COMMUNICATION FROM THE COMMISSION - Environmental Taxes and Charges in the Single Market
Date: 1997-03-26
Institutions: European Commission
Subjects: EU environmental policy, EU law, economic instrument for the environment, environmental tax, single market

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COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  2 6 . 0 3 . 1 9 97 
COM(97)  9 final 

COMMUNICATION  FROM THE COMMISSION 

Environmental Taxes and Charges in the Single 
Market 

FOREWORD 

The Commission has several times given its support to an increased use of  fiscal  instruments 
to make environmental policy more efficient  and cost-effective.  Most of these instruments are 
implemented  at  Member  State  level.  This  Communication  is  presented  in  order  to  support 
these  activités,  and  ensure  that  the  environmental  taxes  and  charges  are  used  in  a  way 
compatible with Community  legislation. 

The Communication  is a first step in the Commission's treatment of the use of  environmental 
taxes  by  the  Member  States.  It  aims  to  explain  the  existing  legal  framework  for  the  use  of 
environmental  taxes  and  charges  by  Member  States  within  the  framework  of  the  single 
market. It also aims to clarify  both the possibilities  and constraints  for  Member  States to  act 
in this field. This Communication will not discuss the advantages and disadvantages  in terms 
of  economic  efficiency  and  environmental  effectiveness  of  using  environmental  levies  at 
Member  States  level. Nevertheless,  it  will  provide  Member  States  with  a  view  of  the  legal 
obligations in question, which have to be considered, when environmental  levies and  charges 
are  designed.  It  shows  that  there  is  considerable  room  for  action  by  the  Member  States  to 
implement fiscal instruments, while respecting Treaty obligations. 

Environmental  taxes  and charges  are increasingly  used  in the Member  States. This  opens  up 
the  scope  for  a  more  cost-effective  environmental  policy.  Environmental  taxes  and  charges 
can  be  an  appropriate  way  of  implementing  the  "polluter  pays"  principle,  by  including  the 
environmental  costs  in  the  price  of  goods  or  services.  Fiscal  instruments  are  considered  as 
incentives  for  producers  and  consumers,  steering  choices  towards  more  environmentally 
sustainable activities. The present use of environment taxes in the Member  States is set out in 
an appendix to the  Communication. 

Obviously, these  instruments  should  be used  in a way which  is compatible with  Community 
law. In particular,  competition,  single market and taxation policies affect  how  environmental 
taxes  and  charges,  and  the  resulting  revenues,  may  be  used.  The  legal  framework  basically 
aims  to  ensure  that  Member  States  do  not  distort  competition  by  discriminating  against 
products/services  from  other Member  States. However, the detailed  legal  framework  is  quite 
complex,  which  is  the  reason  why  the  Commission  deems  it  important  to  clarify  it  in  this 
Communication.  The  document  also  specifies 
in  the 
Community, known as the rules of  notification. 

the  control  measures  existing 

The Commission, in cooperation with all interested parties, intends to continue to explore the 
avenue of environmental  levies and charges by : 

i) 

ii) 

iii) 

Systematic collection of experience from  Member  States of the existing  levies 
and charges, 
Systematic  analysis  of  the  environmental  impact  of  the  use  of  environmental 
taxes  and charges within Member States, 
Systematic  analysis  of  the  impact  of  environmental  taxes  and  charges  on  the 
internal market and the competitiveness of European industry 

The  results  of  this  work  will  be used  to draw policy  conclusions  on  the  further  use  of  these 
instruments on Community and Member State levels. 

CONTENTS 

I. OBJECTIVES AND SCOPE OF THE COMMUNICATION 

,  1 

II. DEFINITIONS AND LEGAL CONTEXT 

a. Definitions 

b. Different  types of environmental levies 

c. Legal context 

III. GUIDELINES 

A. GUIDELINES FOR THE USE OF ENVIRONMENTAL LEVIES 

a. Environmental objective of the levy 

b. Custom duties and charges having similar effects 

c. Internal taxation 

d. Secondary legislation on indirect taxation 

e. State aid 

Existence of aid 

Compatibility  of aid with EU state aid legislation 

f.  Quantitative restrictions, and measures having equivalent effect 

B. GUIDELINES  ON COMMUNITY CONTROL MECHANISMS 

a. Notification  requirements in the field of state aid 

b. Notification  requirements in the field of Directive 83/189/EEC and 

secondary Community environmental law 

c. Notification  of national measures transposing Community Directives 

d. Complaints and Commission's own initiative investigations 

IV. CONCLUSION 

APPENDIX 

3 

3 

4 

5 

5 

5 

5 

6 

7 

9 

11 

15 

17 

17 

19 

20 

20 

20 

Overview of environmentally  related taxes and charges in EU/EEA Member States. 

& 

I. OBJECTIVES AND SCOPE OF THE COMMUNICATION 

1. The Community Fifth  Environmental Action Programme1 and its  1996 review2, present the 
broadening  of the range  of environmental  policy  instruments  as one of  its key priorities.  On 
several  occasions,  the  Community  Institutions  have  called  upon  the  Commission  and  the 
Member  States  to  explore  to  a  larger  extent  the  potential  of  new  environmental  policy 
instruments,  in  particular  of  a  fiscal  nature.  In  December  1995  the  European  Council  of 
Madrid concluded: "In order to exploit the job-creation potential of environmental  protection, 
these  (environmental)  policies  should  - to  a  greater  extent  than  at  present  -  rely  on  market 
based  instruments,  including  fiscal  ones." The  European  Council  of  Florence  of  June  1996 
sent a similar message3. 

2.  In  order  to  reach  environmental  objectives,  which  are  increasingly  set  in  the  context  of 

framework  legislation  at EU  level, Member  States have, apart  from  measures  harmonised  at 

Community  level,  a  multitude  of  economic,  technical,  and  voluntary  instruments  at  their 

disposal.  Environmental  taxes  and  charges  form  part  of  the  range  of  environmental 

instruments  and  can  be  an  appropriate  way  of  implementing  the  polluter  pays  principle,  by 

including  the  environmental  costs  in the  price  of  a  good  or  service.  These  instruments  can 

thereby induce consumers and producers into environmentally more sustainable behaviour. 

3.  One  of  the  purposes  of  environmental  taxes  and  charges  is  to  reach  an  environmental 
objective,  and  consequently,  they  should  have  an  effect  on  the  market.  It  is  therefore 
important  that  the  rate  of  an  environmental  tax  or  a  charge  is  set  at  a  correct  level:  a  levy 
which  is  too  low  will  not  be  able  to  fully  correct  a  distortion  on  the  market,  while  a  levy 
which is too high replaces one distortion with another. 

4.  Revenues  from  environmental  taxes  and  charges  can  be  used  to  finance  environmental 
protection  activities.  In  some  cases,  these  instruments  can  also  provide  large  and  stable 
revenues. They can then be used to decrease other taxes which are perceived  as distorting the 
economy, such as labour taxes.  Such an approach was proposed to the Member  States in the 

OJnoC  138, 17.5.1993, p. 1. 

2 

COM (95) 647, 24. 01.1996 

It  requested  the  Council  to  submit  to  it  a report  on the  development  of the  tax  systems  within  the 
Union,  "taking  account  of  the  need  to  create  a tax  environment  that  stimulates  enterprise  and  the 
creation of jobs and promote a more efficient  environmental policy". 

Commission  White  paper  "Growth,  Competitiveness,  and  Employment"4;  and  endorsed  by 
the  European  Council  of Brussels in December  1993. This question  is also  dealt  with  in  the 
Commission  Report5  "Taxation  in the  European  Union,  Report  on  the  Development  of  Tax 
Systems", prepared for the European Council in Dublin, December  1996. 

5. Environmental  taxes  and  charges  are being used  in all  EC/EEA Member  States6 and  they 
also  play  an  increasing  role  in  environmental  policy  in  the  Central  and  Eastern  European 

countries  that  have  applied  for  EU  membership.  Where  appropriate,  Community-wide  rules 

have  been  adopted  to  enable  such  taxes  to  be  applied  within  the  framework  of  the  single 

market  (e.g. taxation  of mineral  oils; see paragraph  23). On the  other  hand,  in  line with  the 

principle of subsidiarity, an increasing number of national  initiatives in the form  of taxes and 

charges are being taken to deal with local environmental problems, which often  also are more 

efficiently  dealt with at that level. 

6.  The  use  of  environmental  taxes  and  charges  and  of  their  revenues  impinges,  directly  or 

indirectly, on several areas of Community  legislation other than environmental policy, and  in 

particular  on  competition,  single  market  and  taxation  policies.  Many  concrete  cases  have 

shown the importance of improving integration between these different  areas of policy. In the 

agricultural  sector,  additional  considerations  might  sometimes  be  required,  due  to  the 

Community  agricultural  policy.  The use of environmental  taxes and charges may  also  affect 

obligations  towards  third  countries, e.g.  in the context  of the  WTO.  Member  States  need  to 

take  account  of  all  these  linkages  in  order  to  ensure  that  national  environmental  taxes  and 

charges  are  implemented  in  a  way  which  is  compatible  with  their  WTO  and  Treaty 
obligations7. 

7.  For  the  reasons  set  out  above,  the  Commission  deems  it  important  to  clarify  the  legal 

framework  applicable  for  Member  States  wishing  to  introduce  environmental  taxes  and 

charges. The framework  is defined  by the Treaty, secondary EC legislation, the jurisprudence 

4 

5 

6 

COM (93) 700  final 

COM (96) 546, 22.10.1996 

See further  Appendix  1. 

Although  this document concerns aspects related to the single market, Member  States should be  aware 
that there may  potentially  be conflicts  between  what  is permitted  by  EU  and  WTO  rule, especially  in 
the  field  of  Border  Tax  Adjustments.  See  further  Commission  Communication  on  Trade  and 
Environment,  COM (96) 54 (OJ no C , 28.02.1996). 

of the Court of Justice, as well  as the decisions and legal steps the Commission has taken to 

put this legal framework into practice. The Commission also deems it important to highlight 

which further elements it may take into consideration when assessing national environmental 

taxes and charges. The objective of the document is, however, not to analyze the advantages 

and  disadvantages 

in  terms  of 

economic  and  environmental  efficiency  of  using 

environmental  taxes  and  charges  at  Member  State  level.  The  information  should  provide 

useful  guidelines  for  Member  States  in  designing,  implementing  and  evaluating  such 

instruments. The aim is to ensure a balanced and efficient  use of the instruments at Member 

State, regional or local level, and a transparent assessment by the Commission. 

8.  The  Commission  will  keep the use  of  environmental  taxes  and charges  at national  level 

under  review,  having  regard  to  the  impact  of  such  measures  on  the  functioning  of 

environmental policy, the single market and on European competitiveness, and other relevant 

policies  such  as  energy  policy.  If  a multiplication  of  different  national  solutions  to  similar 

problems become  evident, or when environmental  objectives can be reached in a more cost-

effective  way, the  Commission  will  put forward new proposals  at Community  level  despite 

the difficulties  which arise because of the current unanimity requirements for the adoption of 

fiscal measures. 

9.  Chapter II of this  Communication  deals with the question  of  definitions  and sets  out the 
general legal context, while detailed guidelines are set out in Chapter III. It should be stressed 
that this Communication cannot provide definitive answers on future cases, and consequently, 
each individual case will have to be considered on its own merits. 

II. 

DEFINITIONS AND LEGAL CONTEXT 

a.  Definitions 

10. In the area of environmental taxation, different  meanings are often given to similar terms 
in  different  Member  States,  and  no  precise  definitions  are  offered  by  EU  legislation. 
Nevertheless, it is important to stress that it is the characteristics and the effects  of a measure 
which  determines  how  it  will  be  judged  with  respect  to  Community  law  and  not  the 
denominations used in the Member States. Accordingly, this Communication does not set out 
to  define  the  various  types  of  instruments  used  in  Member  States.  The  term  "taxes and 
charges" should  be  understood  to  cover  all  compulsory,  unrequited  payments,  whether  the 

revenue accrues directly to the Government budget or is destined for particular purposes (e.g. 
earmarking). In this Communication the word levy will be used to cover "taxes and charges" 
as defined  above. Levies covered by more specific provisions in Community directives will 
fall under the legal context of respective directive. 

11. One likely feature for a levy to be considered as environmental would be that the taxable 
base of the levy has a clear negative effect on the environment. However, a levy could also be 
regarded  as  environmental  if  it  has  a  less  clear,  but  nevertheless  discernable  positive 
environmental effect.  One such example could be differentiations  of any tax or charge based 
on environmental criteria, such as between leaded and unleaded gasoline. In general, it is up 
to the Member State to show the estimated environmental effect  of the levy, if that would be 
needed in assessing its compatibility with Community law. 

b. Different  types of environmental levies 

12. Experience has shown that environmental taxes and charges are very different  in nature 
but can be divided into two main categories8. 

Emission  levies involve payments that are directly related to the real or estimated  pollution 
caused,  whether  emitted  into  air,  water  or  on  the  soil,  or  due  to  the  generation  of  noise. 
Existing  examples  are  charges  on  emissions  of  NOx  from  large  combustion  plants,  and 
charges on pollution to water from  waste water treatment plants. Levies on the emission of 
noise exist in the field of aviation. In so far as these levies are applied to stationary  sources 
(such  as  industrial  plants)  they  will  to  a  large  extent  fall  outside  the  scope  of  this 
Communication, as the cost of paying them falls only on domestic producers9. 

Product  levies  are  applied  to  raw  materials  and  intermediate  inputs  such  as  fertilisers, 
pesticides, natural gravel, and ground water, and on final consumer products such as batteries, 
one  way  packaging,  car  tyres  and  plastic  bags.  Some product  levies  that  have  existed  for 
many years, mainly  in the field of energy, are increasingly  regarded  as contributing  to the 

See further  e.g.  "Environmental  Taxes; Implementation  and Environmental  Effectiveness",  European 
Environmental Agency, 1996, and "Environmental Taxes in OECD Countries", OECD, 1995. 

Q 

Exemptions from  emission levies and the use of revenues from  such levies may, however, fall  under 
state aid rules (see further below). 

integration  between  environmental  and  energy  policies.  Typical  examples  are  taxes  on 

gasoline, diesel and heating oils and electricity. 

c. Legal context 

13  The  legal  appraisal  of  environmental  levies  is  complex  since  the  instrument  is 
comparatively  new and developing  and  since the Treaty was not conceived  with this type  of 
environmental policy  instrument  in mind. The basic legal context surrounding  environmental 
levies is given by the following  articles: 

customs  duties  levied  on  intra  Community  trade, or charges having  equivalent  effect 
(Articles  9-12); 

quantitative  restrictions  on  importations  and  exportations  of  goods  between  the 

Member States, or measures having equivalent effect  (Articles 30 - 36); 

provisions  on  transport  policy,  that  are  less  favourable  in  their  effect  on  carriers  of 

other Member States (Article 76). 

state aid  creating  distortions  of competition  affecting  intra community  trade  (Articles 

92-93); 

internal taxation discriminating  against products of other Member  States or  otherwise 

protecting  national  production  (Article  95)  and  legislation  concerning  excise  duties 

and other forms of indirect taxation based on Article 99; 

Article  13Or stating the objectives of Community environmental policy. 

III.  GUIDELINES 

A 

GUIDELINES FOR THE USE OF ENVIRONMENTAL  LEVIES 

a. Environmental  objective of the levy 

14. Article 2 of the EC Treaty  states that  "sustainable and non-inflationary  growth  respecting 

the  environment"  is  one  of  the  main  tasks  of  the  Community.  Article  130r  states  that 

Community  policy  on  the  environment  shall  contribute  to  preserving,  protecting  and 

improving  the  quality  of the environment, protecting  human health  and  prudent  and  rational 

utilisation  of  natural  resources.  The  preventative  aspect  is  a  key  principle  as  well  as  the 

polluter  pays  principle  and  the  precautionary  principle.  Furthermore  it  is  stated  that 

environmental  protection  requirements  must  be 

integrated 

into 

the  definition  and 

implementation  of  other  policies.  When  introducing  environmental  levies  Member  States 

should  provide  a  sound  justification  on  the  need  to  solve  the  environmental  problems. 

Particular  attention  should  be paid  to  the  relation  between  these  measures  and  the  elements 

included  in  Article  13 Or of  EC  Treaty,  Community  environmental  legislation  and  related 
jurisprudence,  the  Fifth  Environmental  Action  Program10,  and  international  agreements  to 
which the European Community has acceded. 

b. Customs duties and charges having equivalent  effect 

15.  According  to  Articles  9  to  12  of  the  EC  Treaty,  Member  States  shall  refrain  from 

introducing  any new customs duties on imports or exports or any charges having  equivalent 

effect.  Such  customs  duties  in  the  strictest  sense  no  longer  exist  between  Member  States. 
Nevertheless,  the  Court  has  decided  that  any  pecuniary  charge  levied  on  products  only 

because they cross a frontier  has an equivalent effect  to a customs duty. If a levy falls  only on 

foreign  products,  it may therefore  be regarded  as equivalent  to  a customs  duty.  However,  if 

such a levy is part of a general system of taxation of products, according to objective  criteria 

without  regard  to  the  origin  of  the  products,  it  will  have  to  be  examined  on  the  basis  of 

Article 95. 

16. A  general  system  of taxation  under  which  a very  large portion  of  national  production  is 

exempted may still be regarded as a charge having an effect  equivalent to a customs duty.  In 

this connection the  Court has made  it clear that  it may  be necessary  to take  into  account  the 

appropriation  of  the  revenue  from  the  levy.  A  levy  applying  to  products  of  other  Member 

States and domestic products according to the same criteria can therefore  constitute  a  charge 

having  an  effect  equivalent  to  customs  duties,  if  the  revenue  is  used  to fully  compensate 

domestic  producers  of  the  taxed  products.  However,  using  the  revenue  to  support  the 

consumers of the taxed products would not fall  in this category, but would have to be judged 
according  to  state  aid  law  (see paragraphs  33  -  34). A  levy  could  be regarded  as  having  an 
effect  similar  to  customs  duties,  and  illegal  state  aid,  as  it  can  be  governed  both  by  the 
provisions of Article 9-12 and by Article 92. 

10 

OJnoC  138, 17.5.1993, p. 1 

c. Internal  taxation 

17.  Article  95  aims  at  guaranteeing  the  neutrality  of  internal  taxation  by-prohibiting 

discrimination  against products of other Member  States and protection  of domestic products. 

The  relevant  jurisprudence  developed  by  the  Court  of  Justice  is  based  on  three  main 

principles : 

1) Member  States are, subject  to certain limits, in principle  free  to  choose the  system 
of taxation which they consider most suitable; 

2)  The  system  applied  to  domestic  products  constitutes  the  point  of  reference  for 

determining  whether  products  of  other  Member  States  are  taxed  more  heavily  than 

domestic products; 

3)  Article  95  is  infringed  if  a  product  of  another  Member  State  is  more  heavily 

charged than a domestic product. 

18.  As  regards  the  first  point,  the  Court  has  consistently  held11  that  Member  States  may 
differentiate 
levies  between  products,  even  if  they  are  "similar".  To  be  legal,  such 
differentiation 

1) must be based  on objective  criteria,  such as the nature of the raw materials  used or 
the production processes employed12; 
2) must pursue  objectives  of economic policy  which  are themselves  compatible  with 

the requirements of the Treaty and its secondary legislation; and 

3)  in  addition,  the  detailed  rules  must  be  such  as  to  avoid  direct  or  indirect 

discrimination  of  products  from  other  Member  States  or  protection  of  competing 

domestic products. 

The  Court  has  pointed  out  that  a  levy  cannot  be  considered  discriminatory  solely  because 

only  products  of  other  Member  States  fall  within  the  most  heavily  taxed  category,  if  this 
results  from  the  application  of  objective  and  not  discriminatory  criteria13.  If,  however, 
products  of  other  Member  States  are  ,  on  the  basis  of  arbitrary  and/or  discriminatory 

1 ' 

12 

13 

Judgement of 4 March 1986 Case C-106/84, Commission v. Denmark [1986] ECR 833 and judgement 
of 7 April  1987 Case C-196/85 Commission v. France [1987] ECR 1597. 

Judgement of 14 January  1981,  Case 46/80, SA Vinal v. Orbat [1981] ECR 77. 

Judgement of 30 November  1995, Case C-l 13/94, Casarin [1995] ECR 4203. 

conditions,  excluded  in advance and/or by definition  from  benefitting  from  a reduced rate of 
the levy, there would be a breach of Article 9514. 

19. As regards point 2, the system of taxation must be transparent, at least to the extent that it 

must  be  possible  to  determine  objectively  whether  the  burden  falling  on  products  of  other 
Member  States  exceeds  that  falling  on  similar  domestic  products15.  Moreover,  the  system 
must apply  equally to domestic products  and products  of other Member  States. In  particular, 

according  to the  Court, to assess  if Article  95 has been infringed,  it is necessary  to take  into 

consideration : 

- 

- 

- 

- 

the rate of the levy, 

the provisions relating to the taxable base, 

the control systems for charging the levy, and 

the detailed rules for the collection of the levy. 

The  case  law  of  the  Court  also  points  out  that  the  mere  fact  that  the  tax  is  levied 
predominantly  on imports is not enough to deem it discriminatory16.  The decisive criterion  is 
the actual  financial  burden  of each  levy  falling  on national  products  on the one hand  and  on 
products of other Member States on the other. 

20.  Article  95  does  not  give  the  Community  a  right  to judge  whether  a  levy  in  a  Member 
State is excessively high in relation to its environmental objective17.  Jurisprudence on Article 
95 has confirmed  the application  of the criteria of proportionality,  which involves  balancing 
the  gain  for  the  environment  with  the  potential  impact  on  the  single  market,  only  for 
administrative control measures of the levy 18. 

21.  As  regards  point  3,  in  order  to  establish  if  Article  95,  first  paragraph,  is  infringed,  the 

"similarity" between national  and foreign  products must be assessed. The Court has held that 

"similar products" are those that " have similar characteristics  and meet the same needs  from 

14 

15 

16 

17 

Judgement of  27 May  1981, Case  142 and  143/80, Salengo, [1981] ECR  1413 and Judgement  of 3 
July 1985, Case 277/83, Commission v Italy [1985] ECR 2049. 

Judgements of 26 June 1991, Case C-152/89, Commission v Luxembourg [1991]  ECR 3141  and Case 
C- 153/89,  Commission v Belgium, [1991] ECR 3171. 

Judgement of 16 December 1986, Case 200/85, Commission v Italy, [1986] ECR 3953. 

Judgement of 5 April 1990, Case C-132/88, Commission v. Greece [1990] ECR 1567. 

Judgement-of 7 April 1987, Case 196/85  Commission v. France [1987] ECR 1597. 

the point of view of consumers"19. In this context, it should be considered whether goods with 
the same function  but with different  environmental properties due to content or differences  in 
production methods could be regarded as being different  goods20. 

22. If the goods are not  "similar",  but still are at least partially  or potentially  competing  with 

foreign products , the second paragraph of Article 95 requires that the levy must not have the 
effect  of protecting  domestic products21. In the assessment  of this aspect, not only the  actual 
situation but also the potential market for  foreign  products, if no protectionist  measures  were 

involved, should be taken into consideration. It is also necessary to take into account how the 

revenue  from  the levy  is used. The Court ruled that when the revenue from a levy  is used  to 

partly  offset  the  burden  borne  by  domestic  products,  the  charge  constitutes  discriminatory 
taxation  within  the  meaning  of  Article  95  of  the  Treaty22.  In  addition,  a  levy  could  be 
regarded  as being both discriminatory  and illegal state aid, as it can be governed  both by  the 
provisions of the first paragraph of Article 95 and by Article 9223 (see paragraphs 26  ff). 

d. Secondary legislation on indirect taxation 

23. Community legislation adopted under Article 99 contains 

a)  harmonised  rules  on  tax  structure  and  minimum  rates  for  excise  duties  on  mineral  oils, 
tobacco and alcoholic beverages 

b)  other  general  provisions  in  directive  92/12/EEC,  allowing  Member  States  to  introduce 
indirect  taxes  on  products  provided  that  those  taxes  do  not  give  rise  to  border-crossing 
formalities  in trade between Member States. 

19 

20 

21 

22 

23 

Judgement of 7 May  1987, Commission  v. Italy,  Case  184/85 [1987] ECR 2013. In order to assess 
similarity, the Court considered whether products satisfy  the same consumer needs and both legal and 
factual circumstances are relevant. 

Under Council Regulation on a Community eco-label award scheme (EEC No 880/92 of 23/3 1992, OJ 
no L 99, 11.04.1992, p. 1.),  eco-labels can be awarded for products (e.g.paper)  with the same function 
but with different  ecological properties. 

Judgements of 7 May 1987, Case 184/85, Commission v Italy, [1987] ECR 2013 and case  193/85, Co-
frutta,  [1987] ECR 2085. 

Judgement of 16 December  1992, Case C-17/91, Georges Lornoy [1992] ECR 6523. 

Judgement of 21 May 1980, Case 73/79, Commission v. Italy [1980] ECR 1533. 

An  important  provision  of  Directive  92/81/EEC24  is that  in  general,  only  one  tax  rate  per 
product  can  be  used.  Directive  92/12/EEC25 provides  Member  States  with  the  possibility, 
within certain restrictions, to introduce other national taxes on mineral oils. Such taxes must 
comply  with the rules  applicable  for  excise duty and VAT 26. Member  States may  request 
authorization  from  the  Council  to  apply  reduced  tax  rates  or  exemptions,  e.g.  for 
environmental reasons27. In addition, Member States have the right to apply reduced tax rates 
or tax  exemptions  on mineral  oils  used  for  specific  purposes,  for  example,  in  the  field  of 
public transport and within the agriculture sector. 

24. Directive 93/89/EEC28, sets out framework conditions  for the application of taxes , tolls and 
user charges (Eurovignette) on heavy goods vehicles in Member States. The Commission 
presented in July 1996 a proposal29, based on Article 75,  for replacing this Directive30. The 
proposal would allow road charges (annual vehicle taxes, tolls and user charges  in general and in 
particular on sensitive routes) to be differentiated  to take account of external costs.  More 
generally, the Commission launched a debate on the use of economic instruments in the transport 
sector with its Green Paper "Towards fair and efficient  pricing in transport: Policy options for 

24 

25 

26 

27 

28 

29 

30 

Council  Directive  92/81/EEC  of  19  October  1992,  on  the  harmonisation  of  the  structures  of  excise 
duties on mineral oils (OJ no L 316, 31.10.1992, p. 12). 

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, 23.03.1992, 
p.l). 

Laid  down  in  Directives  92/81/EEC  of  19  October  1992,  on  the  harmonisation  of  the  structures  of 
excise duties on mineral oils (OJ no L 316, 31.10.1992, p. 12) and  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). 

So  far  some  70  derogations  have  been  granted.  Some  derogations  concern  tax  differentiation 
depending on environmental  criteria of fuels  such as reduced rates on environmentally  improved  diesel 
and  on  reformulated  unleaded  and  leaded  petrol.  The  Community  wide  stipulated  tax  differentiation 
between  leaded  and  unleaded  petrol  has  been  created  by  treating  the  two  different  fuels  as  different 
products. 

Directive 93/89/EEC (OJ no L 279,  12.11.1993). 

Proposal  for  a  Council  Directive  on  the  charging  of  heavy  goods  vehicles  for  the  use  of  certain 
infrastructure,  COM (96) 331,  10.7.1996. 

The Court annulled the Directive on 5 July  1995 on grounds of procedural  irregularities.  The 
effects  of the Directive are however to be maintained until legislation replacing the Directive is 
adopted. 

10 

internalizing the external costs of transport in the European Union.31"  Further action to follow up 
the Green paper will be brought forward by the Commission later this year 

25.  The  Directives  91/542/EEC32,  93/59/EEC33,  94/12/EC34,  adopted  under  Article  100a, 
concerning  polluting  emissions  from  motor  vehicles  contain  specific  frameworks  for  fiscal 
incentives  related  to  the  purchase  of  new  vehicles.  The  system  aims  at  allowing  Member 
States  to  encourage  marketing  of  new  cleaner  vehicles,  while  avoiding  fiscal  measures 
constituting de facto technical requirements other than those harmonised at Community  level. 
These fiscal incentives are authorised provided that they respect the following  principles: 

they must apply to all new vehicles in conformity  with future  emission limits  foreseen 

in the Directives 

they must be phased out when the new emission limits become mandatory, 

they must be lower than the extra cost needed to meet these future  emission standards, 
they have to be notified  in due time to the Commission. 

e. State aid 

26. According  to Article  92 of the Treaty, any aid granted by a Member  State which  distorts 

or  threatens  to  distort  competition  shall  be  incompatible  with  the  common  market.  As  a 

general  rule,  an  aid  element  contained  in  a  levy  system  cannot  be  authorised  by  the 

Commission  if  other  provisions  of  the  Treaty  are  being  infringed.  Thus,  it  first  has  to  be 

assured  that  an  environmental  levy  does  not  run  counter  to  these  other  provisions,  in 

particular  Articles  9,  12,  30-36  and  95.  If  an  aid  element  does  not  run  counter  to  these 

provisions, the aid may be deemed compatible with the common market as described below. 

a) Existence of aid 

27. Before  deciding on the compatibility  of aid with EC state aid provisions, the  Commission 
has  to  clarify  if  aid  is  involved.  Revenues  from  environmental  levies  constitute  "state 

31 

32 

33 

34 

Com (95) 691  final 

OJ no L 295, 25.10.1991, p.l. 

OJ no L  186, 28.07.1993, p.21. 

OJ no L  100,  19.04.1994, p.42. 

11 

resources". If  such revenues  are assigned  to the  general  state  budget,  its  future  use  does  not 

come within the  scope of this communication.  If,  on the  other hand, the revenue  is  destined 

for  a  special  purpose,  state  aid  may  be  involved  if  certain  enterprises  or  productions  are 

favoured.  Exemptions  from  product  or  emission  levies  also  constitute  state  aid,  even  when 

these exemptions are necessary to prevent domestic firms from being placed at a disadvantage 

compared with their competitors in countries that do not have such levies. 

b) Compatibility of aid with EC state aid provisions 

Use of revenues 

28.  Article  92  paragraph  2  lays  down  categories  of  aid  which  shall  be  deemed  compatible 

with  the  common  market,  while paragraph  3 specifies  some  categories  of  aid  which  may  be 

deemed  compatible  with  it.  Article  93  gives  provisions  for  a  procedure  in  order  for  the 

Commission to assess  state aid in the light of Article 92.  The principles  according  to  which 

aid  schemes pursuing  environmental  objectives  shall be assessed  by the  Commission  are  set 
out in the Community  guidelines on State aid for environmental protection35.  The assessment 
is  normally  made  by  weighing  the  adverse  effects  on  competition  with  the  benefits  for  the 

environment. 

29.  When assessing state aid cases the Commission takes into account both the origin and the 
use  of  revenue  in  order  to  get  a  complete  picture.  An  analysis  of  the  use  of  revenues  in 
isolation,  which  did  not  take  the  origin  into  account,  would  give  an  incomplete  figure  as  it 
would  seem as if there was simply a distribution of public funds.  To this effect  the Court has 
stated  that  the  Commission  must  take  into  consideration  all  those  factors  which  directly  or 
indirectly may be involved, including indirect aid, the financing  of the aid and the connection 
between the financing  and the amount to be distributed as aid36. 

30. In order to facilitate  the assessment by the Commission, Member States are encouraged to 
state  clearly  how the revenues from  the environmental  levies are to be used. In all cases  it  is 
desirable that the criteria used  are open, transparent, non-arbitrary  and provide incentives  for 
a desirable behaviour. The following  are the most common ways of using revenue: 

35 

36 

OJ No C 72,  10.3.1994, p. 3. 

Judgement of 25 June  1970, Case 47/69, France v Commission,  [1970]. 

12 

1) Support to environmental investments/activities 

31.  Examples  of  facts  the Commission  takes  into  account  when assessing  compatibility  of 
support to environmental investments with EC state aid rules are: 
- whether the revenue is spent in the same sector of economic activity as it was collected, or 
in a different  sector, i.e. if any sector receives a net benefit, 
- whether the activities financed  by the proceeds of the levies can be provided on a normal 
commercial basis with a satisfactory result, or whether some form of aid is needed, 
- whether the money paid to firms can be considered compensation for undertaking activities 
that they would otherwise not perform, and that are in the public interest, 
- the intended duration of the measure, 
- if the aid element is intended to be reduced over time  . 

2)  Levies  to  finance  systems  for  collection  and  disposal  of  dangerous  products  or 
substances 

32. There is an increasing number of systems for the collection and disposal  of products or 
substances  which  are harmful  to the  environment.  Under those  systems, the  Member  State 
normally  imposes  a  levy  on  the  sale  of  the  products  or  substances  concerned,  with  the 
proceeds  being  used  to pay  companies  for  the collection  and disposal  of the products  after 

38 
use  . 

37 

38 

For aid to agricultural activities, the rules which apply can be found in regulation (EEC) no 
2.078/92, O.J. no. L 215 of 30.07.1992, p.85. 

The  Commission  have  assessed  and  agreed  to  three  such  cases,  namely  a  Danish  scheme  for  the 
collection  of  environmentally  harmful  batteries  (State  aid  case N 539/95), a Danish  scheme  for  the 
collection and disposal of used car tyres (State aid case N 684/93, OJ no C 390, 31.12.1994, p. 15) and 
a Dutch scheme for the collection and disposal of car wrecks (State aid case N 93/95 (ex N 182/95)). 

The key elements in the Commission's assessment were the following: 
(1) that the charge which finances  the system  is imposed  on all  importers/producers  of the products 
concerned in a non-discriminatory way, 
(2) that the payment to the collecting firms is based on normal commercial terms and 
(3) that the systems do' not allow, directly or indirectly, the collecting companies to sell the collected 
products below market price. 
(4) that the systems should be open and transparent, and be economically  efficient. 

As these requirements were fulfilled,  the Commission  concluded that the aid was deemed  compatible 
with state aid legislation and agreed to these collection and disposal systems 

13 

3) Redistribution to the collective that paid the levy 

33.  Redistribution  of revenues  from  emission  levies, only  charged  on domestic firms,  to  the 

collective  that  paid  them  would  normally  be uncontroversial,  as  long  as the  system  follows 

general  requirements  on  transparency  and  non-arbitrariness.  Such  systems  should  however 

avoid unjustifiably  favouring  a specific domestic sector. 

34.  Product  levies  can  affect  both  domestic  products  and those  of  other  Member  States.  If 

the  revenues  from  product  levies  are  used  to fully  offset  the  burden  borne  by  domestic 

producers, the  levy  can be regarded  as being  a charge  having  equivalent  effect  to  a  customs 

duty. It would then, as described above, be prone to be prohibited under Art  12 6f the  Treaty 

(see  paragraphs  15  -  16).  If  the  revenues partly  offset  the  burden  borne  by  the  domestic 

producers,  the  levy  would  have  to  be  examined  concerning  discrimination  under  article  95 
(see  paragraph  22).  The  Commission  has  not  raised  objections  in  cases  involving  product 

levies, where the revenue  has been  intended  to  solve  similar  environmental  problems  as  the 
levy itself, provided that the above mentioned problems did not arise39. 

Exemption rules favourable  to domestic firms 

35. As stated above, exemptions  from  emission  or products levies may constitute  state aid  in 

the meaning  of Art.  92(1)  of the  Treaty. Temporary  relief  from  new  emission  levies  may  be 

authorized  where  it  is  necessary  to  offset  losses  in  competitiveness,  since  emission  levies 

usually  only  apply  to  domestic  firms.  To ensure that these reliefs  do not  distort  competition 

unduly,  and  to  give  an  incentive  for  the  aid  recipients  to  implement  measures  to  reduce 

pollution, the Commission requires that the tax relief or compensation 

- is temporary, 

- does not provide the sector with a net benefit,  and 
- in principle, reduces over time40. 

39 

40 

In two state aid cases; concerning  control of seeds in France (State aid case N 693/91), and  concerning 
a  levy  on  pesticides  in  Denmark  (State  aid  case  N  416/95),  the  Commission  decided  that  revenues 
collected  by  levies  on  both  domestic  products  and  those  of  other  Member  States  may  be  used  to 
address  domestic  environmental  problems  that  are  targeted  by  the  levy.  The  requirement  is  that  the 
revenue is distributed  on the basis of objective  criteria, and does not support the domestic producers  of 
the levied products. 

For these reasons, the Commission  has, for  example, accepted the Dutch (State aid case N 760/95) and 
Danish C02/Energy  tax schemes (State aid case N 459/95, OJ no C 324, 5.12.1995, p.9) as  compatible 
with state aid rules. 

14 

36. Exemption  rules  on product  levies  are more  sensitive,  since  such  levies  affect  producers 

in  other  Member  States.  Such  exemptions  would  first  have  to  be  examined  according  to 

discrimination  and  single  market  rules,  and  if  accepted,  then  according  to  stat& aid  law.  In 

general, Member States are encouraged to ensure that 

- the exemption rules are clearly described, open and transparent 

- the expected time frame for the system is described 

- the effects  on concerned sectors analyzed 

- the exemptions not give an undue advantage to domestic firms 

- the envisaged  effects  both  on domestic producers  and  importers  of the  concerned  products 

and close substitutes is analyzed. 

f. Quantitative restrictions and measures having equivalent  effect 

37. Under  certain  conditions  set  out below,  a levy  or  some  aspects  of  it  may  be  assessed  in 

light  of  Article  30,  which  prohibits  all  measures  having  equivalent  effect  to  quantitative 

restrictions  on  imports.  However,  a  measure  with  such  an  effect  may  be  permitted  under 

Articles  30-36,  if  it  is  judged  necessary  to  reach  the  environmental  objective,  and  if  the 

effects  on the internal market are considered to be proportionate to the environmental  gain. It 

has  to  be  emphasized  that  it  is  the  means  of  protecting  the  environment,  and  not  the 

environmental  objective  as such, which are subject to assessment under Article 30. 

Applicability  of Article  30 

38.  Article  30 of the  Treaty  does not normally  apply  when  a levy  falls  under  Articles  9,  12, 

16, or 95 of the EC Treaty.  However, it  could apply in the following  circumstances: 

-  when  a  levy  is  imposed  on  a product  for  which  there  is  no  similar  or  competing  national 

production, and the levy is of such an amount that the free  movement of the products may  be 

impeded:  the  Court  has,  for  example,  indicated  that  if  a  registration  tax  is  applied  to  new 

motor  vehicles  in  a  Member  State  where  no  such  vehicles  are  manufactured,  it  may  be 
examined under Article 3041, or, 

41 

Case 47/88, Commission v Denmark [1990] ECR 4509. 

15 

-  when a levy  is connected  with certain conditions or factors  which  can be separated  from 
those  defining  the  operation  of the  levy  system, these  requirements  may  be  considered  as 
falling under Article 30. Such conditions or factors could concern how the products have to 
be labelled or presented. If,  for example the levy regulation requires an economic operator to 
alter the  form,  size  or  designation  of  the product,  or the  label  under  which  the product  is 
lawfully marketed in another Member State42, and if this modification is not necessary for the 
proper functioning  and objective of the levy, the required modification may be assessed under 
Article  3043.  Furthermore,  in  accordance  with  the  jurisprudence  of  the  Court  of  Justice 
concerning  technical  requirements,  the  conditions  or  factors  referred  to  above  may  not 
channel trade in such a way that only certain traders can effect  the imports of the products 
concerned, whereas others are prevented from doing so44. 

39. The  Court  has  ruled that  a measure, such as a deposit  charged  per bottle, as part  of a 
recycling system for bottles,  cannot in itself qualify as a fiscal measure, and may therefore be 
examined under Article 3045. 

Assessment criteria on Article 30 

40. Case-law on the application of Article 30 is abundant concerning non-fiscal measures, but 
the Court has not yet assessed a fiscal measure on the basis of this provision. Useful  guidance 
on the judgement  of  necessity  and  proportionality  can,  nevertheless,  be  obtained  from  the 
case law of the Court of Justice46 in the area of  non-fiscal  measures, although, as mentioned 
above  levies  and  technical  regulation  to  some  extent  may  have  different  roles  to  play  in 
environmental policy. 

42 

43 

44 

45 

46 

See e.g. Case 27/80 Fietje [1980] ECR 3839 and Case 94/82 Kikvorsch [1983] ECR 947. 

The same line of reasoning was followed by the Court in the Case 74/76, Ianelli & Volpi [1977] ECR 
557, concerning the relation between Articles 30 and 92. 

Case 104/75,  De Peijper [1976] ECR 613. 

Judgement  of  20  September  1988,  Case  302/86,  Commission  v  Kingdom  of  Denmark,  Free 
movement of goods - containers for beer and soft drinks, "Danish bottle case" [1988] ECR 4607. 

See  also  Article  3  of  Commission  Directive  70/50/CEE  of  22  December  1969.  In  case  155/82 
Commission  v Belgium  [1983] ECR 531, at p. 543, para.  12 etc., and  in case  62/90  Commission v 
Germany [1992] ECR 2575, at p. 2605, para.  11 etc., the Court of Justice also applied the conditions 
for necessity and proportionality and found the national restrictions to the free movement of goods not 
justified on grounds of the protection of health and life of humans. 

16 

41.  If Article  30  is  applicable  to  the  national  measure,  the  protection  of  the  environment  is 
recognized  as a so called "mandatory requirement" which may justify  the measure47 even if it 
would  hinder  the  free  movement  of  goods.  In  accordance  with  case  law,  the  following 

conditions  shall  be  met  in  order  for  such  a measure  to  be justified  for  the  protection  of  the 

environment: 

- The measure must be non-discriminatory,  i.e. applicable to domestic  products  and  those  of 

other Member States alike, 

-  It  should  be  shown to be necessary  in order to meet  the environmental  objective,  by,  inter 
alia, scientific  evidence48, 
- The burden which the measure  imposes should be proportionate  in relation to the  objective 
of protecting  the environment49,  which  implies that  it should  not  create more trade  obstacles 
than  is necessary  to  fulfil  the  environmental  objective  and that no other measure  is  available 

which is less restrictive to trade. 

42. The assessment  of whether an environmental  levy is necessary and proportionate  to  fulfil 

the  objective  of  protecting  the  environment  has  to  be  made  on  a  case-by-case  basis.  In 

practice  the  assessment  will  often  depend  on  factors  such  as  the  level  at  which  the  levy  is 

fixed, the environmental  gain expected  by the measure  and the amount  of the  administrative 

and  other  relevant  costs  connected  with  the  regulated  activity.  The  assessment  of  the 

necessity  and proportionality  of the measure may  also depend  on factors  such as culture  and 

consumer  behaviour. 

B. 

GUIDELINES  ON COMMUNITY  CONTROL  MECHANISMS 

a. Notification  requirements  in the field  of state aid 

43.  Member  States  have to  inform  the  Commission,  in  sufficient  time to  enable  it to  submit 

comments,  of  any  plans  to  grant  or  alter  aid.  However,  notification  is  not  required  for  aid 
coming under the de minimis rule50. The time required for the Commission to assess a case is 

Case Cassis de Dijon  and Danish Bottle Case. 

48 

49 

Case 304/84, Millier,  [1986] ECR  1511 and Case  178/84, Commission v Germany,  [1987] ECR  1227. 

Case 227/82, Van Bennekom, [1983] ECR 3883. 

See Commission  notice on the de minimis rule for  State aid, OJ no C 68 of 6.3.1996, p.9. 

17 

normally  two  months.  However,  if  the  Commission  considers  that  any  such  plan  is  not 

compatible  with  the  common  market,  having  regard  to  Article  92, it  initiates  the  procedure 

provided for in Article 93 paragraph 2. This full  investigation procedure provides the Member 

State  in  question  as  well  as  other  Member  States  and  all  other  interested  parties  the 

opportunity  to  submit  their  views  on  the  planned  aid.  The  Member  State  concerned  cannot 

put  its  proposed  measures  into  effect  until  this  procedure  has  resulted  in  a  final  decision 

(Article 93 (3) EC Treaty). 

44. The full  investigation procedure empowers the Commission to take a final decision on the 

compatibility  of  the  aid.  In  cases  of  negative  decisions,  partly  negative  decisions  or 

conditional  decisions,  the  Commission  orders  the  Member  State  concerned  to  comply  with 
the decision within a stated period of time51. 

45.  An  aid  scheme  put  into  operation  without  respecting  the  notification  requirements  is 
illegal.  The  Commission  may  order  the  Member  State  to  suspend  the  payment  of  the  aid 

pending the outcome of the investigation. In cases of aid which has been put into effect  prior 

to  the  Commission's  decision  and  which  the  Commission  declared  incompatible,  the  final 

decision  of  the  Commission  usually  orders  the  Member  State  concerned  to  recover  the 

illegally  granted  aid,  together  with  interest,  from  the  beneficiaries.  In  the  absence  of 

compliance with the Commission decision, the Commission may refer the matter to the Court 

of  Justice.  The  obligation  for  a  Member  State  not  to  put  its  proposed  measures  into  effect 

until a final Commission decision has direct effect, which means that a competitor to the firm 

benefitting  from  the  aid  could  request  a  national  court  to  take  all  appropriate  measures  in 

accordance  with  national  law,  including  the  suspension  of  further  payments  under  the 

scheme,  until  the  Commission  has  decided  on  the  compatibility  of  the  aid  with  the  Treaty. 

Moreover,  a national  court might  in its final judgement  order the restitution  of the aid  which 
has been paid illegally52 or award damages53. 

51 

52 

53 

For  a  detailed  description  of  the  procedures  see:  Guide  to  Procedures  in  State  Aid  Cases,  in 
Competition Law in the European  Communities, Volume IIA - Rules applicable to State aid, Section 
B-I, Brussels-Luxembourg  1995. 

See Case C-39/94, Syndicat français de l'Express international (SFEI) and others v La Poste and others 
(not yet reported), paragraph 71. 

See  e.g.  joined  Cases  C-6/90  and  C-9/90,  Andrea  Francovich  et  al.  v.  Italy,  [1990]  ECR  5357, 
paragraph 35. 

b.  Notification  requirements  in  the  field  of  Directive  83/189/EEC  and  secondary 
Community environmental  law 

46.  Directive  83/189/EEC54  lays  down  a procedure  for  the  provision  of  information  in  the 
field of technical  standards and regulations. It requires prior notification  by Member  States of 

any  technical  regulations,  including  those  "which  are  linked  to  fiscal  or  financial  measures 

affecting  the  consumption  of  products  by  encouraging  compliance  with  such  technical 

specifications  or other requirements". The prior notification  is to be sent to the  Commission, 

and via the  Commission  to the other Member  States which can emit comments  or a  detailed 

opinion. The normal  standstill period of three months provided  for  by this Directive does not 

apply  to  technical  regulations  related  to  fiscal  measures,  and  the  comments  or  detailed 

opinions  of the Commission  or the Member  States  "may concern  only the  aspect  which  may 
hinder  trade  and  not  the  fiscal  or  financial  aspects  of  the  measure"55.  This  notification 
requirement does not prejudge the outcome of the assessment under Article 30 or Article 95. 

47.  Concerning  other  secondary  Community  environmental  law, the  same  prior  notification 

procedure  as  for  Directive  83/189/EEC  is provided  for  by Article  16 of  Directive  94/62/EC 

on packaging  and packaging  waste.  This Article covers measures that  Member  States  intend 

to  adopt  in  order  to  implement  Directive  94/62/EC  and  states  that  a  Member  State  may 

indicate  that  the  notification  is  equally  valid  for  Directive  83/189/EEC,  if  the  proposed 

measure  is also  a technical  matter  within the meaning  of that  Directive.  This  so called  'one-

shop'  system,  enables  Member  States  to  send  only  one  notification  to  the  Commission, 

covering both Directives. 

48.  In  case  a  measure  which  is  notifiable  under  these  Directives  is  not  notified,  the 

Commission  may  open  an  infringement  procedure  under  Article  169  of  the  EC  Treaty  and 

issue  a  letter  of  formal  notice  to  the  Member  State.  In  such  a  case,  the  Member  State 

concerned  is asked to eliminate the measure from  its national legal order; if the Member  State 

wants to  apply  such  a measure,  it has to send a new draft  to the Commission  and to adopt  it 

after  the notification  procedure. 

54 

55 

Council  directive  83/189/EEC  of  28  March  1983  laying  down  a  procedure  for  the  provision  of 
information  in the field  of technical standards and regulations - OJ no L  109, 26.04.1983, amended by: 
Directive  88/182/EEC of 22 March  1988, OJ no L 81, 26.03.1988  and Directive 94/10/EC of 23 March 
1994, OJ no L  100,  19.04.1994. 

Article 8.1  of the Directive. 

19 

c. Notification  of national measures transposing Community Directives 

49.  Every  Directive  contains  a  provision  requiring  Member  States  to  communicate  the 

measures  they  have  enacted  in  order  to  transpose  it.  This  also  applies  to  levies  or  other 

economic instruments, when directives contain provisions referring  to economic  instruments, 

such  as  Article  15  of  Directive  75/439/EEC  on  waste  oil.  In  case  a  law  transposing  a 

Directive  is  not  notified  to  the  Commission,  an  infringement  procedure  will  be  opened  in 

accordance with Article  169 of the EC Treaty 

d. Complaints and Commission's own initiative  investigations 

50.  The  Commission  is  frequently  informed  on  aspects  related  to  environmental  levies 

through  complaints  from  affected  firms  or  from  other  Member  States.  In  such  cases,  the 

Commission  is  obliged  to  investigate  the  matter  as  it  has  the  institutional  task  to  ensure  a 

proper  implementation  of  the  Treaty  and  secondary  legislation.  It  therefore  has  the  right  to 

take  the  initiative  in  investigating  and  requesting  information  from  Member  States  on  their 

use of environmental  levies. 

IV. 

CONCLUSION 

51. The use of environmental taxes and charges is rapidly increasing in the Member  States, in 

line with  the  5th  Environmental  Action  Programme  and  its recent  review.  The  Commission 

supports  this  evolution,  as  it  opens  up  the  scope  for  a  more  cost-effective  environmental 

policy.  However,  it  also  entails  some  potential  conflicts  with  other  aspects  of  Community 

Policy, in particular related to the single market. This Communication aims to guide Member 

States  in  order  to  ensure  that  national  initiatives  on  environmental  levies  and  charges  are 

compatible with the existing Community  Framework. 

52. This Communication  is a first step by the Commission  in the treatment  of  environmental 

taxes  and  charges. It  shows that there  is considerable  scope for  action by the  Member  States 

to  implement  such  instruments, which have  shown to be particularly  attractive  in  improving 

the  efficiency  of  environmental  policy.  However,  the  Communication  also  underlines  the 

importance  of the  legal  framework  related to the functioning  of the  single market  which  has 

to be respected  by Member  States when introducing  environmental  taxes and charges. In this 

context, the Commission  will reflect  on whether, in future  examinations  of  levies  introduced 

for environmental  reasons, further  attention should be given to the analysis of Article 30. 

20 

53.  With the increased practical experience from the use of environmental taxes and charges 

in  Member  States,  Commission  experience  of  assessing  these  instruments,  based  on  this 

Communication  will  also  increase.  With this information  the  Commission' will  examine the 

need  for  policy  initiatives  in  order  to  ensure  the  achievement  of  essential  Community 

objectives. 

54.  In  order  to  assess  the 

impact  on  the  single  market  and  on  environmental  policy,  the 

Commission, plans to carry out an evaluation on economic and environmental implications of 

the use of these instruments, and policy conclusions that can be drawn from this. 

21 

APPENDIX 

Overview of environmentally-related  taxes and charges in EU and EEA countries1 
As of October 1996 

Environmental  Tax Measures 

Aus 
tria 

Bel 
gium 

Den 
mark 

Fin 
land 

France 

Ger 
many 

Greece 

Ice 
land 

Ire 
land 

Italy 

Liech 
ten 
stein 

Lu 
xem 
bourg 

NL 

Nor 
way 

Portu 
gal 

Spain 

Swe 
den 

U.K. 

Motor  Fuels 

Leaded/Unleaded  (Differential) 
Diesel (Quality  differential) 
Carbon/Energy  taxation 
Sulphur tax 
Other excise taxes 
(other than VAT 

Gasoline (quality  differential) 

Other  Energy  Products 

Other excise taxes 
Carbon/Energy  taxation 
Sulphur tax 
NOx charge 

Vehicle Related  Taxation 
Sales/Excise/Regist. tax diff.  (cars) 
Road/Registration tax diff.  (cars) 

Agricultural  inputs 

Fertilisers 

Pesticides 

• 

• 

• 

• 
• 

• 
• 

• 

• 

• 
• 

• 

• 

• 

• 
• 

• 
• 

• 

• 
• 
• 

• 
• 

• 
• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 
• 

• 

• 

• 

• 

• 

• 

• 

• 
• 

• 

• 

• 
• 

• 

• 

• 
• 

• 

• 

• 

• 
• 

• 

• 

• 

• 

I 

• 

• 

• 

• 

• 

• 

• 

• 
• 
• 
• 

• 

• 
• 
• 

• 

• 
• 

(^ 
f 

Overview of environmentally-related taxes and charges in EU and EEA countries (continued) 
As of October 1996 

Environmental  Tax  Measures 

Aus 
tria 

Bel 
gium 

Den 
mark 

Fin 
land 

France 

Ger 
many 

Greece 

Ice 
land 

Ire 
land 

Italy 

Liech 
ten 
stein 

Lu 
xem 
bourg 

NL 

Nor 
way 

Portu 
gal 

Spain 

Swe 
den 

U.K. 

Other  goods 

Batteries 

Plastic Carrier Bags 

Disposable containers 

Tires 

CFCs and/or halons 

Disposable razors 

Disposable cameras 
Lubricant Oil Charge 

Oil Pollution  Charge 
Solvents 

Direct Tax  Provisions 
Env. Investments/Accelerated  depreciation 
Employer-paid  commuting expenses part 

• 

• 

of taxable income 

Air  transport 
Noise charges 
Other Charges 

• 
• 

• 

• 

• 

• 

• 

• 

• 

• 
• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

* 

• 

• 

• 

• 

• 

• 

• 

• 
• 

• 

• 

• 
• 

• 

. 

• 

• 

• 

t 

• 

r^ 
v^ 

Overview of environmentally-related taxes and charges in EU and EEA countries (continued) 
As of  October 1996 

Environmental Tax Measures 

Aus 
tria 

Bel 
gium 

Den 
mark 

Fin 
land 

France 

Ger 
many 

Greece 

Ice 
land 

Ire 
land 

Italy 

Liech 
ten 
stein 

Lu 
xem 
bourg 

NL 

Nor 
way 

Portu 
gal 

Spain 

Sweden 

U.K. 

Water Charges and Taxes 
Water charges 
Sewage charges 
Water effluent charges 
Tax on groundwater extraction 
Manure charges 
Waste Disposal and Mânagm. Charges 
Municipal waste charges 
Waste disposal charge 
Hazardous waste charge 
Land fill tax or charge 

• 
• 
• 

• 
• 

• 

• 
• 
• 

• 

• 

• 
• 
• 

• 
• 
• 

• 
• 
• 

• 
• 

• 
• 

• 

• 

• 

• 

• 

• 

• 
• 

-  • 
• 
• 

* 

• 
• 
• 
• 

• 
• 

•-

• 
• 

• 
• 
• 

• 
• 

• 

• 

• 

• 
• 

• 
• 
• 

• 
• 

• 

• 

Source: OECD (Implementation Strategies for Environmental Taxes) , 1996, updated 

1)  The objective of this table is to give an schematic overview of the use of environmental taxes and charges in different  countries. The design, the structure, the rates etc. are 
different from country to country. 

O 

ISSN 0254-1475 

COM(97)  9 final 

DOCUMENTS 

EN 

09  14  10 

Catalogue number  :  CB-CO-97-033-EN-C 

ISBN  92-78-15312-5 

Office  for  Official  Publications of the European  Communities 

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