Proposal for a Council Decision authorising Luxembourg to apply a differentiated rate of excise duty to low-sulphur diesel in accordance with Article 8(4) of Directive 92/81/EEC
Date: 2002-03-07
Institutions: European Commission
Subjects: Luxembourg, diesel fuel, excise duty, fiscal policy

29.10.2002

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Official Journal of the European Communities

C 262 E/21

Proposal for a Council Decision authorising Luxembourg to apply a differentiated rate of excise
duty to low-sulphur diesel in accordance with Article 8(4) of Directive 92/81/EEC

(2002/C 262 E/06)

COM(2002) 113 final

(Submitted by the Commission on 7 March 2002)

EXPLANATORY MEMORANDUM

1. Submission of request

In a letter dated 3 December 2001 Luxembourg 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).

The term ‘low-sulphur diesel’ refers to diesel with a sulphur content meeting the 50 ppm environmental
criterion 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 (2).

Luxembourg explains that the purpose of the proposed lower rate of excise duty is to encourage the use of
this environmentally-friendly fuel.

Excise duty would be increased by EUR 15 per 1 000 litres for diesel fuel with a sulphur content
exceeding 50 ppm. Thus the EUR 246,65/1 000 litre rate currently charged on all diesel fuel would
apply only to low-sulphur diesel, and a new rate of EUR 261,65 would be introduced for the higher-
sulphur category. The pump price of diesel with a sulphur content in excess of 50 ppm would increase by
LUF 0,7/litre (EUR 0,02/litre) so the new differentiated rate should lead to its rapid disappearance from
the market.

Luxembourg has asked for this measure to enter into force on 1 January 2002 and expire on 1 January
2004.

Luxembourg does not consider this measure to constitute State aid, since it applies to all consumers,
regardless of economic sector.

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, 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.

By letter dated 3 December 2001, Luxembourg requested authorisation to apply a differentiated rate of
excise duty to low-sulphur (50 ppm) diesel from 1 January 2002.

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

The differentiation will be achieved by means of a EUR 15/1 000 litre increase in excise duty for diesel
with a sulphur content exceeding 50 ppm. The existing EUR 246,65/1 000 litre rate for diesel will then
apply only to low-sulphur fuel, while a new rate of EUR 261,65 will be brought in for diesel whose
sulphur content exceeds 50 ppm.

(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) OJ L 350, 28.12.1998, p. 58, amending Council Directive 93/12/EEC (OJ L 74, 27.3.1993, p. 81).

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The differentiated rates of excise duties will thus comply with the minimum Community rates laid down in
Article 5 of Directive 92/82/CEE (1).

Following a thorough study of the measure and acknowledging the importance of tax incentives to
promote cleaner fuels, the Commission notes that the lower rate of excise will be of general application,
in other words available to anyone filling up with low-sulphur diesel in Luxembourg. The availability of
sufficient quantities of this fuel, of a satisfactory quality, has been verified.

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

The measure is for a fixed period. It expires on 31 December 2003, and use of this type of fuel becomes
mandatory on 1 January 2005 under 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. However, the logic of the system
envisaged in Article 8(4) of Directive 92/81/EC dictates that requests should refer to derogations which will
enter into force only after being approved by the Council, without prejudice to other rules of Community
law. Accordingly the Commission intends to propose that the measure enter into force on a date that
allows the Council time to adopt the proposed authorisation decision, namely 1 April 2002.

The Commission notes that the Council has authorised differentiation of excise duty for low-sulphur diesel
in the Netherlands (2) and Ireland (3). Similar derogations for low-sulphur fuels (petrol and diesel) have also
been approved for Germany (4) and Belgium (5).

3. Decision

In accordance with Article 8(4) of Council Directive 92/81/EEC, the Commission proposes that the Council
authorise Luxembourg to apply a differentiated rate of excise duty of a maximum of EUR 15 per 1 000
litres to low-sulphur (50 ppm) diesel used as fuel from 1 April 2002 until 31 December 2003.

(1) OJ L 316, 31.10.1992, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).
(2) Council Decision 2001/229/EC, 12.3.2001 (OJ L 84, 23.3.2001).
(3) Council Decision 2002/23/EC, 4.12.2001 (OJ L 11, 15.1.2002).
(4) Decision 2000/283/EC of 10.4.2000 authorises Germany to apply a differentiated rate of excise duty from 1
November 2001 to 31 December 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 October 1992 on the approxi-
mation of the rates of excise duties on mineral oils, and in particular the minimum rates laid down in Articles 4 and
5 thereof.

(5) Council Decision 2001/439/EC, 5.6.2001 (OJ L 155, 12.6.2001).

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 (1), and in particular Article 8(4) thereof,

Having regard to the proposal from the Commission,

Whereas:

(2) The other Member
Luxembourg’s request.

States have been informed of

(3) The differentiation of excise duty will take the form of a
EUR 15/1 000 litre increase in excise duty on diesel fuel
with a sulphur content exceeding 50 ppm. The effective
rates will remain above the minimum Community rates
of excise duty laid down in Council Directive 92/82/EEC
of 19 October 1992 on the harmonisation of the structures
of excise duties on mineral oils (2).

(1) Luxembourg has requested authorisation to apply a differ-
entiated rate of excise duty to low-sulphur (50 ppm) diesel
used as fuel.

(4) The derogation is sought on environmental grounds — the

benefits in terms of air quality are known.

(1) OJ L 316, 31.10.1992, p. 12, as last amended by Directive

(2) OJ L 316, 31.10.1992, p. 19, as last amended by Directive

94/74/EC (OJ L 365, 31.12.1994, p. 46).

94/74/EC (OJ L 365, 31.12.1994, p. 46).

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HAS ADOPTED THIS DECISION:

Article 1

Luxembourg is authorised to apply a differentiated rate of
from 1 April
excise duty to low-sulphur (50 ppm) diesel
2002 to 31 December 2003.

Article 2

The differentiation in excise duty referred to in Article 1 must
not exceed EUR 15 per 1 000 litres of fuel.

The rate of excise duty on diesel used as fuel must comply with
the terms of Council Directive 92/82/EEC, and in particular the
minimum rates laid down in Article 5 thereof.

Article 3

This authorisation shall expire on 31 December 2003.

Article 4

This Decision is addressed to Luxembourg.

Parliament

complies with the

environmental
(5) Low-sulphur diesel
laid down in Directive 98/70/EC of
criterion (50 ppm)
the
of
European
13 October 1998 relating to the quality of petrol and
diesel fuels and amending Council Directive 93/12/EEC (1).
Under Article 4 of that Directive, the use of 50 ppm diesel
will normally be compulsory from 1 January 2005. The
Luxembourg measure will expire on 31 December 2003.

the Council

and

of

the
(6) On the information available at present, neither
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.

(7) The Commission

regularly

and
exemptions to check that they do not distort competition
or the operation of the internal market and are not incom-
patible with Community environmental policy,

reductions

reviews

(1) OJ L 350, 28.12.1998, p. 58, amended by Commission Directive

2000/71/EC (OJ L 287, 14.11.2000, p. 46).