Council Directive 2002/10/EC of 12 February 2002 amending Directives 92/79/EEC, 92/80/EEC and 95/59/EC as regards the structure and rates of excise duty applied on manufactured tobacco
Date: 2002-02-12
Institutions: Council of the European Union
Subjects: excise duty, tax harmonisation, tax system, tobacco, tobacco industry

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Official Journal of the European Communities

16.2.2002

COUNCIL DIRECTIVE 2002/10/EC

of 12 February 2002

amending Directives 92/79/EEC, 92/80/EEC and 95/59/EC as regards the structure and rates of
excise duty applied on manufactured tobacco

which may disturb the operation of the internal market
as it is now and as it will be after enlargement.

Greater convergence between the tax rates applied in the
Member States would help reduce fraud and smuggling
within the Community. The introduction of a fixed
minimum amount expressed in euro, in addition to the
minimum excise incidence of 57 % of the retail selling
price of cigarettes of the price category most in demand,
will ensure that a minimum level of excise duties is
levied on such cigarettes. Member States for which the
immediate introduction of this fixed minimum amount
expressed in euro would be problematic for economic
reasons, should be authorised to postpone the imple-
mentation of this new requirement until 31 December
2004 at the latest. Member States which already levy a
high level of excise duty should be allowed greater
leeway in setting the rates. A further increase of the fixed
minimum amounts, on 1 July 2006, should be foreseen.
In view of the economic difficulties that could be caused
by the implementation at this date of this increased
amount,
the Kingdom of Spain and the Hellenic
Republic should be authorised to postpone its imple-
mentation until 31 December 2007.

The Treaty requires that the definition and implementa-
tion of all Community policies and activities ensure a
high level of human health protection. Cigarettes and
fine-cut tobacco intended for the rolling of cigarettes are
both harmful to consumers' health. The level of taxation
is a major factor in the price of tobacco products, which
in turn influences consumers' smoking habits. For this
reason, it is necessary gradually to bring the minimum
rates for fine-cut rolling tobacco closer to the minimum
rate for cigarettes.

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),

(6)

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

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

Whereas:

In accordance with Article 4 of Council Directive 92/
79/EEC of 19 October 1992 on the approximation of
taxes on cigarettes (4) and Article 4 of Council Directive
92/80/EEC of 19 October 1992 on the approximation
taxes on manufactured tobacco other than cigar-
of
ettes (5), an in-depth review of the rates and structure of
excise duties on tobacco products has been carried out.

The Commission's first report on the subject, of 13
September 1995, merely drew attention to certain diffi-
culties encountered in implementing the Directives,
without proposing any specific solutions.

The Commission's second report, of 15 May 1998,
examined the necessary technical amendments, which
were mainly to do with adjusting the incidence of the
overall minimum duty on cigarettes, but kept the struc-
tures and rates of duty unchanged. The report, submitted
to the Council on 18 May 1998, included a proposal for
an amending Directive (6).

(7)

(1)

(2)

(3)

(4)

The proposals made by the Commission were largely
adopted in Council Directive 1999/81/EC of 29 July
1999 amending Directive 92/79/EEC on the approx-
imation 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 (7).

(5)

An analysis of the changes of prices and excise rates for
tobacco products in the Community shows that there
are still considerable differences between Member States

(8)

In order to avoid a fall in the value of the Community
minimum rates of duty on cigars, cigarillos,
fine-cut
tobacco intended for the rolling of cigars and other
smoking tobaccos, a phased increase in the minimum
rates, expressed as a specific amount,

is needed.

(1) OJ C 186 E, 28.6.2001, p. 235.
(2) Opinion delivered on 5 February 2002 (not yet published in the

Official Journal).

(3) OJ C 36, 8.2.2002, p. 111.
(4) OJ L 316, 31.10.1992, p. 8. Directive as amended by Directive

(9)

1999/81/EC (OJ L 211, 11.8.1999, p. 47).

(5) OJ L 316, 31.10.1992, p. 10. Directive as amended by Directive

1999/81/EC.

(6) OJ C 203, 30.6.1998, p. 16.
(7) OJ L 211, 11.8.1999, p. 47.

Any harmonisation of the structures of excise duties
should be such as to prevent distortions of competition
between different categories of manufactured tobacco
belonging to the same group and thereby facilitate
access to the domestic markets of the Member States.

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(10)

(11)

In the interests of uniform and fair taxation, the defini-
tion of cigars and cigarillos, set out in Council Directive
95/59/EC of 27 November 1995 on taxes other than
turnover taxes which affect the consumption of manu-
factured tobacco (1), should be adapted so that a type of
cigar which is similar in many respects to a cigarette is
treated as a cigarette for excise purposes.

The Federal Republic of Germany should be authorised
to postpone the implementation of this new definition
until 31 December 2007 at the latest, in view of the
economic difficulties that
immediate implementation
could cause for the German operators concerned.

(12) Member States should be given more effective means to
deal with unfair pricing practices or the appearance of
products which disrupt the market. This objective can be
achieved by authorising Member States
to levy a
minimum excise duty on cigarettes on condition that it
does not exceed the excise duty levied on cigarettes of
the price category most in demand.

(13)

It is necessary to provide for a regular review procedure.
However, a four-yearly review period would be more
appropriate, to allow time to evaluate the amendments
introduced by this Directive.

(14) Directives 92/79/EEC, 92/80/EEC and 95/59/EC should

therefore be amended accordingly,

HAS ADOPTED THIS DIRECTIVE:

Article 1

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

1. Article 2 shall be replaced by the following:

‘Article 2

Each Member State shall apply an overall minimum
1.
excise duty (specific duty plus ad valorem duty excluding
VAT), the incidence of which shall be set at 57 % of the
retail selling price (inclusive of all taxes) and which shall not
be less than EUR 60 per 1 000 cigarettes for cigarettes of
the price category most in demand. As from 1 July 2006,
the figure of “EUR 60” shall be replaced by “EUR 64”.

2. Member States which levy an overall minimum excise
duty of at least EUR 95 per 1 000 cigarettes for cigarettes
of the price category most in demand need not comply with
the 57 % minimum incidence requirement. As from 1 July
2006 the
replaced by
“EUR 95”
“EUR 101”.

figure of

shall be

The overall minimum excise duty on cigarettes shall
3.
be determined on the basis of cigarettes of
the price
category most in demand according to data established as at
1 January of each year.

Notwithstanding paragraph 1, Member States which
4.
on 1 July 2001 applied an overall minimum excise duty less
than EUR 60 per 1 000 cigarettes for cigarettes of the price

(1) OJ L 291, 6.12.1995, p. 40. Directive as amended by Directive

1999/81/EC.

in demand, may postpone up to and
category most
including 31 December 2004 the application of an overall
minimum excise duty of EUR 60 per 1 000 cigarettes for
cigarettes of the price category most in demand.

The value of the euro in national currencies to be
5.
applied to the amounts of the overall minimum excise duty
shall be fixed once a year. The exchange rates to be applied
shall be those obtained on the first working day of October
the European
and published in the Official
Communities and shall have effect from 1 January of the
following calendar year.

Journal of

6.
By way of derogation from the preceding paragraph,
Member States which have not adopted the euro shall be
authorised to apply the value of
the euro in national
currency on the first working day of October 2000 for the
conversion of the amount of EUR 95 referred to in para-
graph 2. The present derogation shall be re-examined in the
next report to be submitted by the Commission in accord-
ance with Article 4.’;

2. Article 4 shall be replaced by the following:

‘Article 4

the Commission shall submit

Every four years,
to the
Council a report and, where appropriate, a proposal
concerning the rates of excise duty laid down herein and the
structure of excise duties as defined by Article 16 of Council
Directive 95/59/EC of 27 November 1995 on taxes other
than turnover taxes which affect the consumption of manu-
factured tobacco (*). The Council shall examine this report
and this proposal and, acting unanimously after consulting
the European Parliament, shall adopt the necessary meas-
ures. 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 levels of excise
duty in Article 2 calculated solely in accordance with infla-
tion and the wider objectives of the Treaty.

(*) OJ L 291, 6.12.1995, p. 40. Directive as amended

by Directive 1999/81/EC (OJ L 211, 11.8.1999, p.
47).’

Article 2

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

1.

in Article 3(1),
added:

the following subparagraphs

shall be

smoking tobacco intended for

‘As from 1 July 2002, the overall excise duty levied on
the rolling of
fine-cut
cigarettes shall be at
the retail
least equal
selling price inclusive of all taxes, or EUR 27 per kilo-
gram.

to 32 % of

As from 1 July 2003, the overall excise duty shall be at
least equal to the following rates or minimum amounts:

(a) in the case of cigars or cigarillos: 5 % of the retail
taxes or EUR 11 per

selling price inclusive of all
1 000 items or per kilogram;

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(b) in the case of fine-cut smoking tobacco intended for
the rolling of cigarettes: 33 % of
the retail selling
price inclusive of all taxes, or EUR 29 per kilogram;

(c) in the case of other smoking tobaccos: 20 % of the
retail selling price inclusive of all taxes, or EUR 20
per kilogram.

smoking tobacco intended for

As from 1 July 2004, the overall excise duty levied on
the rolling of
fine-cut
the retail
least equal
cigarettes shall be at
selling price inclusive of all taxes, or EUR 32 per kilo-
gram.’;

to 36 % of

2. Article 4 shall be replaced by the following:

‘Article 4

Every four years, the Commission shall submit a report
and, where appropriate, a proposal concerning the rates
of excise duty laid down herein. The Council
shall
examine this report and this proposal and, acting unani-
mously after consulting the European Parliament, shall
adopt the necessary measures. The report by the Commis-
sion and the examination by the Council shall take into
the internal market,
account
the real value of the rates of excise duty and the wider
objectives of the Treaty.’

the proper functioning of

Article 3

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

1. Article 3, points 3 and 4,

shall be replaced by the

following:

‘3. rolls of tobacco with a threshed blend filler and with
the normal colour of a cigar
an outer wrapper of
covering the product in full,
including where appro-
priate the filter but not in the case of tipped cigars,
reconstituted
the tip, and a binder, both being of
tobacco, where the unit weight, not including filter or
mouth-piece,
less than 1,2 g and where the
wrapper is fitted in spiral form with an acute angle of
at least 30° to the longitudinal axis of the cigar;

is not

4. rolls of tobacco with a threshed blend filler and with
an outer wrapper of the normal colour of a cigar, of
in full,
reconstituted tobacco, covering the product
including where appropriate the filter but not,
in the
case of tipped cigars, the tip, where the unit weight,
not including filter or mouth-piece,
is not less than
2,3 g and the circumference over at least one third of
the length is not less than 34 mm.’;

2. Article 16(5) shall be replaced by the following:

‘5. Member States may levy a minimum excise duty on
cigarettes sold at a price lower than the retail selling
price for cigarettes of the price category most in demand,
such excise duty does not exceed the
provided that
amount of
the
price category most in demand.’

the excise duty levied on cigarettes of

Article 4

1. Member States shall bring into force the laws, regula-
tions and administrative provisions necessary to comply with
this Directive by 1 July 2002 at the latest. They shall forth-
with inform the Commission thereof.

By way of derogation from paragraph 1:

2.
— the Federal Republic of Germany shall be authorised to
bring into force the provisions necessary to comply with
Article 3(1) of this Directive by 1 January 2008 at the
latest,

— the Kingdom of Spain and the Hellenic Republic shall be
authorised to bring into force the provisions necessary to
comply with Article 1(1) of this Directive (with regard to
Article 2(1), second sentence, of Directive 92/79/EEC) by
1 January 2008 at the latest.

3. When Member States adopt these measures, they shall
contain a reference to this Directive or be accompanied by
such a reference on the occasion of their official publication.
The methods of making such a reference shall be laid down
by the Member States.

4. Member States
provisions of national
covered by this Directive.

shall communicate the text of

law which they adopt

the
in the field

Article 5

This Directive shall enter
into force on the 20th day
following that of its publication in the Official Journal of the
European Communities.

This Directive is addressed to the Member States.

Article 6

Done at Brussels, 12 February 2002.

For the Council

The President

R. DE RATO Y FIGAREDO