of excise duty to certain mineral oils, when used for specific purposes, 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 oils [3], and in particular Article 8(4) thereof,

[3] OJ L 316, 31.10.1992, p. 12. Directive as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

Having regard to the proposal from the Commission,

Whereas:

(1) 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.

(2) The German authorities informed the Commission that a new law on the continuation of environmental tax reforms, brought into force on 1 January 2000, provided for differentiating levels of mineral oil duty on fuels according to their sulphur content.

(3) The new law provided for mineral oil duty on petrol and diesel fuel with a sulphur content exceeding 50 ppm (parts per million) to be increased by 3 pfennigs per litre from 1 November 2001 and for this higher tax to be applied to fuels with a sulphur content exceeding 10 ppm from 1 January 2003.

(4) The German authorities requested Council authorisation to apply the differentiated rate of excise duties and Council authorised the German authorities to introduce a differentiated rate of excise duty for fuels with a sulphur content not exceeding 50 ppm from 1 November 2001 to 31 December 2002.

(5) The Commission and Member States consider that, on the basis of the currently available information, there are no indications that extending the application of a differentiated rate of excise duty to fuels with a maximum sulphur content of 10 ppm is likely to give rise to distortions of competition or hinder the operation of the internal market.

(6) This decision does not prejudice the outcome of any future state aid procedures that may be undertaken in accordance with Articles 87 and 88 of the Treaty [4].

[4] Commission Decision of 15.2.2000. State aid case N/575/99 - Germany, "Ökosteuer".

(7) The Commission regularly reviews reductions and exemptions to check that they do not distort competition or the operation of the internal market or are incompatible with Community policy on protection of the environment.

(8) Germany has requested authorisation from 1 January 2003 to apply to fuels with a maximum sulphur content of 10 ppm a mineral oil tax of 3 pfennigs per litre less than that on fuels with a higher sulphur content.

(9) The Council will review this decision on the basis of a proposal from the Commission no later than 31 December 2005 when the authorisation granted by this decision expires.

HAS ADOPTED THIS DECISION:

Article 1

In accordance with Article 8(4) of Council Directive 92/81/EEC, Germany is authorised from 1 January 2003 until 31 December 2005 to apply a differentiated rate of excise duty to fuels with a maximum sulphur content of 10 ppm (parts per million) provided that the differentiated rates are in accordance with the obligations laid down in Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils [5], and in particular the minimum rates of excise duty provided for in Articles 4 and 5 thereof.

[5] OJ L 316, 31.10.1992, p. 19. Directive as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

Article 2

This Decision is addressed to Germany.

Done at Brussels,

For the Council

The President