2002/167/EC: Council Decision of 18 February 2002 authorising Portugal to apply a reduced rate of excise duty in the autonomous region of Madeira on locally produced and consumed rum and liqueurs and in the autonomous region of the Azores on locally produced and consumed liqueurs and eaux-de-vie
Date: 2002-02-18
Institutions: Council of the European Union
Subjects: Azores, Madeira, Portugal, alcoholic beverage, excise duty, spirits

L 55/36

EN

Official Journal of the European Communities

26.2.2002

COUNCIL DECISION

of 18 February 2002

authorising Portugal to apply a reduced rate of excise duty in the autonomous region of Madeira on
locally produced and consumed rum and liqueurs and in the autonomous region of the Azores on
locally produced and consumed liqueurs and eaux-de-vie

(2002/167/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 299(2) thereof,

(2)

locally produced spirits in Madeira and the Azores total
approximately 360 000 litres per annum and provide
130 direct jobs,

including 70 on a seasonal basis.

The application by Portugal, by way of derogation from
Article 90 of the Treaty, of a reduction of the excise
duty rate in the autonomous region of Madeira on
locally produced and consumed rum and liqueurs, and
the Azores on locally
in the autonomous region of
produced and consumed liqueurs and eaux-de-vie,
is
therefore necessary and justified in order to avoid endan-
gering the development of those regions.

Taking into account
the importance of giving local
economic operators the fiscal security they need to
develop their commercial activities as against the need to
set a time limit on tax derogations,
the derogation
should be granted for a period of seven years.

However, the granting of a seven-year derogation should
be subject to the condition that a mid-term report is
produced so that the Commission can assess whether
the reasons which justify the granting of the tax deroga-
tion still exist.

(3)

(4)

(5)

This Decision shall not prejudice the possible application
of Articles 87 and 88 of the Treaty,

HAS ADOPTED THIS DECISION:

Article 1

By way of derogation from Article 90 of the Treaty, Portugal is
hereby authorised to apply a rate of excise duty lower than the
full rate on alcohol laid down in Article 3 of Council Directive
92/84/EEC of 19 October 1992 on the approximation of the
rates of excise duty on alcohol and alcoholic beverages (3) in
the autonomous region of Madeira, to locally produced and
consumed rum and liqueurs, and in the autonomous region of
the Azores, to locally produced and consumed liqueurs and
eaux-de-vie.

(3) OJ L 316, 31.10.1992, p. 29.

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

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

Whereas:

(1)

and

liqueurs

produced

consumed

In its requests dated 15 June 2000 and 28 February
2001 concerning the measures to implement Article
299(2) of the Treaty relating to the outermost regions,
Portugal stated that the application of a reduced rate of
excise duty in Madeira, on locally produced and
consumed rums and liqueurs, and in the Azores, on
and
locally
eaux-de-vie, was considered essential for the survival of
the local industry producing and marketing the bever-
ages in question. Given the high cost of those activities
arising mainly from geographical factors (small firms
fragmented
producing limited quantities, remoteness,
terrain and tight local markets) only a reduction of the
tax on rum, liqueurs and eaux-de-vie produced on the
islands and sold almost exclusively on their
local
markets can enable the products to continue competing
against similar spirits imported or supplied from other
parts of the Community and thus ensure the survival of
the industry. To redress the competitive balance, a
reduction of the tax should therefore be introduced to
help offset the competitive disadvantage which spirits
produced in the autonomous regions of Madeira and the
Azores face as a result of the higher production and
marketing costs there. Analysis of the figures for the
price of spirits sold in the regions concerned suggests
that a reduction in the rate of excise duty of about 75 %
of the normal national rate applied in Portugal on ethyl
alcohol would help align the price of spirits produced in
Madeira and the Azores on that of similar spirits
imported or
the
Community. Such a measure should help the current
industry to survive or even expand. Current sales of

supplied from other parts of

(1) OJ C 304 E, 30.10.2001, p. 210.
(2) Opinion delivered on 7 February 2002 (not yet published in the

Official Journal).

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Official Journal of the European Communities

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Article 2

The derogation referred to in Article 1 shall be confined:
1.

in Madeira
(a) to rum as defined in Article 1(4)(a) of Council Regula-
tion (EEC) No 1576/89 of 29 May 1989 laying down
general rules on the definition, description and presenta-
tion of spirit drinks (1) having the geographical designa-
tion ‘Rum da Madeira’ referred to in Article 5(3) and
Annex II(1) of that Regulation,

2.

(b) to liqueurs as defined in Article 1(4)(r) of Regulation
fruit or

(EEC) No 1576/89 produced from regional
plants;
in the Azores
(a) to liqueurs as defined in Article 1(4)(r) of Regulation
(EEC) No 1576/89 produced from regional fruit or raw
materials,

(b) to eau-de-vie made from wine or grape marc having the
characteristics and qualities defined in Article 1(4)(d)
and (f) of Regulation (EEC) No 1576/89.

Article 3

The reduced rate of excise duty applicable to the products
referred to in Article 1 may be lower than the minimum rate of
excise duty on alcohol set by Directive 92/84/EEC, but may not

be more than 75 % lower than the standard national excise
duty on alcohol.

Article 4

By 31 December 2005 at the latest, Portugal shall send the
Commission a report to enable it to assess whether the reasons
which justified the granting of the reduced rate still exist.

Article 5

This Decision shall apply from 1 January 2002 until 31
December 2008.

Article 6

This Decision is addressed to the Portuguese Republic.

Done at Brussels, 18 February 2002.

For the Council

The President

J. PIQUÉ I CAMPS

(1) OJ L 160, 12.6.1989, p. 1. Regulation as last amended by Regula-

tion (EC) No 3378/94 (OJ L 366, 31.12.1994, p. 1).