Council Directive 1999/81/EC of 29 July 1999 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: 1999-07-29
Institutions: Council of the European Union
Subjects: excise duty, tax harmonisation, tobacco, tobacco industry

11. 8. 1999

EN

Official Journal of the European Communities

L 211/47

COUNCIL DIRECTIVE 1999/81/EC

of 29 July 1999

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

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 93 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Parliament (2),

Having regard to the opinion of the Economic and Social
Committee (3),

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

in its first report on the structure and rates of excise
duties, drawn up in accordance with the provisions of
Directive 92/79/EEC (4) and Directive 92/80/EEC (5), the
Commission merely drew attention to certain difficulties
encountered in implementing the Directives, without
proposing any precise solutions;

a consultation process involving national authorities,
business representatives and interest groups has since
taken place;

the first stage in this consultation process was the
Lisbon Conference, the purpose of which was to assess
the performance of the present Community arrange-
ments and to assist the Commission in its task of plan-
ning future excise-duty policy;

the consultation process has led to a second Commis-
sion report;

the consultation process revealed difficulties in applying
the 57 % minimum incidence rule;

the rules should be interpreted and implemented more
uniformly in the Member States if the internal market is
to operate smoothly;

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

(1) OJ C 203, 30.6.1998, p. 16.
(2) OJ C 153, 1.6.1999.
(3) OJ C 410, 31.12.1998, p. 1.
(4) OJ L 316, 31.10.1992, p. 8.
(5) OJ L 316, 31.10.1992, p. 10.

(8)

(9)

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

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

(10) Member States should be given the option of neut-
ralising the impact of changes in the VAT rate on the
overall minimum excise duty;

(11)

the existence of this option should not lead to distor-
tions of competition or to malfunctioning of the internal
market;

(12)

the options open to the Member States regarding the
application of the Directives should be limited in time;

(13)

(14)

(15)

(16)

the situation which justified the derogation from the
overall minimum excise rate of 57 % that was granted to
the Kingdom of Sweden by the 1994 Act of Accession
still subsists; whereas it is therefore necessary to grant
the Kingdom of Sweden an extension of the derogation
up to and including 31 December 2002;

it is appropriate to give France an additional period up
to and including 31 December 2002 for cigarettes and
tobacco products sold on the island of Corsica;

it is appropriate to give Germany an additional period to
adjust its national rates for fine-cut tobacco rolls in line
with Community legislation;

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-rolling tobacco;

(17)

there is a need to establish a regular review procedure;

(18)

(19)

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

this

reason reviews must

for
less
frequently than every three years, and for the first time
not later than 31 December 2000;

take place not

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Official Journal of the European Communities

11. 8. 1999

(20)

in order to avoid a fall in the value of the Community
minimum rates of duty on cigars, cigarillos and hand-
rolling tobacco and other smoking tobacco, a schedule
of increases is needed;

(21)

therefore Directives
95/59/EC (1) should be amended,

92/79/EEC,

92/80/EEC

and

Council Directive 95/59/EC of 27 November 1995 on taxes
other than turnover taxes which affect the consumption of
manufactured tobacco (*) and, acting unanimously after
consulting the European Parliament, shall adopt the neces-
sary 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.

HAS ADOPTED THIS DIRECTIVE:

(*) OJ L 291, 6.12.1995, p. 40.’.

Article 1

Article 2

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

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

1. the following Article shall be inserted:

1. Article 3 shall be amended as follows:

‘Article 2a

thereby bringing the

1. When a change in the retail selling price of cigarettes
in the most popular price category occurs in a Member
State,
the overall
minimum excise duty below the level specified in the first
subparagraph 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.

incidence of

2. When a Member State increases the rate of value-
added tax on cigarettes, it may reduce the incidence of the
overall minimum excise duty up to an amount which,
expressed as a percentage of the retail selling price, is equal
to the incidence of 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
incidence of the overall minimum excise duty to below the
level

laid down in Article 2.

3.
If, in accordance with paragraph 2, a Member State
reduces the incidence of the overall minimum excise duty to
a level below that laid down in the first subparagraph 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.’;

2. the following paragraphs shall be added to Article 3:

‘3.
Notwithstanding Article 2, the Kingdom of Sweden
may postpone, up to and including 31 December 2002, the
application of an overall minimum excise duty equivalent to
57 % of the retail selling price (inclusive of all taxes) of
cigarettes in the most popular price category. In addition,
the Kingdom of Sweden may not reduce the overall excise
duty below the level applied on 1 August 1998.

Up to and including 31 December 2002, the French
4.
Republic may apply for cigarettes sold on the island of
Corsica the same rates as those in force on 31 December
1997.’;

3. Article 4 shall be replaced by the following:

‘Article 4

Not less frequently than every three years, and for the first
time not later than 31 December 2000, 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

(1) OJ L 291, 6.12.1995, p. 40.

(a) paragraph 1 shall be replaced by the following:

‘1. Member States shall apply an excise duty which
may be:

selling price of

the maximum retail

(a) either an ad valorem duty calculated on the basis
of
each
product, freely determined by manufacturers estab-
lished in the Community and by importers from
non-member countries in accordance with Article
9 of Council Directive 95/59/EC of 27 November
1995 on taxes other than turnover taxes which
of manufactured
the
affect
tobacco (*),

consumption

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

(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 establish a minimum
amount of excise duty.

shall be at

The overall excise duty expressed as a percentage, as
an amount per kilogram or for a given number of
to the rates or
least equivalent
items
minimum amounts laid down for:
— cigars and cigarillos: 5 % of the retail selling price
inclusive of all taxes, or EUR 9 per 1 000 items
or per kilogram,

— fine-cut smoking tobacco intended for the rolling
the retail selling price in-

of cigarettes: 30 % of
clusive of all taxes, or EUR 24 per kilogram,
— other smoking tobaccos: 20 % of the retail selling
price inclusive of all taxes, or EUR 18 per kilo-
gram.

January

from 1

As
of
EUR 9, EUR 24 and EUR 18 in the preceding three
indents shall be replaced by EUR 10, EUR 25 and
EUR 19 respectively.

amounts

2001,

the

(*) OJ L 291, 6.12.1995, p. 40.’;

(b) the following paragraph shall be added:

The French Republic may until 31 December
‘4.
2002 apply for
tobacco products covered by this
Directive and sold on the island of Corsica the same
rates as were in force on 31 December 1997.’;

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Official Journal of the European Communities

L 211/49

2. Article 4 shall be replaced by the following:‘

(c) paragraph 5 shall be replaced by the following:

Article 4

Not less frequently than every three years, and for the
first time not later than 31 December 2000, 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,
the
necessary measures. The report by the Commission and
the examination by the Council shall take into account
the proper functioning of
the real
value of the rates of duty and the wider objectives of the
Treaty.’

the internal market,

adopt

shall

Article 3

Directive 95/59/EC is hereby amended as follows:

1.

in the second subparagraph of Article 4(1),
the words
‘Until 31 December 1998’ shall be replaced by ‘Up to
and including 31 December 2001’;

2. Article 16 shall be amended as follows:

(a) the following paragraph shall be inserted:

‘2a.
By way of derogation from paragraph 2, where
a change in the retail selling price of cigarettes in the
in a Member
most popular price category occurs
State, thereby bringing the specific component of the
excise duty, expressed as a percentage of the total tax
burden, below 5 % or above 55 % of
tax
burden,
the Member State in question may refrain
from adjusting the amount of the specific excise duty
until not
the second year
later than 1 January of
following that in which the change occurs.’;

the total

(b) in paragraph 3, the phrase ‘If the excise duty or the
turnover tax levied’ shall be replaced by ‘If the excise
duty levied’;

‘5. Member States may levy a minimum excise duty
on cigarettes, provided that
this does not have the
effect of raising the total tax to more than 90 % of
the total tax on the most popular price category of
cigarettes.’

Article 4

1. Member States shall bring into force the laws, regula-
tions and administrative provisions necessary to comply with
this Directive as from 1 January 1999. They shall forthwith
inform the Commission thereof.

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

these measures,

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

Article 5

This Directive shall enter into force on the day of its pub-
the European Communities.
lication in the Official

Journal of

It shall apply from 1 January 1999.

This Directive is addressed to the Member States.

Article 6

Done at Brussels, 29 July 1999.

For the Council

The President

S. HASSI