Proposal for a Council Decision authorising the Netherlands, in accordance with Article 8(4) of Directive 92/81/CEE, to apply a differentiated rate of excise duty to low-sulphur diesel
Date: 2000-12-15
Institutions: European Commission
Subjects: Netherlands, diesel fuel, excise duty, motor fuel, tariff reduction

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 15.12.2000
COM(2000) 853 final

Proposal for a

COUNCIL DECISION

authorising the Netherlands, in accordance with Article 8(4) of Directive 92/81/CEE, to
apply a differentiated rate of excise duty to low-sulphur diesel

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. PRESENTATION OF THE REQUEST

In a letter dated 2 October the Netherlands told the Commission it wanted to introduce a
differentiated rate of excise duty on low-sulphur diesel (50 ppm), initially for commercial
vehicles alone but ultimately for all users of this type of fuel. The Commission sought
additional information from the Netherlands authorities to clarify the proposed arrangements;
the authorities replied on 31 October.

Subsequently, the Netherlands changed its plans for the cut in excise duty and decided that the
derogation would apply to all users from the outset. In a letter dated 16 November the
government announced its intention of cutting excise duty on low-sulphur diesel fuel from
1 January 2001, while continuing to comply with the minimum excise duty rates laid down in
Community law.

The term "low-sulphur diesel" refers to diesel with a sulphur content meeting the 50 ppm
environmental specification set out in Annex IV to Directive 98/70/EC of the European
Parliament and of the Council of 13 October 1998 relating to the quality of petrol and diesel
fuels.1 Under Article 4(1)(c) of the Directive, use of low-sulphur fuel will in any case be
compulsory from 1 January 2005.

The Netherlands explains that the purpose of the proposed reduction is to encourage faster
introduction of this environmentally-friendly fuel.

2. THE COMMISSION'S ASSESSMENT

Under Article 8(4) of Council Directive 92/81/EEC on the harmonisation of the structures of
excise duties on mineral oils,2 the Council, acting unanimously on a proposal from the
Commission, may authorise any Member State to introduce further exemptions or reductions
for specific policy considerations.

By letter dated 2 October 2000 the Netherlands sought permission to phase in a differentiated
rate of excise duty for low-sulphur (50 ppm) diesel from 1 January 2000. The reduction would
initially be for commercial vehicles only,3 and then, as more of this type of fuel came onto the
market,
this
arrangement, spread over a number of years, would lead to undue distortion of competition on
the Netherlands market, and it sought clarification from the authorities about various aspects
of the scheme, receiving additional information on 31 October 2000.

it would be extended to all users. However,

the Commission feared that

In a letter dated 16 November, the Netherlands government announced an important change
to its original plans in that the differentiated excise duty on low-sulphur (50 ppm) diesel
would be available to all users from 1 January 2001. The legislative text confirmed this.

1

2

3

OJ L 350, 28.12.1998, p. 58, amending Council Directive 93/12/EEC (OJ L 74, 27.3.1993, p. 81).
OJ L 316, 31.10.1992, p. 12, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).
Via a system of selective refunds.

2

Acknowledging the importance of tax incentives to promote cleaner types of fuel
the
Commission, following a thorough study of the measure, finds that the lower rate of duty will
indeed be of general application, in other words the reduced rate is available to anyone filling
up with low-sulphur diesel. The derogation will also be for a limited period, until 1 January
2005, when Directive 98/70/EC4 of the European Parliament and of the Council of 13 October
1998 relating to the quality of petrol and diesel fuels, makes use of this type of fuel
mandatory.

With the normal rate of excise duty on diesel fuel in the Netherlands at NLG 748.75 per
thousand litres and the minimum Community rate at NLG 539.9 per thousand litres, the
excise charged on low-sulphur diesel (50 ppm) will be as follows, depending on the
availability of this type of fuel as a percentage of all diesel put on the market
in the
Netherlands:

(in NLG per 1000 l)

under
availability

20%

20% - 40% 40% - 60% 60%

and

upwards

Excise duty on low-
sulphur diesel

663.7

681.7

699.7

718.7

The reduction proposed by the Netherlands authorities is therefore degressive and complies
with the minimum rate referred to in Article of Directive 92/82/CEE.6

The cost to the budget would be NLG 150 million for 2001.

The derogation is sought on environmental grounds - the benefits in terms of air quality are
known.

The availability of sufficient quantities of this type of fuel, of a satisfactory quality, has been
verified.

The Commission notes that the Council has already allowed Germany to operate a similar
derogation.7 In addition, on 15 November it adopted a proposal for a Council decision8
seeking a five-year extension of the derogations in force at 31 December 2000 that allow
reductions in excise duty to promote the use of cleaner fuel (unleaded petrol and/or diesel) in
Denmark, Spain, Greece, Ireland, Portugal, Sweden and the UK

As required by Directive 92/81/CEE, the other Member States have been informed by letter
dated 6 December 2000 of the Netherlands' request.

4

5

6

7

8

OJ L 350, 28.12.1998, p. 58, amending Council Directive 93/12/EEC (OJ L 74, 27.3.1993, p. 81).
Rate in force at 1.1.2001.
OJ L 316, 31.10.1992, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).
Decision 2000/283/CE of 10.4.2000 allows Germany to apply a differentiated rate of excise duty to
fuels with a sulphur content not exceeding 50 ppm from 1.11.2001 to 31.12.2002, provided it complies
with the terms of Council directive 92/82/EEC on the approximation of the rates of excise duties on
mineral oils, and in particular the minimum rate of excise duty laid down in Articles 4 and 5.
COM(2000) 678 final.

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3. DECISION

The Commission proposes that the Council authorise the Netherlands to apply a differentiated
not exceeding NLG 0.085 per litre to excise duty on low sulphur (50 ppm) diesel fuel between
1 January 2001 and 31 December 2004.

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Proposal for a

COUNCIL DECISION

authorising the Netherlands, in accordance with Article 8(4) of Directive 92/81/CEE, to
apply a differentiated rate of excise duty to low-sulphur diesel

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Union,

Having regard to Council Directive 92/81/EEC on the harmonisation of the structures of
excise duties on mineral oils and in particular Article 8(4) thereof,9

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

(3)

(4)

(5)

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

The Netherlands has asked to be authorised to apply a differentiated rate of excise duty
to low-sulphur diesel (50 ppm) from 1 January 2001. The differential, not exceeding
NLG 0.085 per litre, is available to all users of this type of fuel.

This low sulphur diesel fuel complies with the 50 ppm environmental criterion laid
down in Annex IV to Directive 98/70/EC of the European Parliament and of the
Council of 13 October 1998 relating to the quality of petrol and diesel fuels.10 Under
Article 4(1)(c) of the Directive, its use will in any case be compulsory from 1 January
2005.

The above information has been communicated to the other Member States.

The measure as envisaged by the Netherlands authorities will be degressive in line
with the increasing availability of this type of fuel as a percentage of all diesel put on
the market in the Netherlands. It complies with the minimum rate of excise duty
referred to in Article of Directive 92/82/CEE.11

(6)

The derogation is sought on environmental grounds - the benefits in terms of air
quality are known.

9

10

11

OJ L 316, 31.10.1992, p. 12, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).
OJ L 350, 28.12.1998, p. 58, amending Council Directive 93/12/EEC (OJ L 74, 27.3.1993, p. 81).
OJ L 316, 31.10.1992, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

5

(7)

(8)

(9)

On the information available at present neither the Commission nor the Member States
consider that the application of a differentiated rate of excise duty on low-sulphur
diesel will cause distortions of competition affecting the common interest or hinder the
operation of the single market. They are satisfied that adequate supplies of the fuel, of
a satisfactory quality, are available in the Netherlands.

This Decision is without prejudice to the outcome of any future state aid proceedings
that may be undertaken in accordance with Articles 87 and 88 of the Treaty, nor does
it override the requirement for Member States to notify instances of potential state aid
to the Commission under Article 88 of the Treaty.

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

(10)

The Council will review this decision on the basis of a proposal from the Commission
no later than 31 December 2004 when the authorisation granted by this decision
expires,

HAS ADOPTED THIS DECISION:

Article 1

1. In accordance with Article 8(4) of Council Directive 92/81/EEC, the Netherlands is
authorised to apply a differentiated rate of excise duty on low-sulphur diesel fuel (50 ppm)
from 1 January 2001.

2. The degressive differentiated rate, not exceeding NLG 0.085 per litre, must comply with
the terms of Council Directive 92/82/EEC of 19 October 1992 on the approximation of the
rates of excise duties on mineral oils,12 and in particular the minimum rates laid down in
Article 5 thereof.

3. The differentiated rate must be accorded to all users of low-sulphur 50 ppm diesel without
discrimination.

Without prejudice to an early review by the Council on the basis of a proposal from the
Commission, this authorisation expires on 31 December 2004.

Article 2

12

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

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Article 3

This Decision is addressed to the Netherlands.

Done at Brussels,

For the Council
The President

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