Proposal for a Council Directive amending Directive 92/79/EEC on the approximation of taxes on cigarettes, Directive 92/80/EEC on the approximation of taxes on manufactured tobacco other than cigarettes and Directive 95/59/EC on taxes other than turnover taxes which affect the consumption of manufactured tobacco
Date: 1998-05-15
Institutions: European Commission
Subjects: tax harmonisation, tax system, tobacco, tobacco industry

C  203/16

EN

Official  Journal  of  the  European  Communities

30.6.98

Proposal  for  a  Council  Directive  amending  Directive  92/79/EEC  on  the  approximation  of  taxes
on  cigarettes,  Directive  92/80/EEC  on  the  approximation  of  taxes  on  manufactured  tobacco
other  than  cigarettes  and  Directive  95/59/EC  on  taxes  other  than  turnover  taxes  which  affect
the  consumption  of  manufactured  tobacco

(98/C  203/10)

COM(1998)  320  final  -  98/0189(CNS)

(Submitted  by  the  Commission  on  18  May  1998)

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 
Parliament,

regard 

to 

the  opinion  of 

the  European

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

Whereas  in  its  first  report  on  the  structure  and  rates  of
in  accordance  with  the
excise  duties(cid:216)(˛),  drawn  up 
provisions  of  Council  Directive  92/79/EEC(cid:216)(ˇ)  and
Council  Directive  92/80/EEC(cid:216)(—), 
the  Commission
merely  drew  attention  to  certain  difficulties  encountered
in  implementing  the  Directives  without  proposing  any
precise  solutions;

Whereas  the  rules  must  be  interpreted  and  implemented
more  uniformly 
if  the  single
market  is  to  operate  smoothly;

in  the  Member  States 

Whereas,  moreover,  rules  which  can  be  implemented
more  easily  in  practice  must  be  established  if  the  single
market  is  to  operate  smoothly;

Whereas 
the  Member  States  should  nonetheless  be
allowed  sufficient  flexibility  to  identify  and  implement
policies  tailored  to  national  circumstances;

Whereas,  for  practical  reasons,  the  Member  States  must
be  allowed  some  flexibility  to  adjust  the  incidence  of  the
overall  minimum  excise  duty  in  line  with  certain  changes,
including  those  in  VAT  rates;

Whereas  Member  States  must  be  given  the  option  of
neutralising  the  impact  of  changes  in  the  VAT  rate  on
the  overall  minimum  excise  duty;

Whereas  a  consultation  process  involving  national  auth(cid:220)
orities,  business  representatives  and  interest  groups  has
since  taken  place;

Whereas  the  existence  of  this  option  must  not  lead  to
distortions  of  competition  or  to  malfunctioning  of  the
single  market;

Whereas  the  first  stage  in  this  consultation  process  was
the  Lisbon  Conference,  the  purpose  of  which  was  to
assess 
the  present  Community
arrangements  and  to  assist  the  Commission  in  its  task  of
planning  future  excise(cid:220)duty  policy;

the  performance  of 

Whereas  the  consultation  process  has  led  to  a  second
Commission  report;

Whereas  the  consultation  process  revealed  difficulties  in
applying  the  57(cid:216)%  minimum  incidence  rule;

the  options  open 

Whereas 
the  Member  States
regarding  the  application  of  the  Directives  must  be
limited  over  time;

to 

Whereas  there  is  nothing  to  prevent  Member  States  from
being  authorised  to  apply  a  minimum  excise  duty  to
cigars,  cigarillos  and  smoking  tobacco  where  such  an
option  already  exists  for  cigarettes  and  hand(cid:220)rolling
tobacco;

Whereas  there  is  a  need  to  establish  a  regular  review
procedure;

(˛)(cid:217)COM(95)  285  final,  13.9.1995.
(ˇ)(cid:217)OJ  L  316,  31.10.1992,  p.  8.
(—)(cid:217)OJ  L  316,  31.10.1992,  p.  10.

Whereas  the  present  period  of  two  years  is  too  short  for
changes  in  the  legislation  of  the  Member  States  to  be
properly  evaluated;

30.6.98

EN

Official  Journal  of  the  European  Communities

C  203/17

Whereas,  for  this  reason,  reviews  must  take  place  at  five(cid:220)
yearly  intervals;

2.(cid:217)Article  4  is  replaced  by  the  following:

Whereas,  in  order  to  avoid  a  fall  in  the  value  of  the
Community  minimum  rates  of  duty  on  cigars,  cigarillos
and  hand(cid:220)rolling  tobacco,  a  schedule  of 
is
needed;

increases 

Whereas,  therefore,  Council  Directives  92/79/EEC  and
95/59/EC(cid:216)(˛),  need  to  be  amended,

HAS  ADOPTED  THIS  DIRECTIVE:

"Article  4

Every  five  years,  and  for  the  first  time  not  later  than
31  December  2002,  the  Council,  acting  on  the  basis
of  a  report  and,  where  appropriate,  a  proposal  from
the  Commission,  shall  examine  the  overall  minimum
excise  duty  laid  down  in  Article  2  and  in  Article  3(2)
and  the  structure  of  excise  duties  as  defined  by  Article
16  of  Council  Directive  95/59/EC  and,  acting  unani(cid:220)
mously  after  consulting  the  European  Parliament,
shall  adopt  the  necessary  measures.  The  report  by  the
Commission  and  the  examination  by  the  Council  shall
take 
into  account  the  proper  functioning  of  the
internal  market  and  the  wider  objectives  of  the
Treaty.’

Directive  92/79/EEC  is  hereby  amended  as  follows:

Article  2

Article  1

Directive  92/80/EEC  is  hereby  amended  as  follows:

1.(cid:217)A  new  article  Article  2a  is  inserted:

1.(cid:217)Article  3(1)  is  replaced  by  the  following:

"Article  2a

1.(cid:218)(cid:217)When  a  change  in  the  retail  selling  price  of  ciga(cid:220)
rettes  in  the  most  popular  price  category  occurs  in  a
Member  State,  thereby  bringing  the  incidence  of  the
overall  minimum  excise  duty  below  the  level  specified
in  the  first  paragraph  of  Article  2,  the  Member  State
in  question  may  refrain  from  adjusting  the  incidence
of  the  overall  minimum  excise  duty  until  not  later
than  1  January  of  the  second  year  following  that  in
which  the  change  occurs.

2.(cid:218)(cid:217)When  a  Member  State  increases  the  rate  of
value  added  tax  on  cigarettes,  it  may  reduce  the
incidence  of  the  overall  minimum  excise  duty  by  an
amount  which,  expressed  as  a  percentage  of  the  retail
selling  price,  is  equal  to  the  increase  in  the  rate  of
value  added  tax,  also  expressed  as  a  percentage  of  the
retail  selling  price,  even  if  such  an  adjustment  has  the
effect  of  reducing 
the  overall
minimum  excise  duty  to  below  the  level  laid  down  in
Article  2.

incidence  of 

the 

the 

incidence  of 

3.(cid:218)(cid:217)If,  in  accordance  with  paragraph  2,  a  Member
State  has  reduced 
the  overall
minimum  excise  duty  to  a  level  below  that  laid  down
in  the  first  paragraph  of  Article  2,  it  shall  raise  that
incidence  so  as  to  reach  at  least  that  level  not  later
than  1  January  of  the  second  year  after  that  in  which
the  reduction  took  place.’

(˛)(cid:217)OJ  L  291,  6.12.1995,  p.  40.

"1.(cid:218)(cid:217)Not  later  than  1  January  1993,  Member  States
shall  apply  an  excise  duty  which  may  be:

(a)(cid:217)either  an  ad  valorem  duty  calculated  on  the  basis
of  the  maximum  retail  selling  price  of  each
freely  determined  by  manufacturers
product, 
established  in  the  Community  and  by  importers
from  non(cid:220)member  countries  in  accordance  with
Article  9  of  Directive  95/59/EC,

(b) or  a  specific  duty  expressed  as  an  amount  per
kilogram  or  for  a  given  number  of  items  in  the
case  of  cigars  and  cigarillos,

(c) or  a  mixture  of  both,  combining  an  ad  valorem

element  and  a  specific  element.

In  cases  where  excise  duty  is  either  ad  valorem  or
mixed,  Member  States  may  levy  a  minimum  excise
duty  expressed  in  the  same  way  as  the  excise  duty
referred  to  at  (b).

the  overall  excise  duty
As  of  1  January  1999, 
expressed  as  a  percentage,  as  an  amount  per  kilogram
or  for  a  given  number  of  items  shall  be  at  least
equivalent  to  the  rates  or  minimum  amounts 
laid
down  for:

-(cid:217)cigars  or  cigarillos:  5(cid:216)%  of  the  retail  selling  price
inclusive  of  all  taxes,  or  ECU  9  per  1(cid:216)000  items  or
per  kilogram

-(cid:217)fine(cid:220)cut  smoking  tobacco  intended  for  the  rolling
of  cigarettes:  30(cid:216)%  of  the  retail  selling  price
inclusive  of  all  taxes,  or  ECU  24  per  kilogram

C  203/18

EN

Official  Journal  of  the  European  Communities

30.6.98

-(cid:217)other  smoking  tobaccos:  20(cid:216)%  of  the  retail  selling
inclusive  of  all  taxes,  or  ECU  18  per

price 
kilogram.

As  of  1  January  2001  the  amounts  of  ECU  9  for
cigars  and  cigarillos,  ECU  24  for  fine(cid:220)cut  smoking
tobacco  intended  for  the  rolling  of  cigarettes  and
ECU  18  for  other  smoking  tobaccos  shall  be  replaced
by  ECU  10,  ECU  25  and  ECU  19  respectively.’

2.(cid:217)Article  4  is  replaced  by  the  following:

"Article  4

Every  five  years,  and  for  the  first  time  not  later  than
31  December  2002,  the  Council,  acting  on  the  basis
of  a  report  and,  where  appropriate,  a  proposal  from
the  Commission,  shall  examine  the  rates  of  duty  laid
down  herein  and,  acting  unanimously  after  consulting
the  European  Parliament,  shall  adopt  the  necessary
measures.  The  report  by  the  Commission  and  the
examination  by  the  Council  shall  take  into  account
the  proper  functioning  of  the  internal  market,  the  real
value  of  the  rates  of  duty  and  the  wider  objectives  of
the  Treaty.’

Article  3

excise  duty,  expressed  as  a  percentage  of  the  total  tax
burden,  below  5(cid:216)%  or  above  55(cid:216)%  of  the  total  tax
burden,  the  Member  State  in  question  may  refrain
from  adjusting  the  amount  of  the  specific  excise  duty
until  not  later  than  1  January  of  the  second  year
following  that  in  which  the  change  occurs.’

2.(cid:217)In  paragraph  3,  the  phrase  "If  the  excise  duty  or  the
turnover  tax  levied’  is  replaced  by  "If  the  excise  duty
levied’.

Article  4

laws,
1.(cid:218)(cid:217)Member  States  shall  bring 
regulations  and  administrative  provisions  necessary  to
comply  with  this  Directive  by  1  January  1999.  They  shall
forthwith  inform  the  Commission  thereof.

into  force  the 

When  Member  States  adopt  these  provisions,  they  shall
contain  a  reference  to  this  Directive  or  shall  be  accom(cid:220)
panied  by  such  reference  at  the  time  of  their  official
publication.  The  procedure  for  such  reference  shall  be
adopted  by  Member  States.

States 

2.(cid:218)(cid:217)Member 
the
shall 
Commission  the  text  of  the  main  provisions  of  national
law  which  they  adopt 
in  the  field  covered  by  this
Directive.

communicate 

to 

Article  16  of  Directive  95/59/EC  is  hereby  amended  as
follows:

Article  5

1.(cid:217)The  following  paragraph  2a  is  inserted:

"2a.(cid:218)(cid:217)By  way  of  derogation  from  paragraph  2,
where,  for  instance,  due  to  a  variation  in  VAT  rates,
a  change  in  the  retail  selling  price  of  cigarettes  in  the
most  popular  price  category  occurs  in  a  Member
State,  thereby  bringing  the  specific  component  of  the

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

Article  6

This  Directive  is  addressed  to  the  Member  States.