Proposal for a Council Directive restructuring the Community framework for the taxation of energy products
Date: 1997-03-12
Institutions: European Commission
Subjects: energy-generating product, environmental protection, excise duty, fiscal policy, tax harmonisation

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  12.03.1997 
COM(97) 30 final 

97/0111(CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

RESTRUCTURING THE COMMUNITY 

FRAMEWORK  FOR THE TAXATION OF ENERGY PRODUCTS 

(presented by the Commission) 

PROPOSAL FOR A DIRECTIVE RESTRUCTURING THE COMMUNITY 
FRAMEWORK FOR THE TAXATION OF ENERGY PRODUCTS 

EXPLANATORY  MEMORANDUM 

The  policy  context:  a  single  market  framework  enabling  a  revenue  neutral 
restructuring of tax systems to sustain employment and the environment 

This  proposal  for  a  Directive  modernizes  the  Community  system  for  the  taxation  of 
mineral  oils  and  extends  its  scope to  all energy  products,  with  a view  to  improving  the 
functioning  of the internal market. 

In presenting this initiative, the Commission considers that it has a twofold  responsibility: 

to  provide  the  Member  States  with  a  coherent framework, which  will  encourage 
them to adopt appropriate measures and, 

to  orient  in  a  pro-employment  manner  those  policy  choices  which  lie  within  the 
Community's competence. 

In  effect,  the  Commission  is  thus  meeting  the  obligation  contained  in  Article  10  of 
Directive  92/82/EEC  to  review  the  minimum  rates  of  excise duty  on  mineral  oils.  It  is 
also  responding  to  the  Council's  request,  expressed  following 
the  deadlock  of 
negotiations  on the  C02/energy  tax,  that  it  should  present  new proposals  in the  field  of 
the  taxation  of  energy  products.  Lastly,  it  takes  into  account  the  European  Parliament 
opinion  on  the  Commission's  report  on  minimum  excise  duty  rates,1  which  asks  it  to 
define a consistent basis for taxation covering both mineral oils and competing products. 

This proposal also constitutes the first  legislative initiative of the fiscal  strategy2  presented 
by the Commission  in October  1996 and  endorsed  by the European  Council  in Dublin in 
December  1996.  It also has to be seen in the context  of the political  process initiated by 
the Commission's  'Confidence  Pact  for  Employment"3.  It  seeks to  refocus fiscal policy 

1  COM(95) 285 final of 13.9.95. 

2  SEC (96) 487  final 

3  SEC (96) 1  final 

1^ 

towards  combatting  unemployment,  whilst  respecting  internal  market  principles.  The 
proposal  also  encourages  Member  States  to  respect  the  objective  of  fiscal  neutrality  by 
reducing  statutory  charges  on  labour  at  the  same  time  as  introducing  the  new  common 
system of taxing energy products. 

The  present  proposal  fits  into  an  overall  political  context.  It  does  not  introduce  a 
new  tax,  but  aims  to  establish  a  new  Community  framework  for  the  taxation  of 
energy  products which  makes  it possible  to restructure  national  tax  systems  and  to 
better attain national objectives of employment,  environment, transport and energy 
policy, while respecting a key Community achievement: the Single Market. 

II 

The timing : need for action at a Community level 

A number of Member States are currently looking at ways of restructuring and  reforming 
their tax systems along the lines suggested by the Commission particularly with a view to 
addressing  the  problem  of  unemployment.  The  Commission  considers  it  vital  that  such 
reform  should  place in a co-ordinated  fashion  since it  is clear that  Member  States'  room 
for  manoeuvre  at  a purely  national  level  is increasingly  limited  within  the  context  of the 
Single  Market.  The  timing  of  this  proposal  is  therefore  particularly  opportune  and, 
moreover,  represents  the  first  concrete  action  at  Community  level  designed  to  give 
Member States appropriate fiscal tools to carry out environment and employment policies. 

Ill 

Single  market  and  flexibility:  the  essential  elements  for  any  Community 
strategy for taxing energy products 

The starting point for this proposal for a Directive is that: 

- 

- 

the single market must be the common basis for all policies involving the taxation of 
energy  products  (policies  such  as the  restructuring  of  taxation,  energy,  transport, 
the environment, etc.) 

over  and  above this common basis, any Community  system  of taxation  must  be an 
efficient  instrument at the service of the Member States. 

However, neither of these two conditions is met today. 

The  "common  basis" derived  from  the  single  market  is  only  partial.  A Community 
system  of  taxation  today  applies  only  to  mineral  oils  and  the  excise  duties  charged  on 
them.  The  other  energy  products  and  taxes  other  than  excise  duties  fall  within  the 
discretion  of  each  Member  State.  This  situation  gives  rise  to  a  multitude  of  problems. 

First,  there  is  a  proliferation  of  national  taxes  which,  because  they  differ  widely  in 
application,  in the way they  are calculated  or in their rates, undermine  the  unity  of the 
single  market  and the  liberalisation  of the  energy  markets,  in particular  in the fields of 
natural gas and electricity. 

Second,  the  non-harmonisation  of  national  rates  for  the  taxation  of  energy  products 
(whether these  be mineral  oils,  taxed by all the Member States  pursuant  to  Community 
texts  but  at widely  differing  rates,  or other products,  which  may or  may  not  be taxed, 
depending on the choice of the Member States) leads to distortions due to  excessive tax 
competition.  A Member State wishing to increase or introduce a tax on a product other 
than mineral oils such as, for example gas, may be prevented from doing so if that product 
is  not  taxed  or  taxed  at  a lower  rate  in a neighbouring  country,  for  fear  of  causing  a 
relocation  of  consumption.  However,  as  stressed  by  the  document  'Taxation  in  the 
European  Union" presented  by  the  Commission  to  the  informal  Council  meeting  at 
Verona,  excessive  competition  in  the  tax  area  " is  a  cause  of  concern  because  of  its 
potential  negative effects,  particularly on tax revenues of Member States, on the  efficient 
allocation  of  economic  resources  within  the  EU,  and  on  competitiveness  and 
employment". In other words the lack of a Community structure for taxation of  all energy 
products is inhibiting Member States from pursuing appropriate tax reforms. 

Lastly,  it  is  undeniable  that  the  lack  of  harmonisation  between  Member  States  for  the 
same fuels directly causes distortions on the markets, and affects the choices of consumers 
and firms. This is particularly true in frontier areas, where there is evidence of relocation 
of the consumption of motor fuels and heating fuels. 

In the light of all these facts, it is clear that it is becoming increasingly urgent to strengthen 
the rules of the single market.  This is why the Commission has decided to present a new 
proposal for a Directive to the Council. 

At  the  same  time,  the  present  system  does  not  give  Member  States  sufficient 
freedom  of manoeuvre for their political action. In this context, it should  be recalled 
that  the  Essen  European  Council  asked  the  Commission  to  present  new  proposals 
enabling Member States which so wished to apply a C02/Energy Tax. 

The diversity  of national  objectives is today an incontrovertible fact for which allowance 
has to be made in any Community system.  However,  it cannot be expressed  unless it is 
framed  by the rules of the single market, if it is not to lead to the fragmentation mentioned 
above.  Flexibility combined with the definition of certain common rules, as envisaged by 
this proposal for a Directive, is in fact an effective instrument, which gives Member States 
greater freedom for action. 

It thus offers  the Member  States the opportunity of making greater use of the taxation  of 
energy products for environmental purposes.  It is an established fact that, in this area, the 
present  rules  are  sometimes  too  rigid.  For  example,  under  Article  8(4)  of  Directive 
92/81/EEC,  any  measure  to  differentiate  the  taxation  of  a  product  on  the  basis  of 
environmental standards must be authorised by the Council. 

It  also  offers  some  scope  for  restructuring  national  tax  systems  in  favour  of  the  labour 
factor.  This is a key aspect for the Commission, which has broadly designed this proposal 
for  a Directive as the tangible expression  of the encouragement  it has given the Member 
States  since  the  1993  White  Paper  'Growth,  Competitiveness,  Employment";  the 
Confidence Pact for Employment  again restates that it is necessary to reverse the present 
trend towards imposing the burden of taxation on employment. 

Admittedly, the Commission  intends, though this proposal for  a Directive, to  provide the 
Member  States  with  a  framework  for  target-oriented  political  action.  Although,  in 
accordance with the principle  of  subsidiarity,  the responsibility  for  the political  choice is 
entirely incumbent on the Member  States, it considers that the opportunity they are being 
offered  by this proposal to restructure taxation in a direction which is more favourable  to 
the factor  labour  is an  essential  contribution.  It  therefore  invites the Member  States  to 
give preference, in their policy choices, to the objective of tax neutrality. 

IV 

New measures proposed  by the Commission 

The new measures proposed by the Commission are the following. 

The scope of the Community system of taxation is extended to all energy products 

The Commission is proposing that the scope of taxation be extended  beyond the mineral 
oils covered  by Directives  92/81/EEC  and  92/82/EEC,  to  cover  in the  future  the  other 
competing sources of energy namely : 

- 

- 

- 

coal, coke, lignite, bitumens and products derived from them; 

natural gas; 

electricity. 

It is clear that all these products, inasmuch as they are used as heating fuels, are directly or 
indirectly substitutable and therefore  should all come with the same taxation  framework. 

The treatment of electricity 

There  are  two  possible  ways  of  bring  electricity  within  the  scope  of  the  taxation 
arrangements  : by taxing the  fuels  used  in the production  of electricity  (input  tax)  or by 
taxing the electricity itself (output tax). 

The  Commission  has  proposed  harmonisation  on  the  basis  of  output 
following reasons : 

taxation  for  the 

it is the only method by which the general indirect taxation principle of applying tax 
in the country of consumption can be uniformly  achieved; 

electricity  can  be  traded  within  and  between  countries  without  having  been  taxed 
thus avoiding double taxation in the country of consumption; 

Member  States  can  differentiate  between  electricity  used  by  final  consumers  and 
industry  and  thus  apply  differential  taxes  (this is the  practise  in  nearly  all  Member 
States who currently tax electricity); 

it  is the  only  means by which  the  tax  burden  on  energy  intensive  industry  can  be 
reduced. 

On the other hand, output  taxation does not allow Member  States to directly  differentiate 
tax  levels in  line with  the  environmental  quality  of the  fuel  used.  To  overcome  this,  the 
Commission is proposing to allow Member States : 

a) 

b) 

to  add  an additional  (non-harmonised)  input tax in the case of non-environmentally 
desirable fuels; and 

to  refund  to  electricity  producers  who  use environmentally  preferable  fuels  the tax 
paid by the final consumer. 

The setting of new minimum levels of taxation for all energy products 

The  Commission  proposes  that  the  Community  minimum  levels  on  mineral  oils  set  by 
Directive  92/82/EEC (which  were agreed  in  1992 and  are therefore,  in many cases, now 
substantially  below  the  rates  applied  by Member  States)  be  up-rated  and  that  minimum 
levels be created for products other than mineral oils. 

The  Commission  has  chosen  to  retain  the  structure  of  Community  minimum  levels 
contained in Directive 92/82/EEC and therefore  proposes setting different  minimum levels 
for the following three categories: 

- 

energy products used as motor fuels 

energy products used as motor fuels  for  certain industrial  and commercial  purposes 
(for which very low minimum levels of taxation are set) 

energy products used as heating fuels. 

It  should  be emphasised  that  energy  products  used  other than  as motor  fuels  or  heating 
fuels do not fall within the scope of the tax. In particular, this means that products used in 
industry for chemical reduction purposes or as raw materials will not be taxed. 

The Commission proposes the establishment of a timetable for up-rating these Community 
minimum levels (1998, 2000, 2002) with the following  objectives: 

- 

- 

as  regards  motor  fuels,  the  progressive  approximation  of  rates  between  different 
products, in particular gas oil and petrol; 

for  heating  fuels  and  motor  fuels  used  for  industrial  and  commercial  purposes, 
taxation  on  the  basis  of  the  energy  value,  at  the  end  of  a  transitional  period  for 
products that this proposal brings within the scope of taxation. 

The minimum levels of taxation  for  the last  stage  (2002)  are put  forward  as target  rates 
and  will  need  to  be  confirmed  as  binding  in  a  subsequent  report  and  proposal  from  the 
Commission.  In its report,  the  Commission  will  pay particular  attention  to  the  measures 
taken by Member States to avoid any increase in their overall tax burden. 

Flexibility for the pursuit of objectives of environmental, transport or energy policy 

This proposal  for  a Directive aims to  provide a framework  for  the action  of the Member 
States in the fields mentioned above. 

With this in mind, the Commission is proposing that henceforth  all indirect taxes (with the 
exception  of  VAT)  borne  by  a  product  be  taken  into  account  in  order  to  assess 
compliance  with  the  Community  minimum  levels.  It  is  thus  following  the  logic  of  the 
diversification  of national  taxes applied  by the Member  States to  energy products  (excise 
duties, taxes on energy, on emissions, etc.). 

The  Commission  is  also  proposing  to  offer  the  Member  States  a  number  of  options 
enabling them to pursue more ambitious environmental  policies. This flexibility is entirely 
consistent with the environmental objectives agreed by the European Union at the Council 
meeting  on  energy/environment  held  in  October  1990 (stabilization  of  CO2 emissions  at 
1990  levels  by  the  year  2000)  and  as  a  party  to  the  United  Nations  Framework 
Convention  on  Climate  Change.  It  proposes  for  example  that  the  Member  States  may 
differentiate,  without  prior  authorisation  if  they  comply  with  the  Community  minimum 
levels,  the  rates  of  taxation  applicable  to  a  product  on  the  basis  of  environmental 
standards,  or that the Member  States be authorised to apply reduced  rates or  exemptions 
from tax  to  certain  products  or  uses  (biofuels,  renewable  energy  sources,  rail  transport, 
inland waterway navigation, heat produced in combined generation installations). 

More particularly as regards natural gas, the Commission proposes, in cases where the gas 
market  is  entering  a  development  phase,  to  authorise  Member  States  to  apply  tax 
exemptions or reductions for  a period which may not exceed  10 years after  the entry into 
force  of  this  Directive  The  purpose  of  this  provision  and  those  encouraging  the 
development  of alternative sources of energy is to reinforce the Union's security of supply 
by the diversification  of sources of energy. 

Flexibility  is also  present  in Article  16 of the proposal,  where the  Commission  proposes 
that  should  Member  States  wish  to  pursue  specific  policy  objectives,  they  may  be 
authorized  to  disregard  the  Community  minimum  levels. In the  case  of  transport  policy, 
this  possibility  is  expressed  even  more  strongly  in order  to  facilitate  the  introduction  of 
efficient  transport  pricing  instruments  (notably road  pricing), which  can  more adequately 
address  transport  problems  such  as  congestion  and  air  pollution.  As  set  out  in  the 
Commission's  Green Paper  on Fair and Efficient  Pricing in Transport  (Com(95)69 final), 
the introduction  of such  instruments  should  not,  by itself,  lead  to  an increase in the total 
tax burden on transport. 

Measures to assist firms 

In  order  that  the  extended  scope  of  the  Directive  and  the  setting  of  new  Community 
minimum  levels  do  not  harm  the  competitiveness  of  European  firms  vis-à-vis  third 
countries, the Commission is proposing: 

- 

- 

for firms whose  energy  costs are between  10% and  20% of production  costs, that 
Member States may refund  some or all of the tax paid by a firm on the proportion of 
their energy costs in excess of 10% of its total production costs; 

for firms whose energy costs are higher than 20% of production costs, that Member 
States be obliged to refund  all the tax paid on the proportion of their energy costs in 
excess of  10% of their total production costs. 

V 

Benefits to be expected from the adoption of the Directive 

If it is adopted,  this proposal  for  a Directive will have positive spin-offs  for  the Member 
States, for European firms and citizens. 

For Member States 

By establishing a common regulatory framework for the taxation of energy products, this 
proposal for  a Directive will give Member States greater freedom of manoeuvre  for their 
national policies. 

First, the reduction  in tax competition  (resulting from the harmonization  of national  rates 
of  taxation  on  energy  products)  will  enable  Member States  to  regain  complete  tax 
sovereignty.  Such freedom could, in particular, be exercised in the field of environmental 
policy. 

Second,  the creation  of a new  source of tax  revenue will open up a major  possibility  for 
they  will  be  able  to  reduce  the  compulsory  levies  on  labour,  thereby 
Member States: 
helping  to  cut  unemployment. 
It  is  acknowledged  that  this  possibility  is  at  present 
restricted  by  'the  difficulty  experienced  by  Member States  of  finding  suitable  and 
sufficient  budgetary  compensation  to  offset  the  revenue  losses".4  The  Commission 
intends to set this proposal for a Directive within the context of tax neutrality and strongly 
encourages Member States to implement it as part of a policy to boost employment. 

For firms 

The  proposal  for  a  Directive  lays  the  foundations  for  an  efficient  market  and  fairer 
competition.  Firms have constantly  called for  the practical application  of these principles 
to  energy  products,  as  was  the  case,  for  example,  at  the  Lisbon Conference  on  excise 
duties organized by the Commission in November 1995. 

They will undoubtedly benefit  from  the gains deriving from the improvement  (through the 
elimination  of distortions in the treatment  of competing energy products) in the  operation 
of the energy market.  They will also directly benefit from the introduction  of a more level 
playing  field  within  the  European Union  as  regards  competition.  Firms  are  at  present 
confronted  with  disparities  between  Member States  in  the  tax  treatment  of  energy 
products.  Where  energy  costs  account  for  a  significant  proportion  of  production  costs, 
these  disparities  can  have  a  direct  influence  on  their  competitiveness.  The  proposal  is 
aimed, therefore,  at reducing these disparities by establishing a level playing  field. 

Taxation in the European Union - Report on the development of tax systems, COM(96) 546 final. 

As  regards  the  competitiveness  of  Community  firms  vis-à-vis  third  countries,  the 
Commission  is fully  aware  of the potential  impact  of increasing taxation  on  energy.  For 
ihat  reason,  the proposal  for  a Directive provides for  measures to  reduce the tax burden 
on  energy-intensive  firms.  Reinforcing  the  energy  efficiency  which  will  result  from  the 
introduction  of  the  new  Community  framework  for  taxing  energy  products  will  also 
enhance the competitiveness of Community firms in the medium term. 

Finally, the benefits to be derived from a reduction in taxes on employment  should not be 
disregarded. 

For the  citizen-consumer 

As demonstrated by the tables in the annex, the proposal for a Directive will result in only 
a very limited rise in consumer prices, and in a restricted number of Member States, where 
two  consumers  products,  unleaded  petrol  and  gas  oil,  are  concerned.  These  rises  are 
essential  if the disparities resulting from the current  absence of approximation  of national 
rates of taxation on energy products are to be reduced. 

Consumers  are  very  sensitive  to  price  differences  in  different  places  of  consumption 
(particularly  in  border  areas)  resulting  from  the  non-harmonization  of  national  rates. 
However,  unlike  price  savings  deriving  from  enhanced  efficiency  of  the  market,  those 
resulting from tax  disparities  do not  correspond  to  any structural  reality  and  can  lead, in 
the  medium  term,  to  distortions with  adverse effects  on the economy.  In  promoting  the 
approximation  of national  rates, the proposal for  a Directive aims to  eliminate these very 
defects. 

The  consumer  should  also  benefit  from  the  improvement  in  the  charges  as  regards  the 
environment  and transport which implementation of the proposal for  a Directive will bring 
and, of course, from the enhanced quality of the environment in the medium term. 

Lastly, using the revenue generated by the taxation of energy products to bring down the 
cost of labour and reduce the unemployment which may result should  primarily benefit  the 
citizen-consumer. 

VI 

Conclusion 

Without  introducing  a new tax, this proposal fits in with the objectives  of deepening  the 
internal market, greater respect  for the environment  and the fight against  unemployment, 
by  setting  up  a  Community  framework  for  taxing  energy  products,  thus  facilitating  the 
restructuring of national tax systems. 

It  is becoming increasingly obvious that,  particularly  in the field of environmental  policy, 
Member  States wait  for  Community  instruments which  enable them to  pursue  their  own 
policies under the principle of subsidiarity.  This proposal  should provide them with  such 
an opportunity. 

It  is  also  true  that  the  fears  generated  by  any  tax  project  should  not  be  disregarded. 
Consumers  fear  a  rise  in  the  price  of  motor  or  heating  fuels,  while firms and  Member 
States fear  losses in competitiveness.  However,  the Commission  does not  intend  that  this 
proposal  should  lead  to  any  overall  increase  in  tax  burden  and  this  will  be  the  case 
provided  that Member  States adopt the revenue neutral  approach which the  Commission 
strongly advocates. 

Against  this  background,  Macro-economic  simulations  carried  out  by  the  Commission 
indicated  that  the  proposal  for  a  Directive  would  have  a  positive  economic  impact  on 
economic growth  and job-creation.  They indicated  in particular that, the revenue neutral 
approach  would  lead  to  the  creation  of  new jobs  and  that  the  net  effect  per  household 
(around  54 ECU per  household  in 2000)  of this proposal  would  not  result  in  any fall  in 
private  consumption.  In  the  present  economic  climate,  there  is  no  doubt  that  these 
opportunities should be made available to the Member States, and to the Community as a 
whole. 

10 

Table 1: Effects  on national excise duty rates as a consequence of the proposed increase 
in the EU minimum rate on unleaded petrol 
Member State 

Excise duty 
January 1997 

Effect  on national excise duty rates 
Increase in % 
Increase in ecu 

Relative effect  on 
pump price 

Austria 
Belgium 
Denmark 
Finland 
France 
Germany 
Greece 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
Spain 
Sweden 
United Kingdom 
EUmin 

416 
510 
447 
536 
576 
503 
350 
403 
534 
349 
530 
469 
363 
494 
501 
287 

Excise duty 
January 1998 
(assumed rates*) 
435 
534 
467 
561 
602 
527 
366 
422 
558 
365 
555 
490 
380 
517 
524 
417 

0 
0 
0 
0 
0 
0 
51 
0 
0 
52 
0 
0 
37 
0 
0 
130 

0% 
0% 
0% 
0% 
0% 
0% 
14% 
0% 
0% 
14% 
0% 
0% 
10% 
0% 
0% 
45% 

0% 
0% 
0% 
0% 
0% 
0% 
9% 
0% 
0% 
8% 
0% 
0% 
6% 
0% 
0% 

* For the period between 1993 and 1997 the annual EU average increase, in real terms, of excise duty on unleaded petrol was 2,4 %. 

The table above assumes a real increase in excise duty rates from  1997 to  1998 of  1,3  % plus inflation. 

^ 
-^ 

Table 2: Effects  on national excise duty rates on diesel as a consequence of the proposed increase 
in the EU minimum rate on diesel 
Member State 

Effect  on national excise duty rates 
Increase in ecu 
Increase in % 

Excise duty 
January 1997 

Austria 
Belgium 
Denmark 
Finland 
France 
Germany 
Greece 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
Spain 
Sweden 
United Kingdom 
EUmin 

291 
292 
308 
285 
358 
319 
247 
352 
390 
254 
320 
266 
264 
355 
501 
245 

Excise duty 
January 1998 
(assumed rates*) 
301 
302 
319 
295 
370 
330 
255 
364 
404 
263 
331 
276 
273 
368 
519 
310 

9 
8 
0 
15 
0 
0 
55 
0 
0 
47 
0 
34 
37 
0 
0 
65 

3% 
3% 
0% 
5% 
0% 
0% 
21% 
0% 
0% 
18% 
0% 
12% 
14% 
0% 
0% 
21% 

Relative effect on 
pump price 

1% 
1% 
0% 
3% 
0% 
0% 
11% 
0% 
0% 
9% 
0% 
7% 
7% 
0% 
0% 

* For the period between  1993 and 1997 the annual EU average increase, in real terms, of excise duty on diesel was  1,3 %. 
The table above assumes a real increase in excise duty rates from 1997 to  1998  of  1,3 % plus inflation. 

t° 

Proposal for COUNCIL DIRECTIVE  ..../.../EC 
restructuring the Community framework for the taxation of energy products 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 99 
thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Parliament, 

Having regard to the opinion of the Economic and Social Committee, 

Whereas the scope of Directive 92/81/EEC1 on the harmonization of the structures of excise 
duties on mineral oils and of Directive 92/82/EEC2 on the approximation of the rates of excise 
duties on mineral oils is restricted to mineral oils; 

Whereas the absence of Community provisions imposing a minimum rate of taxation on energy 
products other than mineral oils adversely affects the proper functioning of the internal market; 

Whereas,  in  accordance  with  Article 13 Or  of  the  Treaty,  environmental  protection 
requirements must be integrated  into the definition  and  implementation  of other  Community 
policies; 

Whereas, at the Council meeting on energy/environment  held in October  1990, the European 
Union set itself the objective of stabilizing CO2 emissions at 1990 levels by the year 2000; 

Whereas,  as a party to  the United  Nations Framework  Convention  on Climate  Change,  the 
European  Union  has  undertaken  to  take the  measures  required  to  stabilize  greenhouse  gas 
concentrations in the atmosphere at a level that will prevent dangerous interference  with  the 
climate system; 

Whereas the taxation of energy products is one of the instruments available for achieving these 
objectives; 

Council  Directive  92/81/EEC  of  19 October  1992  on  the  harmonization  of  the  structures  of 
excise duties on mineral oils (OJ No L 316, 31.10.1992, p. 12). 
Council  Directive  92/82/EEC of  19 October  1992 on the approximation  of the rates  of excise 
duties on mineral oils (OJ No L 316, 31.10.1992, p. 19). 

/? 

Whereas,  in  accordance  with  the  guidelines  laid  down  in  the  Commission  White  Paper  on 
growth,  competitiveness  and employment,  the  introduction  of  new  arrangements  should  not 
result in an increase in the overall tax burden in Member States; 

Whereas  implementation  of the principle of tax neutrality will  contribute  to  the  restructuring 
and  the  modernisation  of  tax  systems  by  encouraging  behaviour  conducive  to  greater 
protection of the environment and increased labour use; 

Whereas,  however,  determination  of the arrangements for ensuring  tax  neutrality is  a matter 
for each Member State; 

Whereas energy prices are key parameters of Community energy and transport policies; 

Whereas taxation partly determines the price of energy products; 

Whereas the proper functioning of the internal market and the achievement of the objectives of 
other Community  policies require minimum levels of taxation to  be laid down  at Community 
level for all energy products, including electricity; 

Whereas  Member States  should  nevertheless  be  given  the flexibility necessary  to  define  and 
implement policies appropriate to national circumstances; 

Whereas the Member States wish to  introduce or retain different  types of taxation  on  energy 
products; 

Whereas,  to  that  end,  Member States  should  be  permitted  to  comply  with  the  Community 
minimum  taxation  levels  by  taking  into  account  the  total  charge  of  taxes  which  they  have 
chosen to apply (excluding VAT); 

Whereas the possibility of applying differential  national rates of taxation to the same product is 
also  consistent  with  that  objective,  provided  that  Community  minimum  levels  and  internal 
market and competition rules are respected; 

Whereas it is necessary to establish different  Community minimum levels of taxation according 
to the use of the energy products; 

Whereas energy products used as a motor fuel  for certain industrial  and commercial  purposes 
and those  used  as  a heating  fuel  are normally taxed  at  lower  levels  than those  applicable  to 
energy products used as a motor fuel; 

Whereas appreciable differences in the national levels of taxation applied by Member States are 
detrimental to the proper fiinctioning of the internal market; 

Whereas  the  establishment  of  appropriate  Community  minimum  levels  may  enable  existing 
differences to be reduced; 

Whereas the minimum levels of taxation must reflect  the competitive position of the different 
energy products; 

Whereas  k  would  be  advisable  in this  connection  to  base  the  calculation  of these minimum 
levels as far as possible on the energy value of the products; 

Whereas, however, this method should not be applied to motor fuels and cannot be applied, in 
respect of other uses, without a transition period; 

Whereas the minimum levds of taxation applicable to energy products other than mineral oils 
must be increased gradually; 

Whereas it is necessary,  in order to prevent a loss of value in Community minimum levels,  to 
draw  up  a  schedule  of  biennial  increases  in  these  minimum  levels  and  to  provide  for  the 
Council, not later than 1  January 2001, to lay down new levels for a further period; 

Whereas it is necessary to provide for certain compulsory exemptions at Community level; 

Whereas  Member States  should  be  permitted  to  apply,  if  they  so  wish,  certain  other 
exemptions  or reduced  levels of taxation  below  the  Community  minimum  levels within their 
territory, where that would not be detrimental to the proper functioning of the internal market 
and would not result in any distortions of competition; 

Whereas such exemptions or reduced levels of taxation would greatly facilitate the introduction 
of more efficient transport pricing instruments; 

Whereas,  in particular,  in order to  promote the use  of  alternative  energy  sources,  renewable 
forms of energy must be able to enjoy preferential treatment; 

Whereas it  is  necessary  to  provide  for  a procedure  authorizing  the  introduction by Member 
States, for a set period, of other exemptions or reduced levels of taxation; 

Whereas it is necessary to introduce a procedure for the regular review of such exemptions or 
reductions; 

3 

/S" 

Whereas  Member States  should  be  authorized  to  grant  tax  refunds  to  firms  incurring 
investment  expenditure  aimed  at  improving  energy  efficiency  and  those  whose  energy  costs 
represent a substantial proportion of the value of their sales; 

Whereas, for information purposes, provision should be made for the Member States to  notify 
the Commission of certain national measures; 

Whereas  such notification  does  not  release Member  States from the  obligation,  laid  down in 
Article 93(3) of the Treaty, to notify certain national measures; 

Whereas the scope of 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 
products3 must be extended to all products and indirect taxes covered by this Directive, 

HAS ADOPTED THIS DIRECTIVE: 

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 (OJ No 
L 76, 23.3.1992, p. 1). 

I. Scope 

Article 1 

1.  Member  States  shall  impose  taxation  on  energy  products  in  accordance  with  this 
Directive. 

2.  When  implementing  this  Directive,  Member  States  shall  endeavour  to  avoid  any 
increase in their overall tax burden. In order to attain this objective Member States  shall 
endeavour, in particular, to reduce at the same time statutory charges on labour. 

Article 2 

1. For the purposes of this Directive, "energy products" shall cover the products  specified 
below: 

(a) 

products falling within CN codes 

1507 to  1518; 

(b) 

products falling within CN code 

2207; 

(c) 

products falling within CN codes 

2701 to 2715 ; 

(d) 

products falling within CN codes 

2901 and 2902; 

(e) 

products falling within CN code 

(f) 

products falling within CN code 

(g) 

products falling within CN code 

(h) 

products falling within CN code 

2905; 

3403; 

3 811 ; 

3817; 

(i) 

products falling within CN codes 

4401 and 4402; 

2. This Directive shall also apply to: 

a) 

b) 

electricity falling within CN code 2716; 

heat generated during the production of electricity. 

IT-

3. In addition to the taxable products listed in paragraph  1, any other product intended  for 
use, offered  for sale or used as motor or heating fuel,  or as an additive or extender in such 
fuel,  shall be taxed as motor or heating fuel  respectively. 

4. References in this Directive to codes of the combined nomenclature shall be to those of 
the version in force on 1  October  1996. 

Article 3 

References  in  Directive  92/12/EEC  to  "mineral  oils"  and  "excise  duty"  (insofar  as  it 
applies to  mineral  oils)  shall be interpreted  as  covering  all  energy  products  and  national 
indirect taxes referred to respectively in Articles 2 and 4(3) of this Directive. 

EL Levels of taxation 

Article 4 

1. The levels of taxation which Member States shall apply to the energy products listed in 
Article 2 may not be less than the minimum levels prescribed in this Directive. 

2.  Taxable  energy  products  other  than  those  for  which  a  minimum  level  of  taxation  is 
specified  in this Directive shall be subject to taxation, according to use, at a level which is 
not below the minimum level applicable to the equivalent heating fuel or motor fuel. 

3. For the purpose of this Directive,  "level  of taxation" shall mean the total  charge levied 
in  respect  of  all  indirect  taxes  (except  VAT)  calculated  directly  or  indirectly  on  the 
quantity of product consumed. 

Article 5 

1. Member States may apply differentiated  rates of taxation according to the use or quality 
of  a  product  provided  that  they  respect  the  minimum  levels  of  taxation  set  out  in  this 
Directive and that they are compatible with Community law. 

2.  When,  for  environmental  and/or  health  policy  reasons,  different  standards  are 
established at a Community level for products referred  to in this Directive, Member States 
wishing to apply differential  rates of taxation to a product  according to the quality of that 
product shall incorporate criteria established at Community level. 

Article 6 

1. As from 1  January 1998, the minimum levels of taxation applicable to motor fuels shall 
be fixed as follows: 

for petrol: ECU 417 per 1000 litres at a temperature of  15°C. Moreover, Member 
States  shall  apply  to  leaded  petrol  a  rate  of  taxation  above  that  charged  on 
unleaded petrol. 

for gas oil: ECU 310 per 1000 litres at a temperature of 15°C; 

for kerosene: ECU 310 per 1000 litres at a temperature of 15°C; 

for liquid petroleum gas: ECU 141 per 1000 kg; 

for natural gas: ECU 2,9 per gigajoule. 

Article 7 

1. Notwithstanding  Article 6 of this Directive, the minimum levels of taxation applicable 
to the following  products used  as motor fuel  for the purposes set out in paragraph 2  of 
this Article shall be fixed as follows: 

for gas oil: ECU 32 per 1000 litres at a temperature of 15°C; 

for kerosene: ECU 30 per 1000 litres at a temperature of 15°C; 

for liquid petroleum gas: ECU 41 per 1000 kg; 

for natural gas: ECU 0,3 per gigajoule; 

2. This Article shall apply to the following industrial and commercial purposes: 

(a) 

for agricultural, horticultural or piscicultural works, and in forestry; 

(b) 

for stationary motors; 

(c) 

(d) 

in respect of plant and machinery used in construction, civil engineering and public 
works; 

for  vehicles  intended  for  use  off  the  public  roadway  or  which  have  not  been 
granted authorisation for use mainly on the public highway; 

/i 

(e) 

for passenger transport and captive fleets which provide service to  public bodies. 
However, Member States may limit the scope of the reduced level  of taxation to 
local passenger transport. 

In the case of the use specified in point (e), this Article shall only apply in respect of LPG 
and natural gas. 

Article 8 

As from 1 January  1998, the minimum levels of taxation applicable to heating fuels shall 
be fixed as follows: 

for gas oil: ECU 21 per 1000 litres at a temperature of 15°C; 

for heavy fuel oil falling within CN code 2710 00 74: ECU  18 per 1000 kg; 

for other heavy fuel oil falling within CN code 2710: ECU 22 per 1000 kg; 

for kerosene: ECU 7 per 1000 litres at a temperature of 15°C; 

for liquid petroleum gas: ECU  10 per 1000 kg; 

for natural gas: ECU 0,2 per gigajoule; 

for solid energy products : ECU 0,2 per gigajoule. 

Article 9 

As from 1 January  1998, the minimum level of taxation on electricity and heat generated 
during its production shall be fixed at ECU 1 per megawatthour. 

Article 10 

1.  The  minimum  levels  of  taxation  laid  down  in this Directive  shall  be  amended  on  1 
January 2000, to the amounts shown in annex I. 

2.  Not  later than  1 January  2001, the  Council,  acting  unanimously  after  consulting  the 
European  Parliament,  shall  fix,  on  the  basis  of  a  report  and  a  proposal  from  the 
Commission,  the minimum levels of taxation for  a further  period  beginning  on  1 January 
2002  and  shall  adopt  such  other  measures  as  may  be  appropriate  to  improve  the 
functioning  of the  system  of taxation  of  energy  products.  Until  the  Council  adopts  new 
levels  of  taxation  on  the  basis  of the  Commission  report  and  proposal,  Member  States 
shall treat the amounts shown in Annex I as target levels of taxation from 2002 

7^ 

The  report  by  the  Commission  and  the  consideration  by  the  Council  shall  take  into 
account  the  proper  functioning  of  the  internal  market,  the  real  value  of  the  levels  of 
taxation,  the  achievement  of environmental  policy  objectives  and  the other  objectives  of 
the  Treaty.  It  shall  also  include  an analysis  of the  measures  taken  by Member  States  to 
achieve tax neutrality in implementing this Directive and the Commission's proposal shall 
take full account of this factor. 

Article 11 

Member  States  may  express  their  national  levels  of  taxation  in  units  other  than  those 
specified  in  Articles  6  to  9  of  this  Directive  provided  that  the  corresponding  levels  of 
taxation,  following  conversion  into  those  units,  are  not  below  the  minimum  levels 
specified  in this Directive. 

Article 12 

1. The value of the ECU in national currencies to be applied  to the value of the levels of 
taxation  shall be fixed once a year. The rates to be applied  shall be those obtaining on the 
first  working  day  of  October  and  published  in  the  Official  Journal  of  the  European 
Communities and shall have effect from 1  January of the following calendar year. 

2. Member  States may maintain the amounts of taxation in force  at the time of the annual 
adjustment  provided  for  in paragraph  1 if the  conversion  of the  amounts  of the  level  of 
taxation  expressed  in  ECU  would  result  in  an  increase  of  less  than  5%  or  ECU  5, 
whichever is the lower amount, in the level of taxation expressed in national currency. 

III. Exemptions and tax  refunds 

Article 13 

1. In addition to the general provisions set out in Directive 92/12/EEC  on exempt uses of 
taxable  products,  and  without  prejudice  to  other  Community  provisions,  Member  States 
shall  exempt  the following  from  taxation  under  conditions which  they  shall lay down  for 
the  purpose  of  ensuring  the  correct  and  straightforward  application  of  such  exemptions 
and of preventing any evasion, avoidance or abuse: 

(a) 

Energy  products used  for  purposes  other than  as  motor  fuels  or  as heating  fuels. 
For the purposes  of this Directive, heating fuels  shall not  include energy  products 
used  principally  for  the  purposes  of  chemical  reduction,  and  in  metallurgical  and 
electrolytic processes. Member States shall also exempt electricity used principally 
for  the  purposes  of  chemical  reduction,  and  in  metallurgical  and  electrolytic 
processes. 

(b) 

Energy  products  used  to  produce  electricity  and  heat  generated  during  its 
production.  However,  Member  States  may,  for  reasons  of  environmental  policy, 
subject these products to taxation without having to respect the minimum levels of 
taxation  laid  down  in this Directive.  In  such  case, the taxation  of these  products 
shall not be taken  into account for  the purpose of satisfying  the minimum level of 
taxation on electricity laid down in Article 9 of this Directive. 

(c) 

Energy products  supplied  for  use as fuels  for  the  purpose  of air navigation  other 
than  private  pleasure  flying  for  as  long  as  such  products  are  obliged  to  be 
exempted under international obligations. 

For the purposes  of this Directive,  "private pleasure flying"  shall mean the use of 
an  aircraft  by  its  owner  or  the  natural  or  legal  person  who  enjoys  its  use  either 
through hire or through any other means, for other than commercial purposes and 
in particular other than for the carriage of passengers or goods or for the supply of 
services for consideration or for the purposes of public authorities. 

Member  States may limit the  scope  of this  exemption  to  supplies of jet  fuel  (CN 
code 2710 0051); 

(d) 

Energy  products  supplied  for  use  as  fuel  for  the  purposes  of  navigation  within 
Community waters (including fishing), other than in private pleasure craft. 

For  the  purposes  of  this  Directive,  "private  pleasure  craft"  shall  mean  any  craft 
used by its owner or the natural or legal person who enjoys its use either through 
hire  or  through  any  other  means,  for  other  than  commercial  purposes  and  in 
particular  other than for  the carriage of passengers or goods or for the supply of 
services for consideration or for the purposes of public authorities. 

2. Member  States may limit the scope of the  exemptions  provided  for  in paragraph  1 (c) 
and (d) to international and intra community transport. In addition, where a Member  State 
has entered  into  a bilateral  agreement  with  another Member  State, it may also waive the 
exemptions provided for in paragraphs  1  (c) and (d) of this Article. In such cases, Member 
States may apply a level of taxation below the minimum level set out in this Directive. 

Article 14 

1. Without  prejudice  to  other  Community  provisions,  Member  States may apply total  or 
partial exemptions or reductions in the level of taxation to: 

10 

(a) 

(b) 

(c) 

(d) 

energy  products  used  under  fiscal  control  in  the field of  pilot  projects  for  the 
technological  development  of  more  environmentally-friendly  products  or  in 
relation to fuels from renewable resources; 

energy products falling within CN codes  1507 to  1518, 2207  20 00 and 2905  11 
00, 4401 and 4402; 

forms of energy which are of solar, wind, tidal, geothermal origin or from biomass 
or waste; 

forms  of  energy  which  are  of  hydraulic  origin  produced  in  hydroelectric 
installations with a capacity of less than 10 MW; 

(e) 

heat generated during the production of electricity; 

(f) 

energy products used for the carriage of goods and passengers by rail; 

(g) 

(h) 

energy  products  used  for  navigation  on  inland  waterways  other  than  in  private 
pleasure craft; 

natural  gas  in  Member  States  whose  gas  market  is  in  the  process  of  actual 
development for as long as the share of gas in the domestic and industrial market is 
less than  10%, and for  a period  of no more than  10 years after  the coming into 
force of thi s Directive. 

2. Member States shall be free to give effect to the exemptions or reductions in the level 
of taxation  mentioned  in this Article by refunding  all or part  of the amount  of taxation 
paid. 

3.  The  Commission  shall  report  to  the  Council  on  the  fiscal,  economic,  agricultural, 
energy,  industrial  and environmental  aspects  of the exemptions  or reductions granted in 
accordance with Article  14 (1)  (b) before  1 January 2001  and will make proposals as to 
whether they should be abolished, modified or extended. 

Article 15 

1.  Member  States  may  refund  all  or  part  of  the  amount  of  tax  paid  in  relation  to 
investment expenditure incurred by a firm in improving the efficient  use of energy up to a 
limit of 50% of eligible expenditure incurred. 

2. Member States may refund  some or all of the amount of tax paid by a firm on any part 
of its non transport related energy costs which exceeds  10% of its total production costs. 

H 

2l 

However,  when the part  of non-transport  related  energy costs  of a firm exceeds 20% of 
its total production costs, Member States shall reimburse the whole of the tax paid by the 
firm  on the  part  of its non-transport  related  energy costs which  exceeds  10% of its total 
production costs. 

The  net  amount  of  tax  paid  by  a  firm  following  the  refunds  provided  for  in  the  two 
preceding sub-paragraph shall not be less than  1% of the value of its sales. 

3. Member  States may also refund  to the producer  some or all of the amount of tax paid 
by  the  consumer  on  electricity  and  heat  generated  during  its  production  in  the  case  of 
electricity produced from products specified  in Article 14 paragraphs  1  (b), (c) and (d). 

Article 16 

1. In  addition  to  the provisions  set  out  in the  previous  Articles,  Member  States  may be 
authorised  to apply, for  specific  policy reasons and for  a  specified  period,  exemptions  or 
levels of taxation below the minimum levels specified  in this Directive. 

In particular, a Member State may be authorised to apply levels of taxation on motor  fuels 
between  100% and 60% of the minimum levels  specified  in this Directive  if it  introduces 
or  modifies,  on  a  non  discriminatory  basis,  specific  charging  systems  for  road  transport 
targeting  recovery  of  transport  costs,  such  as  infrastructure,  congestion,  environmental 
costs. 

2.  A  Member  State  wishing  to  introduce  such  a  measure  shall  accordingly  inform  the 
Commission  and  shall  also  provide  the  Commission  with  all  relevant  or  necessary 
information  and an evaluation of the expected effects  of the measure. 

The Commission  shall examine the request,  taking  into  account,  inter  alia,  of the  proper 
functioning  of the internal market, the need to ensure fair  competition  and the community 
environment, and, where appropriate, transport policies. 

3.  For  authorisations granted  under the first sub-paragraph  of paragraph  1, the  following 
procedure shall be applicable. 

The measure may be authorised for a period of three years, with the possibility of renewal, 
using the procedure  set out  in Article 24 of Directive 92/12/EEC  relating to the holding, 
movement and monitoring of products subject to excise duty. 

If the Commission  considers that the exemptions or reductions  provided  for  in paragraph 
1 are no longer sustainable, particularly in terms of fair  competition or proper  functioning 
of the internal market,  or Community policy in the area of protection  of the  environment, 
it shall submit appropriate draft  measures to the Committee on Excise Duties. Decision on 
these  draft  measures  shall  be  taken  according  to  the  procedure  set  out  in  Article  24  of 
Directive 92/12/EEC. 

12 

7 

In  any  event,  within  three  years  of  the  entry  into  force  of  this  Directive  and  every 
subsequent  three  years,  the  situation  with  regard  to  the  exemptions  or  reductions 
authorised  in accordance with paragraph  1 shall be  reviewed  on the basis of a report  by 
the  Commission.  It  shall  be  determined,  using  the  procedure  set  out  in  Article  24  of 
Directive 92/12/ECC, whether any or all of them shall be abolished, modified  or extended. 

4.  For  authorisations  granted  under  the  second  sub-paragraph  of  paragraph  1,  the 
following procedure shall be applicable. 

The  measure  may  be  authorised  using  the  procedure  set  out  in  Article  24  of  Directive 
92/12/EEC  relating  to  the  holding,  movement  and  monitoring  of  products  subject  to 
excise duty. 

The Commission  shall monitor the impact  of decisions taken under the provisions  of the 
second  sub-paragraph  of paragraph  1 and present  a report  on the implementation  of such 
measures every three years. The procedure  of Article 24 of Directive 92/12/EEC  applies 
for proposals of the Commission to abolish or modify existing authorisations. 

5. Member  States shall be free to give effect  to the exemptions or reductions in the level 
of taxation  mentioned  in this Article by refunding  all  or  part  of  the  amount  of  taxation 
paid. 

IV. Holding and movement of products 

Article 17 

1. Only the following  energy products shall be subject  to the provisions of Titles II to IV 
of Directive 92/12/EEC: 

(a) 

(b) 

products falling  within CN codes  1507 to  1518 when  intended  for  use or  offered 
for sale as motor fuel; 

products falling within CN code 2207 20 00 when intended  for use or offered  for 
sale as motor fuel; 

(c) 

products falling within CN codes 2707  10, 2707 20, 2707 30 and 2707 50; 

(d) 

products  falling  within  CN  codes  2710  00  11  to  2710  00  78.  However,  for 
products  falling  within  CN  codes  2710  00  21, 2710  00  25  and  2710  00  59, the 
control and movement provisions shall only apply to bulk commercial movements; 

13 

2f 

(e) 

products falling within CN codes 2711 (except 2711  11 00, 2711 21 00 and 2711 
29 00); 

(f) 

products falling within CN code 2901 10; 

(g) 

(h) 

products  falling  within  CN  codes  2902  20,  2902  30,  2902  41  00,  2902  42  00, 
2902 43 00 and 2902  44; 

products falling within CN code 2905  11 00 when intended  for use or offered  for 
sale as motor fuel 

2. If a Member  State finds that energy products other than those referred  to in paragraph 
1  are  intended  for  use,  offered  for  sale  or  used  as  heating  fuel  or  motor  fuel  or  are 
otherwise  giving  rise  to  evasion,  avoidance  or  abuse,  it  shall  advise  the  Commission 
forthwith.  The Commission shall  transmit the communication to the other Member  States 
within one month of receipt. A decision as to whether the products in question should  be 
made subject  to  the control  and  movement  provisions of Directive  92/12/EEC  shall  then 
be  taken  in  accordance  with  the  procedure  laid  down  in  Article  24  of  Directive 
92/12/EEC. 

3.  Member  States  may,  under  bilateral  arrangements,  dispense  with  some  or  all  of  the 
control  measures  set  out  in Directive 92/12/EEC  in respect  of some or  all of the  above 
products,  in  so  far 
as  they  are  not  covered  by  Article  6  of  this  Directive.  Such 
arrangements  shall  not  affect  Member  States  which  are  not  party  to  them.  All  such 
bilateral  arrangements  shall be  notified  to  the  Commission,  which  shall  inform  the  other 
Member States. 

V. Chargeable event and chargeability 

Article 18 

1. In addition  to  the general  provisions  defining  the  chargeable  event  and the  provisions 
for  payment  set  out  in Directive  92/12/EEC, the amount  of taxation  on  energy  products 
shall  also  become  due  on  the  occurrence  of  one  of  the  chargeable  events  mentioned  in 
Article 2 (3) of this Directive. 

2.  For  the  purposes  of this Directive,  the word  "production"  in Article  5(1)  of Directive 
92/12/EEC shall be deemed to include "extraction", when appropriate. 

3. The consumption  of energy products within the curtilage of an establishment  producing 
energy products falling within CN codes 2707, 2709 to 2715, 2901, 2902 38  11 and 3817 
shall  not  be  considered  a  chargeable  event  giving  rise  to  taxation  as  long  as  the 
consumption is for the purpose of such production. 

14 

?4 

4.  Member  States  may also provide that taxation  on  energy  products  shall become  due 
when it is established that a final use condition laid down in national rules for the purpose 
of a reduced level of taxation or exemption is not or is no longer  fulfilled. 

5.  For  the  purpose  of  applying  Article  6  of  Directive  92/12/EEC  and  in  relation  to 
electricity,  Member  States  may  treat  any  step  in  the  electricity  distribution  process  as 
release for consumption. 

Article 19 

On a change in one or more rates of taxation, stocks of energy products already released 
for consumption may be subject to an increase in or a reduction of the taxation. 

Article 20 

Member  States  may  refund  the  amounts  of  taxation  already  paid  on  contaminated  or 
accidentally mixed energy products sent back to a tax warehouse for recycling. 

Article 21 

1. Energy products released for consumption in a Member State, contained in the standard 
tanks  of  commercial  motor  vehicles  and  intended  to  be  used  as  fuel  by  those  same 
vehicles  and  fuel  to  be used  in the  systems equipping  special  containers transported  by 
those same véhicules shall not be subject to taxation in any other Member  State. 

2.  For the purposes of this Article, "standard tanks" shall mean: 

-  Fixed  fuel  tanks,  directly  connected  to  the  engine  and/or  auxiliary  equipment  which 
comply  with  the  technical  requirements  (in  so  far  as they  relate  to  fuel  tanks)  of  ECE 
Regulation  34  as  amended  or  of Directive  70/221/EEC.  The  total  capacity  of  the fixed 
tanks shall not  exceed  1500 litres per transport  unit and the capacity  of tanks fitted to a 
trailer  shall  not  exceed  500 litres.  Auxiliary tanks on tractor  units shall be deemed  to be 
directly connected  even if the fuel  has to pass through the normal running tank.  Auxiliary 
tanks  on  trailers  may  only  supply  equipment  on  trailers.  Fuel  may  also  be  carried  in 
portable fuel  containers but fuel  carried  in such containers is limited to a maximum of 60 
litres per vehicle. 

"Special  container"  shall  mean  any container fitted with  specially  designed  apparatus  for 
refrigeration  systems, oxygenation systems, thermal insulation systems or other systems. 

15 

2> 

VL Final provisions 

Article 22 

1. Member States shall inform the Commission of the levels of taxation which they apply 
to the products listed in Article 2 of this Directive on the first of January each year and 
following  each  change  in  national  law.  In  particular,  Member  States  shall  inform  the 
Commission of the measures they have taken and the conditions they have applied in their 
efforts to ensure tax neutrality as defined in Article 1  (2). 

2.  Where the  levels of taxation  applied  by the Member  States are expressed  in units of 
measure other  than those  specified  for  each  product  in  Articles 6 to  9,  Member  States 
shall also notify the corresponding levels of taxation following conversion into these units. 

Article 23 

1.  Member  States  shall  inform  the  Commission  of  measures  taken  under  Articles  5, 
7(2Xe), 13(2), 14 and 15 of this Directive. 

2. Measures such as tax exemptions, tax reductions, tax differentiation  and refunds  of tax 
foreseen under this Directive might constitute state aid and in those cases have to be notified 
to the Commission under Article 93(3) of the Treaty. 

Information  provided  to  the  Commission  on  the  basis  of  this  Directive  does  not  free 
Member States from the notification obligation under Article 93(3) of the Treaty. 

3. The obligation to inform the Commission under paragraph  1  of this Article of measures 
taken under Article 5 of this Directive does not free Member States from any notification 
obligations arising under the provisions of Directive 83/189/EEC of 28 March 1983. 

Article 24 

1. Member States shall bring into force the laws, regulations and administrative provisions 
necessary  to  comply  with  this  Directive  not  later  than  31  December  1997.  They  shall 
forthwith inform the Commission thereof. 

16 

?£ 

When  Member  States  adopt  these  measures,  they  shall  contain  a  reference  to  this 
Directive  or  shall  be  accompanied  by  such  reference  on  the  occasion  of  their  official 
publication.  The  methods  of  making  such  reference  shall  be  laid  down  by the  Member 
States. 

2. Member  States shall communicate to  the Commission the texts of the main provisions 
of national law which they adopt in the field governed by this Directive. 

Article 25 

Directives 92/81/EEC and 92/82/EEC are hereby repealed. 

Article 26 

This Directive is addressed to the Member States. 

17 

2^ 

ANNEX I.  MINIMUM  LEVELS OF TAXATION ON 1/01/1998,1/01/2000 AND 1/01/2002 

I.  MINIMUM LEVELS OF TAXATION APPLICABLE TO MOTOR  FUEL 

Minimum levels of 
taxation on 
1/01/1998 

Minimum  levels of 
taxation  on 
1/01/2000 

Target  minimum 
levels of taxation 
for 1/01/2002 

Petrol 
(ECU per  1000 1) 

Gas oil 
(ECU per  1000 1) 

Kerosene 
(ECU per  1000 1) 

LPG 
(ECU per  1000 kg) 

Natural  gas 
(ECU per  gigajoule) 

417 

310 

310 

141 

2,9 

450 

343 

343 

174 

3,5 

500 

393 

393 

224 

4,5 

n. 

MINIMUM  LEVELS  OF  TAXATION  APPLICABLE  TO  MOTOR  FUELS  USED  FOR  THE 
PURPOSES SET OUT IN ARTICLE  7(2) 

Minimum  levels of 
taxation on 
1/01/1998 

Minimum  levels of 
taxation  on 
1/01/2000 

Target  minimum 
levels of taxation 
for 1/01/2002 

Gas oil 
(ECU per  10001) 

Kerosene 
(ECU per  10001) 

LPG 
(ECU per  1000 kg) 

Natural  gas 
(ECU per  gigajoule) 

32 

30 

41 

0,3 

37 

35 

48 

0,6 

41 

39 

53 

1,1 

18 

> 

m. 

M I N I M UM 
ELECTRICITY 

L E V E LS 

OF 

T A X A T I ON 

A P P L I C A B LE 

TO 

H E A T I NG 

F U E LS 

A ND 

Minimum  levels of 
taxation  on 
1/01/1998 

Minimum  levels of 
taxation  on 
1/01/2000 

Target  minimum 
levels of taxation 
for  1/01/2002 

Heating gas oil 
(ECU per 10001) 
Heavy fuel oil 
CN code 27100074 
(ECU per  1000 kg) 
Other heavy  fuel 
oil 
CN code 2710 

Kerosene 
(ECU per 10001) 

LPG 
(ECU per  1000 kg) 

Natural  gas 
(ECU per gigajoule) 
Solid  energy 
products 
(ECU per gigajoule) 

Electricity 
(ECUperMWh) 

21 

18 

22 

7 

10 

0,2 

0.2 

1 

23 

23 

28 

16 

22 

0,45 

0.45 

2 

26 

28 

34 

25 

34 

0,7 

0.7 

3 

19 

V 

ISSN 0254-1475 

COM(97) 30 final 

DOCUMENTS 

EN 

09  12  14 

Catalogue number  : CB-CO-97-056-EN-C 

ISBN 92-78-16115-2 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg