Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (Text with EEA relevance)
Date: 2003-10-27
Institutions: Council of the European Union
Subjects: electrical energy, energy-generating product, tax system

31.10.2003

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Official Journal of the European Union

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COUNCIL DIRECTIVE 2003/96/EC

of 27 October 2003

restructuring the Community framework for the taxation of energy products and electricity

(Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

(8)

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 93 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

The Council needs to examine the exemptions and
reductions and the minimum levels of taxation periodi-
cally, taking into consideration the proper functioning of
the internal market, the real value of the minimum levels
the competitiveness of Community busi-
of taxation,
nesses in the international
framework and the wider
objectives of the Treaty.

Having regard to the opinion of the European Economic and
Social Committee,

(9)

Member States should be given the flexibility necessary
to define and implement policies appropriate to their
national circumstances.

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

The scope of Council Directive 92/81/EEC of 19
October 1992 on the harmonisation of the structures of
excise duties on mineral oils (1) and of Council Directive
92/82/EEC of 19 October 1992 on the approximation
the rates of excise duties on mineral oils (2)
of
is
restricted to mineral oils.

The absence of Community provisions
imposing a
taxation on electricity and energy
minimum rate of
products other than mineral oils may adversely affect the
proper functioning of the internal market.

The proper functioning of the internal market and the
achievement of the objectives of other Community poli-
cies require minimum levels of taxation to be laid down
at Community level for most energy products, including
electricity, natural gas and coal.

Appreciable differences in the national levels of energy
taxation applied by Member States could prove detri-
mental to the proper functioning of the internal market.

(10) Member States wish to introduce or retain different types
of taxation on energy products and electricity. To that
end, Member States should be permitted to comply with
the Community minimum taxation levels by taking into
account the total charge levied in respect of all indirect
taxes which they have chosen to apply (excluding VAT).

(11)

Fiscal arrangements made in connection with the imple-
mentation of this Community framework for the taxa-
tion of energy products and electricity are a matter for
each Member State to decide. In this regard, Member
States might decide not
tax
burden if they consider that the implementation of such
a principle of
tax neutrality could contribute to the
restructuring and the modernisation of their tax systems
by encouraging behaviour conducive to greater protec-
tion of the environment and increased labour use.

to increase the overall

The establishment of appropriate Community minimum
levels of taxation may enable existing differences in the
national levels of taxation to be reduced.

(12)

Energy prices are key elements of Community energy,
transport and environment policies.

In accordance with Article 6 of the Treaty, environ-
mental protection requirements must be integrated into
the definition and implementation of other Community
policies.

(13)

Taxation partly determines the price of energy products
and electricity.

As a party to the United Nations Framework Convention
on Climate Change,
the Community has ratified the
Kyoto Protocol. The taxation of energy products and,
where appropriate, electricity is one of the instruments
available for achieving the Kyoto Protocol objectives.

(14)

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

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

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

94/74/EC.

taxation should reflect

the
The minimum levels of
competitive position of the different energy products
and electricity. It would be advisable in this connection
to base the calculation of these minimum levels as far as
possible on the
the products.
However, this method should not be applied to motor
fuels.

energy content of

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(15)

The possibility of applying differentiated national rates
of taxation to the same product should be allowed in
certain circumstances or permanent conditions, provided
that Community minimum levels of
taxation and
internal market and competition rules are respected.

(24) Member States should be permitted to apply certain
other exemptions or reduced levels of taxation, where
that will not be detrimental to the proper functioning of
the internal market and will not result in distortions of
competition.

(16) As heat is only subject to very limited intra-Community
trade, output taxation of heat should remain outside the
scope of this Community framework.

(17)

is necessary

to establish different Community
It
minimum levels of taxation according to the use of the
energy products and electricity.

(18)

(19)

Energy products used as a motor fuel for certain indus-
trial and commercial purposes and those used as heating
fuel are normally taxed at lower levels than those applic-
able to energy products used as a propellant.

The taxation of diesel motor fuel used by hauliers,
notably those engaging in intra-Community activities,
requires a possibility for a specific treatment, including
measures to allow for the introduction of a system of
road user charges,
in order to limit the distortion of
competition operators might be confronted with.

(20) Member States may need to differentiate between
commercial and non-commercial diesel. Member States
may use this possibility to reduce the gap between the
taxation of non-commercial gas oil used as propellant
and petrol.

(21)

Business use and non-business use of energy products
and electricity may be
tax
purposes.

treated differently for

(22)

(23)

Energy products should essentially be subject
to a
Community framework when used as heating fuel or
motor fuel. To that extent, it is in the nature and the
logic of the tax system to exclude from the scope of the
framework dual uses and non-fuel uses of energy
products as well as mineralogical processes. Electricity
used in similar ways should be treated on an equal
footing.

Existing international obligations and the maintaining of
the competitive position of Community companies make
it advisable to continue the exemptions of energy
products supplied for air navigation and sea navigation,
other than for private pleasure purposes, while it should
be possible for Member States to limit these exemptions.

(25)

(26)

(27)

(28)

(29)

(30)

(31)

In particular, combined heat and power generation and,
in order
to promote the use of alternative energy
sources, renewable forms of energy may qualify for
preferential treatment.

It is desirable to establish a Community framework to
allow Member States to exempt or reduce excise duties
so as to promote biofuels, thereby contributing to the
better functioning of the internal market and affording
Member States and economic operators a sufficient
legal certainty. Distortions of competition
degree of
should be limited and the incentive of a reduction in the
basic costs for producers and distributors of biofuels
should be maintained through, inter alia, the adjustments
by Member States taking into account changes in raw
material prices.

This Directive shall be without prejudice to the applica-
tion of the relevant provisions of Council Directive 92/
12/EEC of 25 February 1992 on the general arrange-
ments for products subject to excise duty and on the
holding, movement and monitoring of such products (1),
and Council Directive 92/83/EEC of 19 October 1992
on the harmonization of the structures of excise duties
on alcohol and alcoholic beverages (2), when the product
intended for use, offered for sale or used as motor fuel
or fuel additive is ethyl alcohol as defined in Directive
92/83/EEC.

Certain exemptions or reductions in the tax level may
prove necessary; notably because of
the lack of a
stronger harmonisation at Community level, because of
the risks of a loss of international competitiveness or
because of social or environmental considerations.

to significantly
Businesses entering into agreements
enhance environmental protection and energy efficiency
deserve attention; among these businesses, energy inten-
sive ones merit specific treatment.

Transitional periods and arrangements may be required
in order to allow Member States to smoothly adapt to
the new levels of taxation, thus limiting possible negative
side effects.

It is necessary to provide for a procedure authorising the
introduction by Member States, for a set period, of other
exemptions or reduced levels of taxation. Such exemp-
tions or reductions should be under regular review.

(1) OJ L 76, 23.3.1992, p. 1. Directive as last amended by Directive

2000/47/EC (OJ L 193, 29.7.2000, p. 73).

(2) OJ L 316, 31.10.1992, p. 21.

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(32)

(33)

(34)

Provision should be made for the Member States to
notify the Commission of certain national measures.
Such notification does not release Member States from
the obligation, laid down in Article 88(3) of the Treaty,
to notify certain national measures. This Directive does
not prejudice the outcome of any future State aid proce-
dure that may be undertaken in accordance with Articles
87 and 88 of the Treaty.

The scope of Directive 92/12/EEC should, where appro-
priate, be extended to the products and indirect taxes
covered by this Directive.

The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down
the procedures for the exercise of implementing powers
conferred on the Commission (1),

HAS ADOPTED THIS DIRECTIVE:

Article 1

Member States shall impose taxation on energy products and
electricity in accordance with this Directive.

Article 2

1.
For the purposes of
products’ shall apply to products:

this Directive,

the term ‘energy

(a) falling within CN codes 1507 to 1518, if these are intended

for use as heating fuel or motor fuel;

(b) falling within CN codes 2701, 2702 and 2704 to 2715;

(c) falling within CN codes 2901 and 2902;

(d) falling within CN code 2905 11 00, which are not of
synthetic origin, if these are intended for use as heating fuel
or motor fuel;

(e) falling within CN code 3403;

(f) falling within CN code 3811;

(g) falling within CN code 3817;

(h) falling within CN code 3824 90 99 if these are intended for

use as heating fuel or motor fuel.

2.

This Directive shall also apply to:

Electricity falling within CN code 2716.

3. When intended for use, offered for sale or used as motor
fuel or heating fuel, energy products other than those for which
a level of taxation is specified in this Directive shall be taxed
according to use, at the rate for the equivalent heating fuel or
motor fuel.

(1) OJ L 184, 17.7.1999, p. 23.

In addition to the taxable products listed in paragraph 1, any
product intended for use, offered for sale or used as motor fuel,
or as an additive or extender in motor fuels, shall be taxed at
the rate for the equivalent motor fuel.

In addition to the taxable products listed in paragraph 1, any
other hydrocarbon, except for peat, intended for use, offered
for sale or used for heating purposes shall be taxed at the rate
for the equivalent energy product.

4.

This Directive shall not apply to:

(a) output taxation of heat and the taxation of products falling

within CN-codes 4401 and 4402;

(b) the following uses of energy products and electricity:

— energy products used for purposes other than as motor

fuels or as heating fuels,

— dual use of energy products

An energy product has a dual use when it is used both
as heating fuel and for purposes other than as motor
fuel and heating fuel. The use of energy products for
chemical reduction and in electrolytic and metallurgical
processes shall be regarded as dual use,

— electricity used principally for the purposes of chemical
and metallurgical

electrolytic

and

in

reduction
processes,

— electricity, when it accounts for more than 50 % of the
cost of a product.
‘Cost of a product’ shall mean the
addition of total purchases of goods and services plus
personnel costs plus the consumption of fixed capital,
at the level of the business, as defined in Article 11.
This cost is calculated per unit on average. ‘Cost of elec-
tricity’ shall mean the actual purchase value of electri-
city or the cost of production of electricity if it is gener-
ated in the business,

— mineralogical processes

‘Mineralogical processes’ shall mean the processes classi-
fied in the NACE nomenclature under code DI 26
‘manufacture of other non-metallic mineral products’ in
Council Regulation (EEC) No 3037/90 of 9 October
1990 on the statistical classification of economic activ-
ities in the European Community (2).

However, Article 20 shall apply to these energy
products.

5.
References in this Directive to codes of the combined
nomenclature shall be to those of Commission Regulation (EC)
to
No 2031/2001 of 6 August 2001, amending Annex I
Council Regulation (EEC) No 2658/87 on the tariff and statis-
tical nomenclature and on the Common Customs Tariff (3).

(2) OJ L 293, 24.10.1990, p. 1. Regulation as last amended by
Commission Regulation (EC) No 29/2002 (OJ L 6, 10.1.2002, p. 3).

(3) OJ L 279, 23.10.2001, p. 1.

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A Decision to update the codes of the combined nomenclature
for the products referred to in this Directive shall be taken once
every year in accordance with the procedure laid down in
Article 27. The Decision must not result in any changes in the
minimum tax rates applied in this Directive or to the addition
or removal of any energy products and electricity.

(c) by refunding all or part of the amount of taxation.

Article 7

Article 3

1.
As from 1 January 2004 and from 1 January 2010, the
minimum levels of taxation applicable to motor fuels shall be
fixed as set out in Annex I Table A.

References in Directive 92/12/EEC to ‘mineral oils’ and ‘excise
duty’, insofar as it applies to mineral oils, shall be interpreted as
covering all energy products, electricity and national indirect
taxes referred to respectively in Articles 2 and 4(2) of this
Directive.

Article 4

1.
The levels of taxation which Member States shall apply to
the energy products and electricity listed in Article 2 may not
be less than the minimum levels of taxation prescribed by this
Directive.

2.
For the purpose of this Directive ‘level of taxation’ is the
total charge levied in respect of all indirect taxes (except VAT)
calculated directly or indirectly on the quantity of energy
products and electricity at the time of release for consumption.

Article 5

Provided that they respect
the minimum levels of taxation
prescribed by this Directive and that they are compatible with
Community law, differentiated rates of taxation may be applied
by Member States, under fiscal control, in the following cases:

— when the differentiated rates are directly linked to product

quality;

— when the differentiated rates depend on quantitative
consumption levels for electricity and energy products used
for heating purposes;

— for the following uses:

local public passenger transport
(including taxis), waste collection, armed forces and public
administration, disabled people, ambulances;

— between business and non-business use, for energy products

and electricity referred to in Articles 9 and 10.

Article 6

Member States shall be free to give effect to the exemptions or
reductions in the level of taxation prescribed by this Directive
either:

(a) directly,

(b) by means of a differentiated rate,

Not later than 1 January 2012, the Council, acting unani-
mously after consulting the European Parliament, shall, on the
basis of a report and a proposal from the Commission, decide
upon the minimum levels of taxation applicable to gas oil for a
further period beginning on 1 January 2013.

2. Member States may differentiate between commercial and
non-commercial use of gas oil used as propellant, provided that
the Community minimum levels are observed and the rate for
commercial gas oil used as propellant does not fall below the
national level of taxation in force on 1 January 2003, notwith-
standing any derogations for this use laid down in this Direc-
tive.

‘Commercial gas oil used as propellant’ shall mean gas oil

3.
used as propellant for the following purposes:

(a) the carriage of goods for hire or reward, or on own
account, by motor vehicles or articulated vehicle combina-
tions intended exclusively for the carriage of goods by road
and with a maximum permissible gross laden weight of not
less than 7,5 tonnes;

(b) the carriage of passengers, whether by regular or occasional
service, by a motor vehicle of category M2 or category M3,
as defined in Council Directive 70/156/EEC of 6 February
1970 on the approximation of the laws of the Member
States relating to the type-approval of motor vehicles and
their trailers (1).

4.
Notwithstanding paragraph 2, Member States which
introduce a system of road user charges for motor vehicles or
articulated vehicle combinations intended exclusively for the
carriage of goods by road may apply a reduced rate on gas oil
used by such vehicles, that goes below the national level of
taxation in force on 1 January 2003, as long as the overall tax
burden remains broadly equivalent, provided that the Commu-
nity minimum levels are observed and that the national level of
taxation in force on 1 January 2003 for gas oil used as propel-
lant is at least twice as high as the minimum level of taxation
applicable on 1 January 2004.

Article 8

As from 1 January 2004, notwithstanding Article 7, the
1.
minimum levels of taxation applicable to products used as
motor fuel for the purposes set out in paragraph 2 shall be
fixed as set out in Annex I Table B.

or

(1) OJ L 42, 23.2.1970, p. 1.

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This Article shall apply to the following industrial and

2.
commercial purposes:

(a) agricultural, horticultural or piscicultural works, and in

forestry;

(b) stationary motors;

(c) plant and machinery used in construction, civil engineering

and public works;

(d) vehicles intended for use off the public roadway or which
have not been granted authorisation for use mainly on the
public roadway.

2. With respect to this Directive, the business entity cannot
be considered as smaller than a part of an enterprise or a legal
body that from an organisational point of view constitutes an
independent business, that is to say an entity capable of func-
tioning by its own means.

3. Where mixed use takes place,
taxation shall apply in
proportion to each type of use, although where either the busi-
ness or non-business use is insignificant, it may be treated as
nil.

4. Member States may limit the scope of the reduced level
of taxation for business use.

Article 9

Article 12

As from 1 January 2004, the minimum levels of taxation
1.
applicable to heating fuels shall be fixed as set out in Annex I
Table C.

2. Member States, which on 1 January 2003 are authorised
to apply a monitoring charge for heating gas oil, may continue
to apply a reduced rate of EUR 10 per 1 000 litres for that
product. This authorisation shall be repealed on 1 January
2007 if the Council, acting unanimously on the basis of a
report and a proposal from the Commission, so decides, having
noted that the level of the reduced rate is too low to avoid
problems of trade distortion between the Member States.

Article 10

1.
As from 1 January 2004, the minimum levels of taxation
applicable to electricity shall be fixed as set out in Annex I
Table C.

2.
Above the minimum levels of taxation referred to in para-
graph 1, Member States will have the option of determining
the applicable tax base provided that they respect Directive 92/
12/EEC.

Article 11

In this Directive,

‘business use’ shall mean the use by a
1.
business entity,
identified in accordance with paragraph 2,
which independently carries out, in any place, the supply of
goods and services, whatever the purpose or results of such
economic activities.

The economic activities comprise all activities of producers,
traders and persons supplying services including mining and
agricultural activities and activities of the professions.

States, regional and local government authorities and other
bodies governed by public law shall not be considered as busi-
ness entities in respect of the activities or transactions in which
they engage as public authorities. However, when they engage
in such activities or transactions, they shall be considered as a
business in respect of these activities or transactions where
treatment as non-business would lead to significant distortions
of competition.

1. Member States may express their national levels of taxa-
tion in units other than those specified in Articles 7 to 10
provided that the corresponding levels of taxation, following
conversion into those units, are not below the minimum levels
specified in this Directive.

For energy products specified in Articles 7, 8 and 9, with
the volume shall be

2.
levels of
measured at a temperature of 15° C.

taxation based on volumes,

Article 13

1.
For Member States that have not adopted the euro, the
value of the euro in national currencies to be applied to the
value of the levels of taxation shall be fixed once a year. The
rates to be applied shall be those obtaining on the first working
day of October and published in the Official
the
European Union and shall have effect from 1 January of the
following calendar year.

Journal of

2. Member States may maintain the amounts of taxation in
force at the time of the annual adjustment provided for in para-
graph 1 if the conversion of the amounts of the level of taxa-
tion expressed in euro would result in an increase of less than
5 % or EUR 5, whichever is the lower amount, in the level of
taxation expressed in national currency.

Article 14

1.
In addition to the general provisions set out in Directive
92/12/EEC on exempt uses of taxable products, and without
prejudice to other Community provisions, Member States shall
exempt the following from taxation under conditions which
they shall lay down for the purpose of ensuring the correct and
straightforward application of
and of
preventing any evasion, avoidance or abuse:

such exemptions

(a) energy products and electricity used to produce electricity
and electricity used to maintain the ability to produce elec-
tricity. However, Member States may, for reasons of envir-
onmental policy, subject these products to taxation without
having to respect the minimum levels of taxation laid down
in this Directive.
these
products shall not be taken into account for the purpose of
satisfying the minimum level of taxation on electricity laid
down in Article 10;

the taxation of

In such case,

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(b) energy products supplied for use as fuel for the purpose of

— generated from fuel cells;

air navigation other than in private pleasure-flying.

For the purposes of this Directive ‘private pleasure-flying’
shall mean the use of an aircraft by its owner or the natural
or legal person who enjoys its use either through hire or
through any other means,
than commercial
purposes and in particular other than for the carriage of
passengers or goods or for the supply of services for
consideration or for the purposes of public authorities.

for other

Member States may limit the scope of this exemption to
supplies of jet fuel (CN code 2710 19 21);

(c) energy products supplied for use as fuel for the purposes of
navigation within Community waters (including fishing),
other than private pleasure craft, and electricity produced
on board a craft.

For the purposes of this Directive ‘private pleasure craft’
shall mean any craft used by its owner or the natural or
legal person who enjoys its use either through hire or
through any other means,
than commercial
purposes and in particular other than for the carriage of
passengers or goods or for the supply of services for
consideration or for the purposes of public authorities.

for other

2. Member States may limit the scope of the exemptions
provided for in paragraph 1(b) and (c) to international and
intra-Community transport. In addition, where a Member State
has entered into a bilateral agreement with another Member
State, it may also waive the exemptions provided for in para-
graph 1(b) and (c). In such cases, Member States may apply a
level of taxation below the minimum level set out in this Direc-
tive.

Article 15

1. Without prejudice
to other Community provisions,
Member States may apply under fiscal control total or partial
exemptions or reductions in the level of taxation to:

(a) taxable products used under fiscal control in the field of
pilot projects for the technological development of more
environmentally-friendly products or in relation to fuels
from renewable resources;

(b) electricity:

— of solar, wind, wave, tidal or geothermal origin;

— of hydraulic origin produced in hydroelectric installa-

tions;

(c) energy products and electricity used for combined heat and

power generation;

(d) electricity produced from combined heat and power
generation, provided that
the combined generators are
environmentally
apply
(or high
national definitions of ‘environmentally-friendly’
efficiency) cogeneration production until the Council, on
the basis of a report and a proposal from the Commission,
unanimously adopts a common definition;

friendly. Member

States may

(e) energy products and electricity used for the carriage of
goods and passengers by rail, metro, tram and trolley bus;

(f) energy products supplied for use as fuel for navigation on
inland waterways (including fishing) other than in private
pleasure craft, and electricity produced on board a craft;

(g) natural gas in Member States in which the share of natural
gas in final energy consumption was less than 15 % in
2000;

The total or partial exemptions or reductions may apply for
a maximum period of ten years after the entry into force of
this Directive or until the national share of natural gas in
final energy consumption reaches 25 %, whichever is the
sooner. However, as soon as the national share of natural
gas in final energy consumption reaches 20 %, the Member
States concerned shall apply a strictly positive level of taxa-
tion, which shall
increase on a yearly basis in order to
reach at least the minimum rate at the end of the period
referred to above.

The United Kingdom of Great Britain and Northern Ireland
may apply the total or partial exemptions or reductions for
natural gas separately for Northern Ireland;

(h) electricity, natural gas, coal and solid fuels used by house-
holds and/or by organisations recognised as charitable by
the Member State concerned. In the case of such charitable
organisations, Member States may confine the exemption
or reduction to use for the purpose of non-business activ-
ities. Where mixed use takes place, taxation shall apply in
proportion to each type of use. If a use is insignificant, it
may be treated as nil;

(i) natural gas and LPG used as propellants;

(j) motor fuels used in the field of the manufacture, develop-

ment, testing and maintenance of aircraft and ships;

(k) motor fuels used for dredging operations in navigable

— generated from biomass or from products produced

waterways and in ports;

from biomass;

— generated from methane emitted by abandoned coal-

(l) products falling within CN code 2705 used for heating

mines;

purposes.

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2. Member States may also refund to the producer some or
all of the amount of tax paid by the consumer on electricity
produced from products specified in paragraph 1(b).

Until 31 December 2003, Member States may exempt or
4.
continue to exempt products solely or almost solely made up
of the products referred to in paragraph 1.

3. Member States may apply a level of taxation down to
zero to energy products and electricity used for agricultural,
horticultural or piscicultural works, and in forestry.

On the basis of a proposal from the Commission, the Council
shall before 1 January 2008 examine if
the possibility of
applying a level of taxation down to zero shall be repealed.

5.
The exemption or reduction provided for the products
referred to in paragraph 1 may be granted under a multiannual
programme by means of an authorisation issued by an adminis-
trative authority to an economic operator for more than one
calendar year. The exemption or reduction authorised may not
be applied for a period of more than six consecutive years. This
period may be renewed.

Article 16

1. Member States may, without prejudice to paragraph 5,
apply an exemption or a reduced rate of taxation under fiscal
control on the taxable products referred to in Article 2 where
such products are made up of, or contain, one or more of the
following products:

— products falling within CN codes 1507 to 1518;

— products

falling within CN codes 3824 90 55 and
3824 90 80 to 3824 90 99 for their components produced
from biomass;

— products

falling within CN codes 2207 20 00 and

2905 11 00 which are not of synthetic origin;

— products produced from biomass, including products falling

within CN codes 4401 and 4402.

Member States may also apply a reduced rate of taxation under
fiscal control on the taxable products referred to in Article 2
where such products contain water (CN codes 2201 and
2851 00 10).

‘Biomass’ shall mean the biodegradable fraction of products,
waste and residues from agriculture (including vegetal and
animal substances), forestry and related industries, as well as
the biodegradable fraction of industrial and municipal waste.

As part of a multiannual programme authorised by an adminis-
trative authority prior to 31 December 2012, Member States
may apply the exemption or reduction under paragraph 1 after
31 December 2012 and until
the multiannual
the end of
programme. The period may not be renewed.

6.
Should Member States be required by Community law to
comply with legally binding obligations to place on their
markets a minimum proportion of the products referred to in
paragraph 1, paragraphs 1 to 5 shall cease to apply as from the
date when such obligations become binding on the Member
States.

7. Member States shall communicate to the Commission the
schedule of tax reductions or exemptions applied in accordance
with this Article by 31 December 2004 and every 12 months
thereafter.

No later than 31 December 2009, the Commission shall
8.
report to the Council on the fiscal, economic, agricultural,
energy, industrial and environmental aspects of the reductions
granted in accordance with this Article.

Article 17

2.
The exemption or reduction in taxation resulting from
the application of the reduced rate laid down in paragraph 1
may not be greater than the amount of taxation payable on the
volume of the products referred to in paragraph 1 present in
the products eligible for the reduction.

1.
Provided the minimum levels of taxation prescribed in
this Directive are respected on average for each business,
Member States may apply tax reductions on the consumption
of energy products used for heating purposes or for the
purposes of Article 8(2)(b) and (c) and on electricity in the
following cases:

taxation applied by Member States on the
The levels of
products made up of or containing the products referred to in
paragraph 1 may be lower than the minimum levels specified
in Article 4.

The exemption or

3.
reduction in taxation applied by
Member States shall be adjusted to take account of changes in
raw material prices to avoid over-compensating for the extra
costs involved in the manufacture of the products referred to in
paragraph 1.

(a) in favour of energy-intensive business

An ‘energy-intensive business’ shall mean a business entity,
as referred to in Article 11, where either the purchases of
energy products and electricity amount to at least 3,0 % of
the production value or the national energy tax payable
amounts to at least 0,5 % of the added value. Within this
definition, Member States may apply more restrictive
concepts, including sales value, process and sector defini-
tions.

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‘Purchases of energy products and electricity’ shall mean the
actual cost of energy purchased or generated within the
business. Only electricity, heat and energy products that are
used for heating purposes or for the purposes of Article
8(2)(b) and (c) are included. All taxes are included, except
deductible VAT.

‘Production value’ shall mean turnover, including subsidies
directly linked to the price of the product, plus or minus
the changes in stocks of finished products, work in progress
and goods and services purchased for resale, minus the
purchases of goods and services for resale.

‘Value added’ shall mean the total turnover liable to VAT
including export sales minus the total purchases liable to
VAT including imports.

Member States, which currently apply national energy tax
systems in which energy-intensive businesses are defined
according to criteria other than energy costs in comparison
with production value and national energy tax payable in
comparison with value added, shall be allowed a transi-
tional period until no later than 1 January 2007 to adapt to
the definition set out in point (a) first subparagraph;

(b) where agreements are concluded with undertakings or asso-
ciations of undertakings, or where tradable permit schemes
or equivalent arrangements are implemented, as far as they
lead to the achievement of environmental protection objec-
tives or to improvements in energy efficiency.

2.
Notwithstanding Article 4(1), Member States may apply a
level of taxation down to zero to energy products and electri-
city as defined in Article 2, when used by energy-intensive busi-
nesses as defined in paragraph 1 of this Article.

3.
Notwithstanding Article 4(1), Member States may apply a
level of taxation down to 50 % of the minimum levels in this
Directive to energy products and electricity as defined in Article
2, when used by business entities as defined in Article 11,
which are not energy-intensive as defined in paragraph 1 of
this Article.

4.
Businesses that benefit from the possibilities referred to in
paragraphs 2 and 3 shall enter into the agreements, tradable
permit schemes or equivalent arrangements as referred to in
paragraph 1(b). The agreements, tradable permit schemes or
equivalent arrangements must lead to the achievement of envir-
onmental objectives or increased energy efficiency, broadly
equivalent to what would have been achieved if the standard
Community minimum rates had been observed.

Article 18

By way of derogation from the provisions of the present
1.
directive, Member States are hereby authorised to continue to
apply the reductions in the levels of taxation or exemptions set
out in Annex II.

Subject to a prior review by the Council, on the basis of a
proposal from the Commission, this authorisation shall expire
on 31 December 2006 or on the date specified in Annex II.

2.
Notwithstanding the periods set out in paragraphs 3 to
12 and provided that this does not significantly distort compe-
tition, Member States with difficulties in implementing the new
taxation will be allowed a transitional
minimum levels of
period of until 1 January 2007, particularly in order to avoid
jeopardising price stability.

3.
The Kingdom of Spain may apply a transitional period
until 1 January 2007 to adjust its national level of taxation on
to the new minimum level of
gas oil used as propellant
EUR 302 and until 1 January 2012 to reach EUR 330. Until
31 December 2009, it may furthermore apply a special reduced
rate on commercial use of gas oil used as propellant, provided
that this does not result in taxation at below EUR 287 per
1 000 l and that the national levels of taxation in force on 1
January 2003 are not reduced. From 1 January 2010 until 1
January 2012, it may apply a differentiated rate on commercial
use of gas oil used as propellant, provided that it does not
result in taxation at below EUR 302 per 1 000 l and that the
national levels of taxation in force on 1 January 2010 are not
reduced. The special reduced rate on commercial use of gas oil
used as propellant may also be applied for taxis until 1 January
2012. With respect to Article 7(3)(a),
it may apply, until 1
January 2008, a maximum permissible gross laden weight of
not
less than 3,5 tonnes in the definition of commercial
purposes.

4.
The Republic of Austria may apply a transitional period
until 1 January 2007 to adjust its national level of taxation on
gas oil used as propellant
to the new minimum level of
EUR 302 and until 1 January 2012 to reach EUR 330. Until
31 December 2009, it may furthermore apply a special reduced
rate on commercial use of gas oil used as propellant, provided
that this does not result in taxation at below EUR 287 per
1 000 l and that the national levels of taxation in force on 1
January 2003 are not reduced. From 1 January 2010 until 1
January 2012, it may apply a differentiated rate on commercial
use of gas oil used as propellant, provided that it does not
result in taxation at below EUR 302 per 1 000 l and that the
national levels of taxation in force on 1 January 2010 are not
reduced.

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The Kingdom of Belgium may apply a transitional period
5.
until 1 January 2007 to adjust its national level of taxation on
gas oil used as propellant
to the new minimum level of
EUR 302 and until 1 January 2012 to reach EUR 330. Until
31 December 2009, it may furthermore apply a special reduced
rate on commercial use of gas oil used as propellant, provided
that this does not result in taxation at below EUR 287 per
1 000 l and that the national levels of taxation in force on 1
January 2003 are not reduced. From 1 January 2010 until 1
January 2012, it may apply a differentiated rate on commercial
use of gas oil used as propellant, provided that it does not
result in taxation at below EUR 302 per 1 000 l and that the
national levels of taxation in force on 1 January 2010 are not
reduced.

levels of taxation in force on 1 January 2010 are not reduced.
The differentiated rate on commercial use of gas oil used as
propellant may also be applied for taxis until 1 January 2012.
With respect to Article 7(3)(a) it may apply, until 1 January
2008, a maximum permissible gross laden weight of not less
than 3,5 tonnes in the definition of commercial purposes.

The Portuguese Republic may apply total or partial exemptions
in the level of taxation of electricity until 1 January 2010.

6.
The Grand Duchy of Luxembourg may apply a transi-
tional period until 1 January 2009 to adjust its national level of
taxation on gas oil used as propellant to the new minimum
level of EUR 302 and until 1 January 2012 to reach EUR 330.
Until 31 December 2009, it may furthermore apply a special
reduced rate on commercial use of gas oil used as propellant,
provided that
in taxation at below
EUR 272 per 1 000 l and that the national levels of taxation
in force on 1 January 2003 are not reduced. From 1 January
2010 until 1 January 2012, it may apply a differentiated rate
on commercial use of gas oil used as propellant, provided that
this does not result in taxation at below EUR 302 per 1 000 l
and that the national levels of taxation in force on 1 January
2010 are not reduced.

this does not

result

The Portuguese Republic may apply levels of taxation on
7.
energy products and electricity consumed in the Autonomous
Regions of the Azores and Madeira lower than the minimum
levels of
taxation laid down in this Directive in order to
compensate for the transport costs incurred as a result of the
insular and dispersed nature of these regions.

The Portuguese Republic may apply a transitional period until
1 January 2009 to adjust its national level of taxation on gas
oil used as propellant to the new minimum level of EUR 302
and until 1 January 2012 to reach EUR 330. Until 31
December 2009, it may furthermore apply a differentiated rate
on commercial use of gas oil used as propellant, provided that
this does not result in taxation at below EUR 272 per 1 000 l
and that the national levels of taxation in force on 1 January
2003 are not reduced. From 1 January 2010 until 1 January
2012, it may apply a differentiated rate on commercial use of
gas oil used as propellant, provided that this does not result in
taxation at below EUR 302 per 1000 l and that the national

8.
The Hellenic Republic may apply levels of taxation up to
EUR 22 per 1 000 l lower than the minimum rates laid down
in this Directive on gas oil used as propellant and on petrol
consumed in the departments of Lesbos, Chios, Samos, the
Dodecanese and the Cyclades and on the following islands in
the Aegean: Thasos, North Sporades, Samothrace and Skiros.

The Hellenic Republic may apply a transitional period until 1
January 2010 to convert its current input electricity taxation
system into an output taxation system and to reach the new
minimum level of taxation for petrol.

The Hellenic Republic may apply a transitional period until 1
January 2010 to adjust its national level of taxation on gas oil
used as propellant to the new minimum level of EUR 302 per
1 000 l and until 1 January 2012 to reach EUR 330. Until 31
December 2009 it may furthermore apply a differentiated rate
on commercial use of gas oil used as propellant, provided that
this does not result in taxation at below EUR 264 per 1 000 l
and that the national levels of taxation in force on 1 January
2003 are not reduced. From 1 January 2010 until 1 January
2012, it may apply a differentiated rate on commercial use of
gas oil used as propellant, provided that this does not result in
taxation at below EUR 302 per 1 000 l and that the national
levels of taxation in force on 1 January 2010 are not reduced.
The differentiated rate on commercial use of gas oil used as
propellant may also be applied for taxis until 1 January 2012.
With respect to Article 7(3)(a) it may apply, until 1 January
2008, a maximum permissible gross laden weight of not less
than 3,5 tonnes in the definition of commercial purposes.

9.
Ireland may apply total or partial exemptions or reduc-
tions in the level of taxation of electricity until 1 January 2008.

10.
The French Republic may apply total or partial exemp-
tions or reductions for energy products and electricity used by
the State, regional and local government authorities or other
bodies governed by public law, in respect of the activities or
transactions in which they engage as public authorities until 1
January 2009.

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The French Republic may apply a transitional period until 1
January 2009 to adapt its current electricity taxation system to
the provisions set out in this Directive. During this period, the
global average level of the current local electricity taxation is to
be taken into account to assess whether the minimum rates set
out in this Directive are respected.

11.
The Italian Republic may apply, until 1 January 2008, a
maximum permissible gross laden weight of not less than 3,5
tonnes in the definition of commercial purposes as given in
Article 7(3)(a).

The Federal Republic of Germany may apply, until 1
12.
January 2008, a maximum permissible gross laden weight of
12 tonnes in the definition of commercial purposes as given in
Article 7(3)(a).

13.
The Kingdom of the Netherlands may apply, until 1
January 2008, a maximum permissible gross laden weight of
12 tonnes in the definition of commercial purposes as given in
Article 7(3)(a).

14. Within the transitional periods established, Member
States shall progressively reduce their respective gaps with
respect to the new minimum levels of taxation. However, when
level and the minimum
the difference between the national
level does not exceed 3 % of that minimum level, the Member
State concerned may wait until the end of the period to adjust
its national level.

If

the Commission considers that

the exemptions or
3.
reductions provided for in paragraph 1 are no longer sustain-
able, particularly in terms of fair competition or distortion of
the operation of the internal market, or in terms of Community
policy in the areas of health, protection of the environment,
energy and transport, it shall submit appropriate proposals to
the Council. The Council shall take a unanimous decision on
these proposals.

Article 20

Only the following energy products shall be subject to

1.
the control and movement provisions of Directive 92/12/EEC:

(a) products falling within CN codes 1507 to 1518, if these

are intended for use as heating fuel or motor fuel;

(b) products

falling within CN codes 2707 10, 2707 20,

2707 30 and 2707 50;

for

(c) products falling within CN codes 2710 11 to 2710 19 69.
However,
CN codes
2710 11 21, 2710 11 25 and 2710 19 29, the control and
movement provisions shall only apply to bulk commercial
movements;

falling within

products

(d) products falling within CN codes 2711 (except 2711 11,

2711 21 and 2711 29);

(e) products falling within CN code 2901 10;

Article 19

(f) products

falling within CN codes 2902 20, 2902 30,

2902 41, 2902 42, 2902 43 and 2902 44;

1.
In addition to the provisions set out in the previous Arti-
cles, in particular in Articles 5, 15 and 17, 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.

(g) products falling within CN code 2905 11 00, which are not
of synthetic origin, if these are intended for use as heating
fuel or motor fuel;

(h) products falling within CN code 3824 90 99 if these are

intended for use as heating fuel or motor fuel.

A Member State wishing to introduce such a measure shall
inform the Commission accordingly and shall also provide the
Commission with all relevant and necessary information.

The Commission shall examine the request,
taking into
the internal
functioning of
account,
market, the need to ensure fair competition and Community
health, environment, energy and transport policies.

the proper

inter alia,

Within three months of receiving all relevant and necessary
information, the Commission shall either present a proposal
for the authorisation of such a measure by the Council or,
alternatively, shall inform the Council of the reasons why it has
not proposed the authorisation of such a measure.

2.
The authorisations referred to in paragraph 1 shall be
granted for a maximum period of 6 years, with the possibility
of renewal in accordance with the procedure set out in para-
graph 1.

If a Member State finds that energy products other than
2.
those referred to in paragraph 1 are intended for use, offered
for sale or used as heating fuel, motor fuel or are otherwise
giving rise to evasion, avoidance or abuse, it shall advise the
Commission forthwith. This provision shall also apply for elec-
tricity. The Commission shall transmit the communication to
the other Member States within one month of receipt. A Deci-
sion as to whether the products in question should be made
subject to the control and movement provisions of Directive
92/12/EEC shall then be taken in accordance with the proce-
dure laid down in Article 27(2).

3. Member States may, pursuant to bilateral arrangements,
dispense with some or all of the control measures set out in
Directive 92/12/EEC in respect of some or all of the products
referred to in paragraph 1, insofar as they are not covered by
Articles 7 to 9 of this Directive. Such arrangements shall not
affect Member States which are not party to them. All such
bilateral arrangements shall be notified to the Commission,
which shall inform the other Member States.

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Article 21

1.
In addition to the general provisions defining the charge-
able event and the provisions for payment set out in Directive
92/12/EEC, the amount of taxation on energy products shall
also become due on the occurrence of one of the chargeable
events mentioned in Article 2(3).

For the purpose of this Directive, the word ‘production’
2.
in Article 4(c) and 5(1) of Directive 92/12/EEC shall be deemed
to include ‘extraction’, when appropriate.

The consumption of energy products within the curtilage
3.
of an establishment producing energy products shall not be
considered as a chargeable event giving rise to taxation, if the
consumption consist of energy products produced within the
curtilage of the establishment. Member States may also consider
the consumption of electricity and other energy products not
produced within the curtilage of such an establishment and the
consumption of energy products and electricity within the
curtilage of an establishment producing fuels to be used for
generation of electricity as not giving rise to a chargeable event.
Where the consumption is for purposes not related to the
production of energy products and in particular for the propul-
sion of vehicles, this shall be considered a chargeable event,
giving rise to taxation.

4. Member States may also provide that taxation on energy
products and electricity shall become due when it is established
that a final use condition laid down in national rules for the
purpose of a reduced level of taxation or exemption is not, or
is no longer, fulfilled.

For the purpose of applying Articles 5 and 6 of Directive
5.
92/12/EEC, electricity and natural gas shall be subject to taxa-
tion and shall become chargeable at the time of supply by the
distributor or redistributor. Where the delivery to consumption
takes place in a Member State where the distributor or redistri-
the Member States of
butor is not established,
delivery shall be chargeable to a company that has to be regis-
tered in the Member State of delivery. Tax shall in all cases be
levied and collected according to procedures laid down by each
Member State.

the tax of

Notwithstanding the first subparagraph, Member States have
the right to determine the chargeable event, in the case where
there are no connections between their gas pipe lines and those
of other Member States.

An entity producing electricity for its own use is regarded as a
distributor. Notwithstanding Article 14(1)(a), Member States
may exempt small producers of electricity provided that they
tax the energy products used for the production of that electri-
city.

For the purpose of applying Articles 5 and 6 of Directive 92/
12/EEC, coal, coke and lignite shall be subject to taxation and
shall become chargeable at the time of delivery by companies,
which have to be registered for that purpose by the relevant
authorities. Those authorities may allow the producer, trader,
importer or fiscal representative to substitute the registered

company for the fiscal obligations imposed upon it. Tax shall
be levied and collected according to procedures laid down by
each Member State.

6. Member States need not treat as ‘production of energy
products’:

(a) operations during which small quantities of

energy

products are obtained incidentally;

(b) operations by which the user of an energy product makes
its reuse possible in his own undertaking provided that the
taxation already paid on such product is not less than the
taxation which would be due if the reused energy product
were again to be liable to taxation;

(c) an operation consisting of mixing, outside a production
establishment or a tax warehouse, energy products with
other energy products or other materials, provided that:

(i) taxation on the components has been paid previously;

and

(ii) the amount paid is not less than the amount of the tax

which would be chargeable on the mixture.

The condition under (i) shall not apply where the mixture
is exempted for a specific use.

Article 22

When taxation rates are changed, stocks of energy products
already released for consumption may be subject to an increase
in, or a reduction of, the tax.

Article 23

Member States may refund the amounts of taxation already
paid on contaminated or accidentally mixed energy products
sent back to a tax warehouse for recycling.

Article 24

Energy products released for consumption in a Member
1.
State, contained in the standard tanks of commercial motor
vehicles and intended to be used as fuel by those same vehicles,
as well as in special containers, and intended to be used for the
operation, during the course of transport, of the systems equip-
ping those same containers shall not be subject to taxation in
any other Member State.

2.

For the purposes of this Article,

‘standard tanks’ shall mean:

fitting enables fuel

— the tanks permanently fixed by the manufacturer to all
motor vehicles of the same type as the vehicle in question
to be used
and whose permanent
directly, both the purpose of propulsion and, where appro-
priate, for the operation, during transport, of refrigeration
systems and other systems. Gas tanks fitted to motor vehi-
cles designed for the direct use of gas as a fuel and tanks
fitted to the other systems with which the vehicle may be
equipped shall also be considered to be standard tanks;

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— the tanks permanently fixed by the manufacturer to all
containers of the same type as the container in question
and whose permanent
to be used
directly for the operation, during transport, of the refrigera-
tion systems and other
systems with which special
containers are equipped.

fitting enables fuel

‘Special container’ shall mean any container fitted with specially
designed apparatus
refrigeration systems, oxygenation
systems, thermal insulation systems or other systems.

for

Article 25

1. Member States shall inform the Commission of the levels
of taxation which they apply to the products listed in Article 2
on 1 January each year and following each change in national
law.

2. Where the levels of
taxation applied by the Member
States are expressed in units of measurement other than those
specified for each product in Articles 7 to 10, Member States
shall also notify the corresponding levels of taxation following
conversion into these units.

Article 26

1. Member States shall inform the Commission of measures
taken pursuant to Articles 5, 14(2), 15 and 17.

tax
tax reductions,
2. Measures such as tax exemptions,
differentiation and tax refunds within the meaning of
this
Directive might constitute State aid and in those cases have to
be notified to the Commission pursuant to Article 88(3) of the
Treaty.

Information provided to the Commission on the basis of this
Directive does not free Member States from the notification
obligation pursuant to Article 88(3) of the Treaty.

The obligation to inform the Commission pursuant to
3.
paragraph 1 of measures taken pursuant to Article 5 does not
free Member States from any notification obligations pursuant
to Directive 83/189/EEC.

Article 28

1. Member States shall adopt and publish the laws, regula-
tions and administrative provisions necessary to comply with
this Directive not later than 31 December 2003. They shall
forthwith inform the Commission thereof.

They shall apply these provisions from 1 January 2004,
2.
except
the provisions laid down in Articles 16 and 18(1),
which may be applied by the Member States from 1 January
2003.

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

4. Member States shall communicate to the Commission the
texts of the main provisions of national law which they adopt
in the field governed by this Directive.

Article 29

The Council, acting on the basis of a report and, where appro-
priate, a proposal
from the Commission, shall periodically
examine the exemptions and reductions and the minimum
levels of taxation laid down in this Directive and, acting unani-
mously after consulting the European Parliament, shall adopt
the necessary measures. The report by the Commission and the
consideration by the Council shall take into account the proper
functioning of
the
minimum levels of taxation and the wider objectives of the
Treaty.

the internal market,

the real value of

Article 30

Notwithstanding Article 28(2), Directives 92/81/EEC and 92/
82/EEC shall be repealed as from 31 December 2003.

Article 31

This Directive shall enter into force on the day of its publica-
tion in the Official Journal of the European Union.

Article 27

Article 32

The Commission shall be assisted by the Committee on

1.
Excise Duties set up by Article 24(1) of Directive 92/12/EEC.

2. Where reference is made to this paragraph, Article 5 and
7 of Decision 1999/468/EC shall apply.

The period laid down in Article 5(6) of Decision 1999/468/EC
shall be set at three months.

3.

The Committee shall adopt its Rules of Procedure.

This Directive is addressed to the Member States.

Done at Luxembourg, 27 October 2003.

For the Council

The President

A. MATTEOLI

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ANNEX I

Table A. — Minimum levels of taxation applicable to motor fuels

1 January 2004

1 January 2010

Leaded petrol
(in euro per 1 000 l)

CN codes 2710 11 31, 2710 11 51 and 2710 11 59

Unleaded petrol
(in euro per 1 000 l)

CN codes 2710 11 31, 2710 11 41, 2710 11 45 and
2710 11 49

Gas oil
(in euro per 1 000 l)

CN codes 2710 19 41 to 2710 19 49

Kerosene
(in euro per 1 000 l)

CN codes 2710 19 21 and 2710 19 25

LPG
(in euro per 1 000 kg)

CN codes 2711 12 11 to 2711 19 00

Natural gas
(in euro per gigajoule gross calorific value)

CN codes 2711 11 00 and 2711 21 00

421

359

302

302

125

2,6

421

359

330

330

125

2,6

Table B. — Minimum levels of taxation applicable to motor fuels used for the purpose set out in Article 8(2)

Gas oil
(in euro per 1 000 l)

CN codes 2710 19 41 to 2710 19 49

Kerosene
(in euro per 1 000 l)

CN codes 2710 19 21 and 2710 19 25

LPG
(in euro per 1 000 kg)

CN codes 2711 12 11 to 2711 19 00

Natural gas
(in euro per gigajoule gross calorific value)

CN codes 2711 11 00 and 2711 21 00

21

21

41

0,3

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Table C. — Minimum levels of taxation applicable to heating fuels and electricity

Business use

Non-business use

Gas oil
(in euro per 1 000 l)

CN codes 2710 19 41 to 2710 19 49

Heavy fuel oil
(in euro per 1 000 kg)

CN codes 2710 19 61 to 2710 19 69

Kerosene
(in euro per 1 000 l)

CN codes 2710 19 21 and 2710 19 25

LPG
(in euro per 1 000 kg)

CN codes 2711 12 11 to 2711 19 00

Natural gas
(in euro per gigajoule gross calorific value)

CN codes 2711 11 00 and 2711 21 00

Coal and coke
(in euro per gigajoule gross calorific value)

CN codes 2701, 2702 and 2704

Electricity
(in euro per MWh)

CN code 2716

21

15

0

0

0,15

0,15

0,5

21

15

0

0

0,3

0,3

1,0

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Reduced rates of taxation and exemptions from such taxation referred to in Article 18(1)

ANNEX II

1. BELGIUM:

— for liquid petroleum gas (LPG), natural gas and methane;

— for local public passenger transport vehicles;

— for air navigation other than that covered by Article 14(1)(b) of this Directive;

— for navigation in private pleasure craft;

— for a reduction in the rate of excise duty on heavy fuel oil to encourage the use of more environmentally
friendly fuels. Such reduction shall be specifically linked to sulphur content and in no case can the reduced rate
fall below EUR 6,5 per tonne;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty;

— for a differentiated rate of excise duty on low-sulphur (50 ppm) and low-aromatic (35 %) unleaded petrol;

— for a differentiated rate of excise duty on low-sulphur (50 ppm) diesel.

2. DENMARK:

— for a differentiated rate of excise duty, from 1 February 2002 to 31 January 2008, to heavy fuel oil and heating
oil used by energy-intensive firms to produce heating and hot water. The maximum amount of the authorised
differentiation in the excise duty is EUR 0,0095 per kg on heavy fuel oil and EUR 0,008 per litre on heating
oil. The reductions in excise duty must comply with the terms of this Directive, and in particular the minimum
rates;

— for a reduction in the rate of duty on diesel to encourage the use of more environmentally friendly fuels,
provided that such incentives are linked to established technical characteristics including specific gravity, sulphur
content, distillation point, cetane number and index and provided that such rates are in accordance with the
obligations laid down in this Directive;

— for the application of differentiated rates of excise duty between petrol distributed from petrol stations equipped
with a return system for petrol fumes and petrol distributed from other petrol stations, provided that the differ-
entiated rates are in accordance with the obligations laid down in this Directive, and in particular the minimum
rates of excise duty;

— for differentiated rates of excise duties on petrol, provided that the differentiated rates are in accordance with
the obligations laid down in this Directive, and in particular the minimum levels of taxation provided for in
Article 7 thereof;

— for local public passenger transport vehicles;

— for differentiated rates of excise duties on gas oil, provided that the differentiated rates are in accordance with
the obligations laid down in this Directive, and in particular the minimum levels of taxation provided for in
Article 7 thereof;

— for partial reimbursement to the commercial sector, provided that the taxes concerned are in conformity with
Community law and provided that the amount of the tax paid and not reimbursed at all times respects the
minimum rates of duty or monitoring charge on mineral oils as provided for in Community law;

— for air navigation other than that covered by Article 14(1)(b) of this Directive;

— for the application of a reduced rate of excise duty of a maximum of DKK 0,03 per litre on petrol distributed
from petrol stations meeting more stringent standards of equipment and operation designed to reduce leakage
of methyl tertiary butyl ether into ground water, provided that the differentiated rates are in accordance with
the obligations laid down in this Directive, and in particular the minimum rates of excise duty.

3. GERMANY:

— for a differentiated rate on excise duty on fuels with a maximum sulphur content of 10 ppm from 1 January

2003 until 31 December 2005;

— for the use of waste hydrocarbon gases as heating fuel;

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— for a differentiated rate of excise duty on mineral oils used as fuel in local public passenger transport vehicles,

subject to compliance with the obligations laid down in Directive 92/82/EEC;

— for samples of mineral oils intended for analysis, tests on production or for other scientific purposes;

— for a differentiated rate of excise duty on heating oils used by manufacturing industries, provided that the differ-

entiated rates are in accordance with the obligations laid down in this Directive;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.

4. GREECE:

— for use by national armed forces;

— to grant relief from the excise duties on mineral oils for fuels intended to be used to power the official vehicles

of the Ministry of the Presidency and the national police force;

— for local public passenger transport vehicles;

— for differentiated rates of tax on unleaded petrol to reflect different environmental categories, provided that the
differentiated rates are in accordance with the obligations laid down in this Directive, and in particular the
minimum levels of taxation provided for in Article 7 thereof;

— for LPG and methane used for industrial purposes.

5.

SPAIN:

— for LPG used as fuel in local public transport vehicles;

— for LPG used as fuel in taxis;

— for differentiated rates of tax on unleaded petrol to reflect different environmental categories, provided that the
differentiated rates are in accordance with the obligations laid down in this Directive, and in particular the
minimum levels of taxation provided for in Article 7 thereof;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.

6.

FRANCE:

— for differential rates of tax on diesel used in commercial vehicles, until 1 January 2005, which cannot be less

than EUR 380 per 1 000 l as from 1 March 2003;

— in the framework of certain policies aimed at assisting areas suffering from depopulation;

— for consumption on the island of Corsica, provided that the reduced rates at all times respect the minimum rates

of duty on mineral oils as provided for under Community law;

— for a differentiated rate of excise duty on a new fuel composed of a water-and-antifreeze/diesel emulsion stabi-
lised by surfactants, provided that the differentiated rates are in accordance with the obligations laid down in
this Directive, and in particular the minimum rates of excise duty;

— for a differentiated rate of excise duty for premium-grade unleaded petrol containing a potassium-based additive

to improve resistance to valve burn-out (or any other additive of equivalent effect);

— for fuel used in taxis, within the limits of an annual quota;

— for exemption from excise duty on gases used as fuel for public transport subject to an annual quota;

— for an exemption from excise duties for gases used as engine fuels in gas-powered refuse collection vehicles;

— for a reduction in the rate of taxation on heavy fuel oil to encourage the use of more environmentally friendly
fuels; this reduction shall be specifically linked to sulphur content and the rate of duty charged on heavy fuel oil
must correspond to the minimum rate of taxation on heavy fuel oil as provided for in Community law;

— for an exemption for heavy fuel oil used as fuel for the production of alumina in the region of Gardanne;

— for air navigation other than that covered by Article 14(1)(b) of this Directive;

— for gasoline delivered from the harbours of Corsica to private pleasure craft;

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— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty;

— for local public passenger transport vehicles until 31 December 2005;

— for the granting of permits for the application of a differentiated rate of excise duty to the fuel mixture ‘petrol/
ethyl alcohol derivatives whose alcohol component is of agricultural origin’ and for the application of a differen-
tiated rate of excise duty to the fuel mixture ‘diesel/vegetable oil esters’. To allow a reduction in excise duty on
blends incorporating vegetable oil esters and ethyl alcohol derivatives which are used as fuel within the meaning
of this Directive, the French authorities must issue the necessary permits to the biofuel production units
concerned by 31 December 2003 at the latest. The authorisations will be valid for a maximum of six years from
the date of issue. The reduction specified in the authorisation may be applied after 31 December 2003 until the
expiry of the authorisation. The reductions in excise duties shall not exceed EUR 35,06/hl or EUR 396,64/t for
vegetable oil esters and EUR 50,23/hl or EUR 297,35/t for ethyl alcohol derivatives used in the mixtures
referred to. The reductions in excise duties shall be adjusted to take account of changes in the price of raw mate-
rials to avoid overcompensating for the extra costs involved in the manufacture of biofuels. This Decision shall
apply with effect from 1 November 1997. It shall expire on 31 December 2003;

— for the granting of permits for the application of a differentiated rate of excise duty to the mixture ‘domestic
heating fuel/vegetable oil esters’. To allow a reduction in excise duty on mixtures incorporating vegetable oil
esters and used as fuel within the meaning of this Directive, the French authorities must issue the necessary
permits to the biofuel production units concerned by 31 December 2003 at the latest. The authorisations will
be valid for a maximum of six years from the date of issue. The reduction specified in the authorisation may be
applied after 31 December 2003 until the expiry of the authorisation, but may not be extended. The reductions
in excise duties shall not exceed EUR 35,06/hl or EUR 396,64/t for the vegetable oil esters used in the mixtures
referred to. The reductions in excise duty shall be adjusted to take account of changes in the price of raw mate-
rials to avoid overcompensating for the extra costs involved in the manufacture of biofuels. This Decision shall
apply with effect from 1 November 1997. It shall expire on 31 December 2003.

7.

IRELAND:

— for LPG, natural gas and methane used as motor fuel;

— in motor vehicles used by the disabled;

— for local public passenger transport vehicles;

— for differentiated rates of tax on unleaded petrol to reflect different environmental categories, provided that the
differentiated rates are in accordance with the obligations laid down in this Directive, and in particular the
minimum levels of taxation provided for in Article 7 thereof;

— for a differentiated rate of excise on low-sulphur diesel;

— for the production of alumina in the Shannon region;

— for air navigation other than that covered by Article 14(1)(b) of this Directive;

— for navigation in private pleasure craft;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.

8.

ITALY:

— for differentiated rates of excise duty on mixtures used as motor fuels containing 5 % or 25 % of biodiesel until
30 June 2004. The reduction in excise duty may not be greater than the amount of excise duty payable on the
volume of biofuels present in the products eligible for the reduction. The reduction in excise duty shall be
adjusted to take account of changes in the price of raw materials to avoid overcompensating for the extra costs
involved in the manufacture of biofuels;

— for a reduction in the rate of excise duty used as fuel by road transport operators, until 1 January 2005, which

cannot be less than EUR 370 per 1 000 l as from 1 January 2004;

— for waste hydrocarbon gases used as fuel;

— for a reduced rate of excise duty to water/diesel emulsions and water/heavy fuel oil emulsions from 1 October
2000 until 31 December 2005 provided that the reduced rate is in accordance with the obligations laid down
in this Directive, and in particular with the minimum rates of excise duty;

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— for methane used as fuel in motor vehicles;

— for the national armed forces;

— for ambulances;

— for local public passenger transport vehicles;

— for fuel used in taxis;

— in certain particularly disadvantaged geographical areas, for reduced rates of excise duty on domestic fuel and
LPG used for heating and distributed through the networks of such areas, provided that the rates are in accor-
dance with the obligations laid down in this Directive, and in particular the minimum rates of excise duty;

— for consumption in the regions of Val d'Aosta and Gorizia;

— for a reduction in the rate of excise duty on petrol consumed on the territory of Friuli-Venezia Giulia, provided
that the rates are in accordance with the obligations laid down in this Directive, and in particular the minimum
rates of excise duty;

— for a reduction in the rate of excise duty on mineral oils consumed in the regions of Udine and Trieste, provided

that the rates are in accordance with the obligations laid down in this Directive;

— for an exemption from excise duty on mineral oils used as fuel for alumina production in Sardinia;

— for a reduction in the rate of excise duty on fuel oil, for the production of steam, and for gas oil, used in ovens
for drying and ‘activating’ molecular sieves in Reggio Calabria, provided that the rates are in accordance with
the obligations laid down in this Directive;

— for air navigation other than that covered by Article 14(1)(b) of this Directive;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.

9.

LUXEMBOURG:

— for LPG, natural gas and methane;

— for local public passenger transport vehicles;

— for a reduction in the rate of excise duty on heavy fuel oil to encourage the use of more environmentally
friendly fuels. Such reduction shall be specifically linked to sulphur content and in no case can the reduced rate
fall below EUR 6,5 per tonne;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.

10. NETHERLANDS:

— for LPG, natural gas and methane;

— for samples of mineral oils intended for analysis, tests on production or for other scientific purposes;

— for use by the national armed forces;

— for the application of differentiated rates of excise duty on LPG used as fuel in public transport;

— for a differentiated rate of excise duty on LPG used as fuel for waste-collection, drain suction and by street-

cleaning vehicles;

— for a differentiated rate of excise duty on low sulphur (50 ppm) diesel to 31 December 2004;

— for a differentiated rate of excise duty on low sulphur (50 ppm) petrol to 31 December 2004.

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11. AUSTRIA:

— for natural gas and methane;

— for LPG used as fuel by local public transport vehicles;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.

12. PORTUGAL:

— for differentiated rates of tax on unleaded petrol to reflect different environmental categories, provided that the
differentiated rates are in accordance with the obligations laid down in this Directive, and in particular the
minimum levels of taxation provided for in Article 7 thereof;

— for exemption from excise duty on LPG, natural gas and methane used as fuel

in local public passenger

transport;

— for a reduction in the rate of excise duty on fuel oil consumed in the autonomous region of Madeira; this reduc-

tion may not be greater than the additional costs incurred in transporting the fuel oil to that region;

— for a reduction in the rate of excise duty on heavy fuel oil to encourage the use of more environmentally
friendly fuels; this reduction shall be specifically linked to sulphur content and the rate of duty charged on heavy
fuel oil must correspond to the minimum rate of duty on heavy fuel oil as provided for in Community law;

— for air navigation other than that covered by Article 14(1)(b) of this Directive;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.

13. FINLAND:

— for natural gas used as fuel;

— for an exemption from excise duty for methane and LPG for all purposes;

— for reduced excise duty rates on diesel fuel and heating gas oil, provided that the rates are in accordance with
the obligations laid down in this Directive, and in particular the minimum levels of taxation provided for in
Articles 7 to 9;

— for reduced excise duty rates on reformulated unleaded and leaded petrol, provided that the rates are in accor-
dance with the obligations laid down in this Directive, and in particular the minimum levels of taxation provided
for in Article 7 thereof;

— for air navigation other than that covered by Article 14(1)(b) of this Directive;

— for navigation in private pleasure craft;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.

14. SWEDEN:

— for reduced tax rates for diesel in accordance with environmental classifications;

— for differentiated rates of tax on unleaded petrol to reflect different environmental categories, provided that the
differentiated rates are in accordance with the obligations laid down in this Directive, and in particular the
minimum rates of excise duty;

— for a differentiated rate of energy tax to alkylate-based petrol for two-stroke engines, until 30 June 2008,

provided that the total excise duty applicable comply with the terms of this Directive;

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— for an exemption from excise duty for biologically produced methane and other waste gases;

— for a reduced rate of excise duty on mineral oils used for industrial purposes, provided that the rates are in

accordance with the obligations laid down in this Directive;

— for a reduced rate of excise duty on mineral oils used for industrial purposes by introducing both a rate which is
lower than the standard rate and a reduced rate for energy-intensive enterprises, provided that the rates are in
accordance with the obligations laid down in this Directive, and do not give rise to distortions of competition;

— for air navigation other than that covered by Article 14(1)(b) of the present Directive.

15. UNITED KINGDOM:

— for differentiated rates of excise duty for road fuel containing biodiesel and biodiesel used as pure road fuel, until
31 March 2007. Community minimum rates have to be respected and no overcompensation for the extra costs
involved in the manufacture of biofuels can take place;

— for LPG, natural gas and methane used as motor fuel;

— for a reduction in the rate of excise duty on diesel to encourage the use of more environmentally friendly fuels;

— for differentiated rates of tax on unleaded petrol to reflect different environmental categories, provided that the
differentiated rates are in accordance with the obligations laid down in this Directive, and in particular the
minimum levels of taxation provided for in Article 7 thereof;

— for local public passenger transport vehicles;

— for a differentiated rate of excise duty on water/diesel emulsion provided that the differentiated rates are in
accordance with the obligations laid down in this Directive, and in particular the minimum rates of excise duty;

— for air navigation other than that covered by Article 14(1)(b) of this Directive;

— for navigation in private pleasure craft;

— for waste oils which are reused as fuel, either directly after recovery or following a recycling process for waste

oils, and where the reuse is subject to duty.