Proposal for a Council Decision authorising Ireland to apply a differentiated rate of excise duty to low-sulphur diesel in accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC
Date: 2001-10-09
Institutions: European Commission
Subjects: Ireland, competition law, derogation from EU law, diesel fuel, excise duty, petrol

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 09.10.2001
COM(2001) 563 final

Proposal for a

COUNCIL DECISION

authorising Ireland to apply a differentiated rate of excise duty to low-sulphur diesel in
accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC

(presented by the Commission)

EXPLANATORY MEMORANDUM

1.

SUBMISSION OF REQUEST

In a letter dated 13 June 2001, supplemented by further information sent on 1 August, Ireland
informed the Commission that it wanted to introduce a differentiated rate of excise duty on
diesel fuel with a sulphur content not exceeding 50 particles per million (ppm) under Article
8(4) of Council Directive 92/81/EEC on the harmonisation of the structures of excise duties
on mineral oils.1

Ireland explained that the purpose of the proposed reduction is to protect the environment
and, in particular, to improve air quality.

It wished to reduce excise duties by IEP 0,06 per litre for diesel containing less than 50 ppm
sulphur. This reduction would be accorded to all users of 50 ppm diesel.

The measure, as provided for in Section 155 of the "Finance Act, 2001", will enter into force
upon authorisation by the Council and terminate on 31 December 2004. The estimated budget
cost is IEP 123,5 million per year.

The Irish authorities do not consider that this measure constitutes a State aid since it will be
accorded to all consumers, without discrimination.

2.

THE COMMISSION'S ASSESSMENT

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

In letters of 13 June and 1 August 2001 Ireland requested authorisation to apply a
differentiated rate of excise duty to low-sulphur (50 ppm) diesel until 31 December 2004. The
measure will not enter into force until authorised by the Council.

In accordance with Directive 92/81/EEC, the other Member States have been informed of this
request.

Following the implementation of the planned measure,
charged on diesel in Ireland will be as follows:

the differentiated excise duties

1

OJ L 316, 31.10.1992, p. 12, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

2

(in EUR per 1000 l)

Community minimum

Diesel

245

Excise duty on conventional
diesel

325,2
(IEP 256,1 )

Excise duty on 50 ppm diesel

249,0
(IEP 196,1 )

The reduced excise duty would thus comply with the Community minimum laid down in
Article 5 of Council Directive 92/82/EEC of 19 October 1992 on the approximation of the
rates of excise duties on mineral oils.2

Following a thorough study of the measure and acknowledging the importance of tax
incentives to promote cleaner fuels, the Commission notes that the reduction of excise will be
of general application, in other words the reduced rate will be available to anyone filling up
with low-sulphur diesel in Ireland.

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

expires on
The Commission notes
the day before use of this type of fuel becomes mandatory under
31 December 2004,
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.3

for a finite period.

this measure is

that

It

The Commission notes that on 12 March 2001 the Council allowed the Netherlands to apply a
reduced rate of excise duty on 50 ppm diesel fuel.4 The Council has also authorised
aderogation under Directive 92/81/EEC for 50 ppm fuels in Germany5 and in Belgium.6

2

3

4

5

6

OJ L 316, 31.10.1992, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).
OJ L 350, 28.12.1998, p. 58, Directive amending Council Directive 93/12/EEC (OJ L 74, 27.3.1993,
p. 81).
Council Decision 2001/229/EC of 12.3.2001 (OJ L 84 of 23.3.2001).
Decision 2000/283/EC of 10.4.2000 authorises Germany, to apply a differentiated rate of excise duty
from 1.11.2001 to 31.12.2002 on fuels with a maximum sulphur content of 50 ppm on condition that it
complies with the requirements laid down in Council Directive 92/82/EEC of 19.10.1992 on the
approximation of the rates of excise duties on mineral oils, and in particular the minimum rates laid
down in Articles 4 and 5 thereof.
Council Decision 2001/439/EC of 5.6.2001 (OJ L 155, 12.6.2001).

3

3.

DECISION

In accordance with Article 8(4) of Council Directive 92/81/EEC, the Commission proposes
that the Council authorise Ireland to apply a differentiated rate of excise duty of a maximum
of EUR 0,076 (IEP 0,06) per
fuel until
31 December 2004.

litre on low-sulphur

(50 ppm) diesel

The reduced excise duty must comply with the requirements of Council Directive 92/82/EEC
and in particular the minimum rate laid down in Article 5.

4

Proposal for a

COUNCIL DECISION

authorising Ireland to apply a differentiated rate of excise duty to low-sulphur diesel in
accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC

(only the English version is authentic)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of
the structures of excise duties on mineral oils,7 and in particular Article 8(4) thereof,

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

(3)

(4)

(5)

7

8

9

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

Ireland has requested authorisation to introduce a differentiated rate of excise duty on
low-sulphur (50 ppm) diesel. The differentiation, provided for in Section 155 of the
“Finance Act, 2001”, is of EUR 0,076 (IEP 0,06) per litre. This would mean that the
value of the differentiated excise duties imposed on diesel in Ireland would be
EUR 325,2 (IEP 256,1) on 1000 litres of conventional diesel and EUR 249,0
(IEP 196,1) on 100 litres of 50 ppm diesel.

The Irish measure would thus comply with the Community minimum rate of excise
duty of EUR 245 per 1000 litres laid down in Article 5 of Directive 92/82/EEC of
19 October 1992 on the approximation of the rates of excise duties on mineral oils.8

This differentiation would be accorded to all consumers of 50 ppm diesel in Ireland.

Low-sulphur diesel complies with the environmental criterion (50 ppm) laid down in
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.9 Under Article 4 of that Directive, the
use of 50 ppm diesel will be compulsory from 1 January 2005.

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

5

(6)

(7)

(8)

(9)

(10)

(11)

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

The other Member States have been informed of this request by the Irish authorities.

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 fuel will cause distortions of competition affecting the common interest or
hinder the operation of the single market.

This Decision does not prejudice the outcome of any future state aid procedures 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 environmental policy.

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.

2.

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

This reduction in excise duty, not exceeding EUR 0,076 (IEP 0,06) per litre of fuel,
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,10 and in particular the
minimum rate laid down in Article 5 thereof.

10

OJ L 316, 31.10.1982, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

6

The differentiated rate must be accorded to all users of 50 ppm diesel purchased in Ireland,
without discrimination.

Article 2

Subject to a prior review by the Council, on the basis of a proposal from the Commission, this
authorisation shall expire on 31 December 2004.

Article 3

This Decision is addressed to Ireland.

Done at Brussels,

Article 4

For the Council
The President

7