Report from the Commission to the Council, the European Parliament and the European Economic and Social Committee on the rates of excise duty applied on alcohol and alcoholic beverages (presented pursuant to Article 8 of Council Directive 92/84/EEC on the approximation of excise duty on alcohol and alcoholic beverages)
Date: 2004-05-26
Institutions: European Commission
Subjects: alcohol, alcoholic beverage, enlargement of the Union, excise duty, tax harmonisation

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.5.2004 
COM(2004) 223 final 

REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN 
PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE 

on the rates of excise duty applied on alcohol and alcoholic beverages 

(presented pursuant to Article 8 of Council Directive 92/84/EEC on the approximation 
of excise duty on alcohol and alcoholic beverages) 

EN 

   EN 

 
 
 
  
 
 
TABLE OF CONTENTS 

SUMMARY ................................................................................................................................. 4 

A. 

B. 

1. 

1.1. 

1.2. 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

The rates of excise duty on alcohol and alcoholic beverages...................................... 4 

The structure of excise duty on alcohol and alcoholic beverages ............................... 5 

Introduction.................................................................................................................. 6 

The Community excise system .................................................................................... 6 

Excise duty on Alcoholic beverages ............................................................................ 6 

Examination of the structure and rates of excise duty ................................................. 8 

General remarks ........................................................................................................... 8 

First Commission report............................................................................................... 9 

Scope of the present (second) report............................................................................ 9 

General ......................................................................................................................... 9 

Functioning of the Internal Market ............................................................................ 10 

Competition between alcoholic beverages................................................................. 15 

The real value of the rates .......................................................................................... 17 

The wider objectives of the Treaty............................................................................. 19 

3.5.1.  Health and social policy............................................................................................. 19 

3.5.2.  Agricultural policy ..................................................................................................... 20 

3.5.3.  The enlargement of the European Union ................................................................... 22 

3.6. 

The examination period ............................................................................................. 22 

4. 

4.1. 

4.2. 

The structure of excise duty applied to alcoholic beverages...................................... 22 

Different treatment of wine and sparkling wine ........................................................ 23 

Adapt the CN (Customs Nomenclature) codes used to define the product  
categories ................................................................................................................... 23 

4.3. 

Classification of products for excise purposes........................................................... 24 

CONCLUSIONS ....................................................................................................................... 27 

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ANNEX A.................................................................................................................................. 28 

ANNEX B1................................................................................................................................ 29 

ANNEX B2................................................................................................................................ 31 

ANNEX B3................................................................................................................................ 33 

ANNEX B4................................................................................................................................ 35 

ANNEX C.................................................................................................................................. 37 

3 

 
 
  
 
SUMMARY 

A. 

THE RATES OF EXCISE DUTY ON ALCOHOL AND ALCOHOLIC BEVERAGES 

The present report examines the status of Community legislation in the field of excise duties 
on alcohol and alcoholic beverages. This legislation entered into force on 1 January 1993 and 
has  not  been  amended  since.  This  report  is  called  for  by  Article 8  of  Council  Directive 
92/84/EEC  of  19 October 1992  on  the  approximation  of  the  rates  of  excise  duty  on  alcohol 
and alcoholic beverages, which provides for a regular examination of the excise duty rates on 
alcohol products. 

The  report  mainly  focuses  on  the  following  points:  the  proper  functioning  of  the  internal 
market, competition between the different categories of alcoholic drinks, the real value of the 
rates of duty and the wider objectives of the Treaty. 

With regard to the functioning of the internal market, it notices that the abolition of fiscal 
frontiers  in  1993,  together  with  the  continued  application  by  Member  States  of  widely 
diverging rate levels on alcoholic beverages caused a number of problems which disturb the 
proper  functioning  of  the  Internal  Market.  These  problems  derive  from  the  sometimes  high 
tax  burden  on  the  products  relative  to  their  underlying  value  and  the  fact  that  there  are 
significant  divergences  in  rates  of  excise  duty  between  some  Member  States.  These 
divergences  constitute  an  opportunity  for  legitimate  cross-border  shopping  but  also  an 
incentive for fraudulent transactions, which target the markets of those Member States where 
the rates of duty are high, often resulting in tax induced distortions of competition, diversion 
of  trade  and  restrictions  on  freedom  of  movement  for  citizens.  Enhanced  approximation 
would go a long way in providing a long term solution to these Internal Market problems. 

As  regards  competition  between  different  categories  of  alcoholic  beverages,  it  appears 
that, in general, the extent to which different types of alcoholic beverages compete with each 
other is not a decisive factor in determining their rate levels, and that the demand for a certain 
type of beverage is relatively insensitive to changes in its own price or to changes in the price 
of competing types of alcoholic beverages. 

The report also concludes that, in order to maintain the real value of the  minimum excise 
duty  rates,  Member  States  could  consider  a  re-valorisation  of  about  24%  to  reflect  the 
inflation between 1 January 1993 and 31 December 2002. Such a re-valorisation is required in 
order to avoid minimum rates becoming meaningless over time. 

Finally, as regards the wider objectives of the Treaty, particular attention is given to the link 
between,  on  the  one  hand,  taxation  of  alcoholic  beverages  and,  on  the  other  hand,  health 
policy  and  agricultural  policy.  As  for  health  policy,  it  notices  that  a  majority  of  Member 
States do not usually take into account health policy considerations when they fix their rates. 
As far as agricultural policy  is concerned, wine taxation  remains  a  very controversial issue. 
Whilst  wine  producing  Member  States  consider  it  necessary  to  keep  the  possibility  of 
applying  a  zero  rate  on  wine  if  they  so  wish,  some  of  the  other  Member  States  argue  that 
changes  to  the  minimum  rates  should  be  conditional  upon  the  introduction  of  a  positive 
minimum excise duty rate for wine. The zero minimum rate applied to wine is also considered 
by wine producing Member States as a necessary auxiliary measure in order to promote one 
of  the  basic  policy  objectives  of  the  Common  Market  Organisation  for  wine,  namely  a 

4 

 
 
  
 
balanced market situation. With regard to the enlargement of the Union, it is noted that all 
new Member States undertook to apply rates at or above the minimum rates on 1 May 2004. 

B. 

THE STRUCTURE OF EXCISE DUTY ON ALCOHOL AND ALCOHOLIC BEVERAGES 

Article 8 of Directive 92/84/EEC only requires the Commission to report on the rates of duty 
laid down in that Directive. However, the Commission feels that changes to the structure of 
taxation should also be considered, as this is an issue which is closely linked to the issue of 
the rates itself. This is especially the case for matters concerning the classification of alcoholic 
beverages in each of the categories defined in the structure directive (Directive 92/83/EEC). 
The  report  identifies  the  following  three  issues  that  have  emerged  from  the  consultation 
process and which require particular attention: 

1. 

2. 

3. 

The issue of whether or not the option that allows Member States to tax still and 
sparkling alcoholic beverages differently should be maintained. 

The need to update the references to the codes of the combined nomenclature, to 
which  Directive  92/83/EEC  refers  to  define  the  categories  of  alcoholic  beverages 
for taxation purposes, in order to reflect possible changes of CN codes since 1992, 
and to simplify the situation for both operators and administrations. Furthermore, the 
updating of this reference to the applicable CN codes could in the future be carried 
out  in  accordance  with  the  procedure  laid  down  in  Article  24  of  Directive 
92/12/EEC. 

Both traders and national administrations have brought problems of classification of 
alcoholic  beverages  in  the  categories  foreseen  by  Directive  92/83/EEC  to  the 
attention  of  the  Commission  services,  whereby  they  complain  about  divergent 
classifications  and  −  hence  −  diverging  taxation  of  the  same  product  in  different 
Member States. The report describes the  problem and presents the main  issues that 
arise in this matter. 

Taking account of the complexity and the many politically sensitive aspects of the issue, and 
due to the fact that the Commission has decided in September 2002 not to propose a minimum 
excise rate for wine, the present report is not accompanied by a proposal for a Directive. At 
this  stage,  this  report  is  intended  to  launch  a  broad  debate  in  the  Council,  the  European 
Parliament and the European Economic and Social Committee. On the basis of the outcome 
of this debate, the Commission will decide whether or not to submit any proposals on all or 
some of the issues raised in this report. 

5 

 
 
  
 
1. 

1.1. 

1. 

2. 

3. 

INTRODUCTION 

The Community excise system 

Excise  duties  are  taxes  on  the  consumption  of  goods  such  as  alcoholic  beverages, 
tobacco  products  and  mineral  oils.  Excise  duty  on  these  products  is  an  important 
source of revenue for the Member States, accounting in total for between 1,8% and 
4,5% of GDP (see Annex A). Since Member States are free to set excise duty levels 
nationally  provided  that  they  comply  with  the  Community  minimum  levels,  excise 
duty  rates  vary  from  one  Member  State  to  another.  When  deciding  on  the  level  of 
their rates, Member States may take into account not only budgetary considerations 
but  also  such  factors  as  health,  agricultural  policy,  the  risk  of  fraud  and  evasion, 
employment,  the  rate  levels  fixed  by  other  Member  States,  the  functioning  of  the 
internal market, etc. 

The current arrangements were introduced on 1 January 1993. They are the outcome 
of discussions which started in 1985 with the White Paper on completing the internal 
market1 and a subsequent proposal on approximation of excise duty on alcohol and 
alcoholic  beverages2,  in  which  the  Commission  proposed  full  harmonisation  of 
excise duties on the three categories of excise products mentioned above, including 
alcoholic  beverages.  However,  the  Council  chose  not  to  take  this  approach,  nor  a 
modified  approach  proposed  by  the  Commission  in  19893,  consisting  of  the 
combination  of  minimum  and  target  rates,  and  harmonisation  extended  only  to 
taxation structures. As far as rates are concerned, only minimum rates were set. 

Excisable  goods  move  between  Member  States  principally  under  duty-suspension 
arrangements4. Businesses wishing to move goods under such arrangements must be 
authorised  in  the  Member  State  where  they  are  established.  Consignments  must  be 
accompanied  by  an  administrative  –  or  equivalent  commercial  –  document,  and 
goods are subject to taxation in the Member State of destination. Private individuals 
may  purchase  duty-paid  goods  in  the  Member  State  of  their  choice  and  transport 
them  to  another  Member  State  without  formalities  and  without  having  to  pay  duty 
again,  on  the  condition  that  the  goods  are  for  their  own  use  and  are  transported  by 
them to the Member State of destination. 

1.2. 

Excise duty on Alcoholic beverages 

4. 

1 
2 
3 
4 

5 

The  Community  framework  concerning  excise  duty  on  alcohol  and  alcoholic 
beverages  is  laid  down  in  two  Directives.  Council  Directive  92/83/EEC5  on  the 
harmonisation of the structures of excise duties on alcohol and alcoholic beverages 
lays down common definitions of the products subject to the duty, ensuring as such 
that  all  Member  States  treat  the  same  product  in  the  same  way.  The  structures 

COM(85) 310 of 14.6.1985. 
COM(87) 328 final/3 of 10.11.1987 (OJ C 250, 18.9.1987, p. 4). 
COM(89) 527 of 7.12.1989 (OJ C 12, 18.1.1990, p. 12). 
Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to 
excise duty and on the holding, movement and monitoring of such products (OJ L 76, 23.3.1992, p.1), 
as last amended by Council Regulation (EC) No 807/2003 of 14 April 2003 (OJ L 122, 16.5.2003, p.36). 
Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties 
on alcohol and alcoholic beverages (OJ L 316, 31.10.1992, p. 21). 

6 

 
 
  
 
                                                 
directive  also  specifies  the  method  of  calculating  the  duty,  and  the  criteria  under 
which certain products may qualify for exemptions or reduced rates. 

5. 

Council Directive 92/84/EEC6 on the approximation of the rates of excise duties on 
alcohol and alcoholic beverages lays down minimum rates of duty for each product 
category.  These  minimum  rates,  above  which  Member  States  can  freely  fix  their 
national rates, are as follows: 

(the  exact 
Product  category 
definition  of  each  category  can 
be found in Directive 92/83/EEC) 

Wine  and  fermented  beverages 
other than wine and beer 

Minimum rate laid down in the Directive 

0 EUR 

per hl of product 

Beer 

0,748 EUR 

per hl per degree Plato 

or 

1,87 EUR 

per hl per degree of alcohol 

Intermediate  products 
fortified wines; liqueur wines) 

(e.g. 

45 EUR 

per hl of product 

Ethyl  alcohol  and  spirituous 
beverages 

550 EUR 

per hl of pure alcohol 

Note:  Member  States  applying  a  rate  of  not 
more  than  1000  EUR  may  not  reduce  their 
national  rate.  Member  States  applying  a  rate 
exceeding  1000  EUR  may  not  reduce  their 
national rate below that amount 

The  introduction  of  these  minimum  rates  in  1993  required  increases  of  the  rates 
applied  in  7  out  of  12  Member  States  at  the  time7.  Above  these  minimum  rates, 
Member States can freely determine their national duty rates. This has resulted in a 
diversity within the Community in the levels of taxation applied, reflecting varying 
national  policy  considerations.  Annexes  B1  to  B4  give  a  detailed  overview  of  the 
rates  applied  by  the  Member  States  on  1  May  2004,  including  the  Member  States 
which joined the EU on that date, to each of the product categories. 

It is worth noting that, in a statement entered in the minutes when Council Directive 
92/84/EEC was adopted, Member States undertook to treat the target rates proposed 
by  the  Commission  in  COM(89)  527  as  reference  rates  towards  which  they  would 
endeavour to adjust their national rates. These target rates are as follows: 

Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise duties on 
alcohol and alcoholic beverages (OJ L 316, 31.10.1992, p. 29). 
On beer: in Germany, Greece, France and Luxembourg. 
On spirits: in Greece, Spain, Italy and Portugal. 

7 

6. 

7. 

6 

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Ethyl alcohol and spirits  1398,1 
Still wine 
Sparkling wine 
Beer  
Intermediate products 

18,7 
33 
1,496 
93,5 

EUR per hl of pure alcohol 
EUR per hl of product 
EUR per hl of product 
EUR per hl per degree Plato of finished product 
EUR per hl of product 

In  practice,  Member  States  have  not  always  taken  these  target  rates  into  account 
when  changing  their  national  rates,  but  instead  have  made  use  of  the  flexibility 
offered  in  the  statement  to  adjust  their  duty  rates  in  a  manner  different  from  that 
envisaged  by  the  reference  rates  for  specific  reasons  and  in  particular  to  meet 
budgetary needs. 

8. 

The following table shows the minimum rates for each product category expressed in 
Euro per hectolitre degree of alcohol, as well as the minimum rate expressed per litre 
of product at a degree of alcohol at which it is commonly sold. 

Product category  

rate 
Minimum 
expressed  per  hl 
and  degree  of 
alcohol 

Minimum  rate  expressed 
per  l  of  product  at  a 
degree  at  which 
is 
commonly sold 

it 

Wine  and  fermented  beverages 
other than wine and beer 

0 EUR 

Wine (12°) 

0 EUR 

Beer 

1,87 EUR 

Beer (5°) 

0,1 EUR 

Intermediate products  

2,5 EUR 

Int. prod. (18°)  0,45 EUR 

Ethyl alcohol and spirit drinks  5,5 EUR 

Spirits (40°) 

2,2 EUR 

9. 

On average, total receipts from excise duty on alcoholic beverages represent 10,5% 
of  total  excise  duty  receipts  or  0,29  %  of  Member  States'  total  GDP  (see  an 
overview per Member State in Annex A). 

2. 

EXAMINATION OF THE STRUCTURE AND RATES OF EXCISE DUTY 

2.1. 

General remarks 

10. 

Article 8 of Directive 92/84/EEC stipulates that every two years, the Council, acting 
on  the  basis  of  a  report  and,  where  appropriate,  a  proposal  from  the  Commission, 
shall examine the rates of duty laid down in that Directive and, acting unanimously 
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  internal  market,  competition  between  the 
different  categories  of  alcoholic  drinks,  the  real  value  of  the  rates  of  duty  and  the 
wider objectives of the Treaty. 

8 

 
 
  
 
2.2. 

First Commission report 

11. 

12. 

13. 

In  September  1995  the  Commission  presented  its  first  report,  which,  in  addition  to 
alcoholic beverages, dealt with tobacco and mineral oils8. It was not accompanied by 
a  proposal.  It  noted  that  there  was  a  marked  stagnation  in  duty  rates  applied  to 
alcoholic beverages. It indicated that this suggested at the time that the zero rate for 
wine  could  limit  the  scope  for  change  on  other  alcohol  products  within  the  same 
Member  State  and  in  neighbouring  Member  States.  It  concluded  that  the  issue  of 
alcohol  taxation  needed  further  examination  and  that  further  consultation  with  all 
interested  parties  was  needed,  before  final  decisions  were  taken.  In  the  meantime, 
Member States at or near the minimum rates could maintain their existing rates, and 
thus  avoid  trade  distortions,  which  might  be  brought  about  by  forced  rate 
adjustments. 

As part of the process of consultation of interested parties, the Commission decided 
to hold a Conference on excise duty in Lisbon in November 1995. This was the first 
stage of an ongoing consultation process. The Conference’s aim was to evaluate the 
operation of the Community excise duty arrangements, which had been in force since 
January 1993, and in particular to assist the Commission in its task of planning future 
excise duty policy. At  the  Conference, the difficulties  highlighted in the report and 
the views of trade and health associations and Member States were confirmed, but no 
possible solution emerged. 

On  19  September  1996  the  European  Parliament  adopted  its  opinion9  on  the 
Commission’s  review  and  called  upon  the  Commission  to  examine  and  propose 
appropriate  amendments  to  existing  Directives,  along  a  number  of  suggested 
guidelines and to work towards an equitable tax system where there is no distortion 
of competition between alcoholic beverages. 

3. 

SCOPE OF THE PRESENT (SECOND) REPORT 

3.1. 

General 

14. 

15. 

As indicated before, this report is required to examine the excise duty rates applied to 
alcohol  and  alcoholic  beverages,  taking  into  account  the  proper  functioning  of  the 
internal market, competition between the different categories of alcoholic drinks, the 
real value of the rates of duty and the wider objectives of the Treaty, such as health 
and agricultural policy. 

A  consultation  process  preceded  this  report.  The  services  of  the  Commission 
requested  the  Member  States  to  give  their  views  on  each  of  the  elements  to  be 
examined  on  the  basis  of  a  questionnaire.  As  this  consultation  process  started  in 
2001, it did not involve the Member States which joined the EU on 1 May 2004. As a 
consequence, their views are not reflected in this report. Trade associations as well as 
health  associations  were  also  invited  to  submit  position  papers  and  had  the 
opportunity to discuss the matter during bilateral meetings with the Commission. 

8 
9 

COM(95)285, 13.9.1995. 
OJ C 320, 28.10.1996, p. 205. 

9 

 
 
  
 
                                                 
16. 

For  one  of  the  aspects  to  be  taken  into  account  -  competition  between  alcoholic 
beverages - the Commission engaged an independent consultant to assess the extent 
of such competition (hereafter referred to as "the study on competition"). In addition, 
the study examined trends in consumption of alcoholic drinks and reasons for these 
trends  (e.g.  changes  in  taxation).  Additionally,  for  a  number  of  Member  States,  it 
looked  into  the  issue  of  cross  border  shopping  by  individuals  and  unlawful 
commercial  movements  of  tax-paid  goods  across  frontiers10.  (See  references  to 
results of the study in paragraphs, 41, 42, 58). 

3.2. 

Functioning of the Internal Market 

17. 

18. 

This  chapter  examines  the  impact  of  the  rates  applied  by  Member  States  on  the 
proper functioning of the internal market for alcoholic beverages. 

When  looking  at  this  issue,  the  first  report  distinguished  three  broad  categories  of 
intra-Community  movements  of  excise  products:  commercial  movements  under 
suspension  of  excise  duty,  commercial  transactions  of  duty-paid  goods  and 
movement of products by private individuals. This distinction is also used here. 

Commercial movement of goods under duty suspension arrangements 

19. 

20. 

The first report concluded that, on the whole, as far as legitimate trade is concerned, 
the  Community  excise  system  operated  quite  well  despite  the  large  differences  in 
excise duty rates between Member States. Since goods move under duty suspension, 
whereby  duty  is  payable  in  the  Member  State  of  destination,  and  at  the  rates 
applicable  in  that  Member  State,  it  is  unlikely  that  rate  differences  lead  to  any 
significant distortion of choice or competition on the part of companies involved in 
trade at this level of the distribution chain. This has been confirmed by the Member 
States. 

The  first  report  also  concluded  that  it  was  more  difficult  to  assess  the  effect  which 
the continued disparity in rates combined with the disappearance of frontier controls 
had on fraudulent activity in this area and that it was too early to assess whether such 
fraud was on the increase. However, shortly after the tabling of this report, Member 
States voiced their concern about increased fraud in the excise sector. This lead to the 
creation,  at  the  beginning  of  1997,  of  a  High  Level  Group  on  Fraud  in  the  area  of 
excise  duties,  consisting  of  representatives  of  the  Member  States  and  the 
Commission. The Group had to identify the nature and extent of fraud as well as the 
flaws  and  weaknesses  in  the  regulatory  and  control  system,  and  to  recommend 
solutions and/or improvements to those systems. In its report of 24 April 199811 the 
group concluded that fraud in the tobacco and alcohol sectors had reached alarming 
proportions.  For  the  European  Union  as  a  whole,  the  Member  States  estimated  the 
loss  in  1996  at  approximately  1,5  billion  Euro  for  the  alcohol  sector  (about  8%  of 
total  excise  duty  receipts  on  alcoholic  beverages).  In  comparison,  for  tobacco 
products Member States estimated the loss in 1996 at approximately 3,3 billion Euro 
(or  7,5%  of  total  excise  duty  receipts  on  tobacco  products).  The  report  also  found 

10 

11 

“Study on the competition between alcoholic beverages”, Customs Associates Ltd., February 2001. The 
executive summary of this study is available on the following web-site:  
http://europa.eu.int/comm/taxation_customs/publications/reports_studies/report.htm 
Report of the High Level Group on Fraud in the alcohol and tobacco sector, approved by the Ecofin-
council on 19 May 1998. 

10 

 
 
  
 
                                                 
that  alcohol  fraud  tended  to  centre  on  abuse  of  the  intra-Community  holding  and 
movement system. These are the large-scale frauds, which target the markets of those 
Member States where the rates of excise duty are high. Clearly the corollary of this 
major  loss  of  tax  revenue  is  the  huge  profits  that  can  be  made  very  quickly  by  the 
fraudsters.  The  report  indicated  that  these  profits  derive  from  the  very  high  tax 
burden  on  the  products  relative  to  the  underlying  value  of  the  goods  and,  in  some 
cases, the fact that there are significant differences in rates of excise duty and VAT 
between Member States. 

A number of Member States, in their replies to the questionnaire, confirmed the facts 
established in the report of the High Level Group on Fraud. Some of them (Ireland, 
UK,  France)  reported  an  increased  number  of  cases  of  diversion  fraud,  whereby 
goods moving from one Member State to another under suspension of excise duty are 
then  diverted  en  route,  often  into  Member  States  applying  relatively  high  levels  of 
duty. Other Member States reported an increase in smuggling of alcohol from third 
countries (this is the case for Finland) or increases in home distilling and confiscation 
of  alcoholic  beverages  brought  into  the  country  illicitly  from  other  Member  States 
(this is the case for Sweden). But also Member  States  applying  relatively  low  duty 
rate levels (such as Portugal), reported increasing fraud in the alcohol and alcoholic 
beverage sector, mainly taking the form of duty evasion. The Commission has also 
become aware of an increasing number of cases, signalled by individual companies 
in  the  alcohol  sector,  of  non-clearance  of  intra-EC  movements  or  movements 
towards third countries, whereby these companies are held liable for payment of the 
duty on goods which have not reached their destination. 

Following the recommendations of the High Level Group on Fraud, the Commission 
and  Member  States  have  taken  a  number  of  initiatives  in  order  to  combat  fraud. 
Examples  are 
the  adoption  of  a  Commission  Recommendation  concerning 
warehouse-keepers12,  and  the  computerisation  of  the  movement  and  surveillance 
system  of  excisable  products13.  These  initiatives  will  improve  the  efficiency  of  the 
present  regulatory  and  control  systems,  and  facilitate  the  fight  against  fraud  and 
evasion. 

21. 

22. 

Commercial activities involving duty-paid goods 

23. 

The first report noted that only a small percentage of intra-Community commercial 
transactions take place outside the suspension arrangements. This is certainly still the 
case for commercial transactions between traders, to which the procedure of Article 7 
of Directive 92/12/EEC applies. In such cases, movements between Member States 
take place with a simplified administrative document and the excise duty paid in the 
Member  State  of  departure  is  refunded  upon  proof  being  given  of  duty  payment  in 
the Member State of destination. No serious problems have been raised by Member 
States,  even  though  one  Member  State  (UK)  has  indicated  that  it  had  experienced 
serious problems with fraudulent claims being made for the reimbursement of duty in 
respect  of  goods  which  had  in  fact  never  left  the  UK  and/or  had  never  borne  UK 
duty. However the UK tightened up its reimbursement procedures, which effectively 

12 

13 

Commission  Recommendation  2000/789/EC  of  29  November  2000  setting  out  guidelines  for  the 
authorisation of warehousekeepers under Council Directive 92/12/EEC in relation to products subject to 
excise duty (OJ L 314, 14.12.2000 p. 29). 
Decision  No.  1152/2003/EC  of  the  European  Parliament  and  of  the  Council  of  16  June  2003  on 
computerising the movement and surveillance of excisable products (OJ L 162, 1.7.2003, p. 5). 

11 

 
 
  
 
                                                 
24. 

25. 

26. 

removed  the  scope  for  this  type  of  fraud.  This  experience  illustrates  that  fraudsters 
operate within whatever system is considered to be the weakest at any given time, are 
very  flexible  and,  as  one  system  is  strengthened,  simply  move  their  activities  to 
exploit another system. None of the systems can therefore be looked at in isolation 
when considering what should be done to strengthen them. 

The  main  development  to  be  reported  under this  heading  relates  to  distance  selling 
(sales  of  goods  dispatched  or  transported  directly  or  indirectly  by  the  vendor  or  on 
his behalf to final consumers). A large number of Member States reported increases 
in  distance  selling  to  final  consumers,  especially  in  the  wine  and  spirits  sector, 
following the development of e-commerce. The procedures applicable to such sales 
are laid down in Article 10 of Directive 92/12/EEC and involve payment of the duty 
in the Member State of destination by or on behalf of the vendor. The increase of this 
type  of  trade  is  demonstrated  by  the  increase,  reported  by  a  number  of  Member 
States, in their registrations of operators from other Member States for the payment 
of duty on distance sales. 

However,  a  number  of  Member  States  (mainly  those  applying  high  tax  levels) 
reported that Internet sales companies based in countries with low excise duty levels 
increasingly  sell  duty  paid  products  to  customers  in  the  higher  taxing  territory 
without payment of the appropriate duty in the recipient country. This is attributed, to 
some extent, to the complexity of the procedures for payment of duty in the Member 
State  of  destination,  as  well  as  to  the  compliance  cost  of  this  procedure,  which, 
especially  for  small  and  medium  sized  companies,  is  often  disproportionate  to  the 
value of the operations carried out. This situation does not allow traders, nor citizens, 
to  fully  benefit  from  the  Internal  Market.  In  other  cases,  however,  Internet  sites 
offering  alcoholic  beverages  have  apparently  been  set  up  in  order  to  exploit  rate 
differentials between Member States. Products sold are sent by mail to customers in 
other  Member  States  and  it  is  clear  that  such  consignments  are  difficult  to  control 
within an Internal Market, where free movement of goods is the rule. 

The above mentioned problems of distance selling are considered in more detail by 
the Commission in a report on the functioning of the provisions of Articles 7 to 10 of 
Directive  92/12/EEC.  The  report  and  the  accompanying  proposal  for  a  Directive 
propose  simplifications  to  the  distance  selling  procedures  as  well  as  a  degree  of 
liberalisation  for  distance  purchasing  of  alcoholic  beverages14.  For  more  details, 
reference should be made to the report and proposal on Article 7 to 10 of Directive 
92/12/EEC15, adopted by the Commission on 2 April 2004. 

Cross-border shopping 

27. 

In  accordance  with  the  principles  of  the  Internal  Market,  private  individuals  can 
purchase duty-paid goods in the Member State of their choice and transport them to 
another  Member  State  without  having  to  pay  duty  again.  This  is  subject  to  the 
conditions that the goods are for their own use including the use of their families, and 
are  transported  by  them  to  the  Member  State  of  destination  (Article  8  of  Directive 
92/12/EEC).  To  determine  whether  excise  products  are  for  the  personal  use  of  the 

14 

15 

In  this  context,  distance  selling  means  a  transaction  whereby  excise  products  are  dispatched  or 
transported  to  the  buyer  by  or  on  behalf  of  the  vendor.  Distance  purchasing  means  a  transaction 
whereby this dispatch or transport is carried out by or on behalf of the buyer. 
COM(2004)227, 2.4.2004. 

12 

 
 
  
 
                                                 
28. 

29. 

traveller and his family, Member States must take account of a number of criteria one 
of  which  is  the  quantity  of  the  products  transported  (see  Article  9  of  Directive 
92/12/EEC). For the purposes of applying the latter criterion, they may also lay down 
guide  levels,  solely  as  a  form  of  evidence.  Moreover,  it  should  be  noted  that  three 
Member  States  (Sweden,  Denmark  and  Finland)  were  authorised,  until  the  end  of 
2003,  to  apply  restrictions  to  the  quantity  of  excise  products  (including  alcoholic 
beverages)  that  can  be  brought  into  their  territory,  by  travellers  coming  from  other 
Member States, without further payment of excise duty (see Article 26 of Directive 
92/12/EEC). 

As to the scale of cross-border shopping, the first report noted that this phenomenon 
was  generally  widespread  and  that  it  had  been  growing  since  1992,  especially 
towards  Member  States  applying  rates  significantly  above  the  rates  applied  by 
neighbouring Member States. The report also noted that it was universally accepted 
that excise rate differences were a significant factor. On this issue, the report of the 
High Level Group on Fraud noted that, in addition to large-scale fraud by groups of 
organised  criminals,  there  was  also  a  significant  amount  of  fraud  by  means  of 
small-scale abuse of the current rules, which involves tax/duty-paid goods, and is the 
consequence of large differences in tax and duty rates between the Member States. 

In their replies to the questionnaire, Member States applying relatively low tax levels 
to alcoholic beverages did not express major concerns about the issue of cross-border 
shopping and generally do not have any data on its magnitude. High taxing Member 
States  monitor  this  issue  more  closely.  The  UK,  for  instance,  carries  out  an  annual 
survey  of  international  passengers  at  various  ports  and  airports  around  the  country. 
Based  on  this  survey,  it  estimated  that  total  revenue  evasion  and  losses  (duty  and 
VAT)  resulting  from  cross-Channel  smuggling,  involving  tax/duty-paid  alcoholic 
drinks  of  all  types,  increased  from  70M  £  in  1992  to  about  285M  £  in  1999.  Beer 
represented  the  major  part  of  the  total  losses.  Duty  rate  differentials  played  a  very 
important  part  in  this  although  other  factors,  such  as  pre-tax  prices,  exchange  rates 
and  fare  prices  also  played  a  role.  Denmark  estimated  cross-border  purchases,  as  a 
percentage of total consumption by Danes in the year 2000, at 18% for beer, 13,5% 
for  wine  and  27%  for  spirit.  Sweden  experienced  an  increase  in  cross-border 
shopping  in  the  second  half  of  the  1990s,  which  is  probably  generated  by  tax 
differentials. In 2000, this represented a total of 1.26 litres of pure alcohol per person 
aged  15  years  or  more.  This  equated  to  17%  of  total  consumption.  For  spirits,  this 
percentage  was  27%,  for  beer  12%  and  for  wine  14%.  In  Finland,  frontier  trade  in 
alcoholic  beverages  is  mainly  conducted  with  third  countries,  as  the  price  gap 
between  Finland  and  Russia  and  Estonia  is  particularly  important.  So  far,  frontier 
trade with other Member States has not been a major problem, but Finland expects 
this to change after the enlargement of the EU. Trade organisations in Member States 
such  as  Belgium  and  the  Netherlands,  applying  more  “moderate”  tax  levels,  have 
also  complained  about  the  negative  impact  upon  their  members  of  cross-border 
purchases by citizens in Member States applying a zero-rate or a rate close to zero on 
wine and sparkling wine. 

30. 

For  Denmark,  Sweden  and  Finland  the  future  development  of  their  revenue  from 
alcohol  and  alcoholic  beverages  either  has  been  or  will  be  influenced  both  by  the 
termination on 31 December 2003 of the authorisation to apply restrictions as to the 
quantity  of  excise  products  that  can  be  brought  into  their  territory  by  travellers 
coming  from  other  Member  States,  without further payment of excise duty, and by 
enlargement  of  the  EU.  There  is  an  ongoing  debate  in  these  Member  States 

13 

 
 
  
 
31. 

concerning the impact that these events should have on the level of their excise duty 
rates. Denmark reduced the duty rate on spirits by 45%, which took effect in October 
2003 and Finland made across-the-board rate reductions (beer by 32%, wine by 10% 
and  spirits  by  44%),  effective  from  1  March  2004.  The  impact  of  these  rate 
reductions on the tax revenue of these Member States will depend upon their effect 
on total consumption and, foremost, the extent to which cross-border shopping and 
cross-border smuggling is substituted by regular sales within these Member States. 

The  situation  described  above  shows  that  citizens  make  extensive  use  of  the 
possibility  of  purchasing  duty-paid  goods  in  the  Member  State  of  their  choice  and 
transporting them to another Member State without having to pay duty again. This is 
perfectly legitimate and a fundamental freedom for citizens in the Internal Market. It 
is also apparent that such cross-border purchases are to a large extent induced by tax 
differentials between Member States. To control whether or not goods transported by 
private  persons  are  for  commercial  rather  than  for  private  use  requires  physical 
checks  upon  travellers.  However,  as  systematic  controls  of  the  internal  borders  are 
incompatible with the basic Internal Market principles enshrined in Article 14 of the 
Treaty,  such  checks  should  be  of  an  occasional  nature  only  (random  checks)  and 
form part of internal monitoring arrangements covering the whole of the territory of a 
Member State. Such controls should furthermore comply with the general principles 
of  Community  law,  and  in  particular  should  not  be  carried  out  in  an  arbitrary  or 
unnecessarily restrictive manner16. The controls on travellers, and the way in which 
they are carried out by certain Member States, often cause irritation to travellers, and 
have  led  to  numerous  complaints  to  the  Commission  against  those  Member  States. 
The very fact that such fiscal controls are still exercised, is often seen by travellers as 
an  impediment  to  their  right  of  free  movement  within  the  Internal  Market.  This 
report does not deal with the question concerning the extent to which Member States 
are still allowed to carry out controls on travellers. It is however clear that the very 
reason why a number of Member States still carry out such checks on travellers, to 
distinguish genuine cross-border shopping from smuggling of duty paid goods, is to a 
large  extent  their  application  of  duty  rate  levels  far  in  excess  of  those  applied  by 
neighbouring Member States. 

Functioning of the Internal Market - Conclusions 

32. 

33. 

It  is  clear  from  the  above  analysis  that  the  abolition  of  fiscal  frontiers  in  1993, 
together  with  the  continued  application  by  Member  States  of  widely  diverging  rate 
levels  on  alcoholic  beverages,  although  sometimes  advantageous  for  consumers, 
causes a number of internal market problems. 

In  addition,  individual  operators  as  well  as  organisations  representing  producers  of 
alcoholic  beverages  in  some  Member  States  have  repeatedly  complained  about 
distortions  of  competition  and  diversion  of  trade  resulting  from  high  rate 
divergences. Producers as well as traders established in Member States or in certain 
regions  of  Member  States  applying  high  duty  rate  levels  point  at  the  high  level  of 
taxes  applied  and  at  the  negative  impact  on  their  business  of  fraud  and  smuggling, 
but also of tax-induced cross border shopping (even though they recognise that this is 
fully legitimate, from the consumer's point of view). 

16 

See, in that respect, the Judgement of the ECJ of 27.4.1991 in case 321/87. 

14 

 
 
  
 
                                                 
34. 

Most Member States agree that the proper functioning of the Internal Market requires 
further  rate  approximation.  However,  there  is  no  agreement  on  how  this  should  be 
achieved. High taxing Member States, reporting increases in cross-border shopping, 
smuggling  and  commercial  fraud  due  to  rate  divergences  emphasise  the  need  to 
increase all minimum rates. But many others emphasise that an effort is also required 
by Member States applying very high rates. As to the latter point, it should be noted 
that Denmark and Finland have recently made substantial reductions in their rates on 
some alcoholic beverages as a consequence of  the expiry on 31 December 2003 of 
their derogations to apply restrictions on the amount of alcohol that intra-Community 
travellers can bring with them, and in anticipation of the enlargement of the EU on 1 
May 2004. 

3.3. 

Competition between alcoholic beverages 

35. 

36. 

37. 

This  section  examines  the  extent  to  which  there  is  competition  between  different 
types  of  alcoholic  drinks  and  whether  there  should  be  harmonisation  of  the  excise 
duties applied to competing categories. 

The  levels  of  the  minimum  rates  on  the  various  product categories  as laid down in 
Directive 92/84/EEC are the outcome of a political compromise and reflect the issue 
of  competition  only  to  a  limited  extent.  Minimum  rates  on  beer  were  set  at  a 
relatively low level, which could be considered as reflecting the fact that beer is in 
competition with wine, for which the minimum rate was set at zero. Rates on spirits, 
and  to  a  more  limited  extent  on  intermediate  products  (which  contain  distilled 
alcohol)  have  been  set  at  a  much  higher  level  per  degree  alcohol,  which  could  be 
interpreted  as  meaning  that  there  is  no,  or  only  limited,  competition  between  those 
products and beer and wine. 

Directive  92/84/EEC  as  such  does  not  require  Member  States  to  fix  their  national 
rates  on  the  various  product  categories  at  comparable  levels  per  degree  of  alcohol. 
However, when fixing their rates, they must also respect the general provision of the 
EC Treaty and in particular Article 90, which states that internal taxation should not 
discriminate against products of other Member States or provide indirect protection 
of  other  national  products.  Based  on  this  provision,  the  European  Court  of  Justice 
ruled  (in  case  C-170/78),  that  where  a  Member  State  cannot  be  regarded  as  a 
producer of a given drink (wine) it may not tax that drink in such a way as to protect 
its  closest  domestic  competitor  (beer).  Consequently,  all  Member  States  not 
producing wine have to tax wine and beer at comparable levels, taking into account 
their  respective  alcohol  content,  and  are  constrained  in  their  freedom  to  set  duty 
rates.  In  a  more  recent  case  (C-166/98),  a  question  concerning  the  validity  of 
Directives  92/83/EEC  and  92/84/EEC  was  referred  to  the  Court  for  a  preliminary 
ruling  under  Article  234  of  the  EC  Treaty.  The  question  was  whether  these 
Directives were invalid from the point of view of the EC Treaty and in particular the 
second paragraph of Article 90, in that they required Member States to raise the tax 
on beer to the minimum rate and so bring about the creation of tax differentials liable 
to  give  rise  to  discrimination  as  between  wine  and  beer.  The  Court  ruled  that 
consideration  of  the  question  referred  disclosed  no  factor  capable  of  affecting  the 
validity  of  these  Directives,  arguing,  inter  alia,  that  the  Member  States  retain  a 
sufficiently wide margin of discretion to ensure that the relationship of the taxes on 
wine and beer excludes any protection for domestic production within the meaning 
of Article 90 of the Treaty. 

15 

 
 
  
 
38. 

39. 

40. 

41. 

Member  States  have  generally  indicated  that  the  extent  to  which  one  product 
competes  with  another  is  not  a  decisive  factor  in  determining  the  rate  levels 
applicable  to  the  various  product  categories.  They  feel  that  price  is  not  the  major 
factor influencing consumer choice and that other factors (habits, occasion, culture, 
climate) may be more or at least equally important. As a consequence, apart from the 
requirements that derive from the above-mentioned provision of the EC Treaty, their 
rates  generally  do  not  take  this  issue  into  consideration.  This  is  illustrated  by  the 
chart in Annex C, showing the duty rates expressed per hl degree of alcohol applied 
to  the  various  categories  of  alcoholic  beverages.  High  taxing  Member  States  (in 
particular  DK,  SE,  UK  and  IE)  emphasised  however,  in  their  replies  to  the 
questionnaire  that  contrary  to  wine  producing  Member  States,  they  have  to  tax 
competing products equally according to ECJ Jurisprudence, whereas Member States 
producing both wine and beer are free to set their levels without taking into account 
the issue of competition. 

Beer  and  wine  producers  do  not  regard  competition  between  different  types  of 
alcoholic beverages as being of major importance. According to wine producers, in 
particular,  the  zero  rate  for  wine  does  not  pose  any  problem  of  competition  with 
other alcoholic beverages for two reasons. First, the consumption of table wines but 
also of quality wines is decreasing in those Member States applying a zero-rate or a 
rate  close  to  zero.  Second,  according  to  these  producers,  competition  between 
various  drinks  does  not  depend  upon  price,  but  rather  upon  other  factors  such  as 
traditions, culture, place and time of consumption, fashion, age, social environment 
and marketing. 

Spirits  producers,  on  the  other  hand  see  the  current  levels  at  which  minimum  rates 
are  fixed  as  an  institutionalisation  of  the  discrimination  against  spirits  that  national 
excise  policies  embody.  Their  view  is  that  all  products  compete  to  a  certain  extent 
and, therefore, the discrimination against spirits as opposed to beer and wine should 
be reduced by lowering the spirits minimum rate. They feel that excise duty can also 
affect  the  market  shares  of  different  categories  of  alcoholic  beverage  because  of 
competition  through  prices.  Particularly  in  the  higher  taxing  Member  States,  spirits 
are more price sensitive than other categories. 

The  study  on  competition  between  alcoholic  beverages  examined  the  own-price 
elasticity  of  demand  for  the  various  drinks  categories  (the  relationship  between  the 
demand  for  a  certain  type  of  product  and  its  own  price)  as  well  as  the  cross-price 
elasticity of demand for these categories (the relationship between the demand for a 
certain  type  of  product  and  the  prices  of  other  product  categories)17.  Cross-price 
elasticities  give  an  indication  on  the  degree  of  competition  between  drinks.  Before 
looking at the results, one has to draw attention to the difficulties of this approach, 
highlighted by the consultant. First of all, he found that data on alcohol drinks’ prices 
is  either  very  scarce  in  most  Member  States  and/or  is  not  of  the  quality  that  can 
provide  robust  estimates  of  alcohol  cross-price  elasticities.  Furthermore,  he  found 
that  a  range  of  factors  influence  alcoholic  drink  consumption  and  the  degree  of 
switching  by  consumers  between  categories  of  drink.  For  example,  consumers’ 
attitudes  to  consuming  wine  may  change  over  a  number  of  years  leading  to  an 
increase in wine consumption at the expense of other drink categories, although this 

17 

The conclusions of this study are without prejudice to the analysis of the Commission in competition 
cases. 

16 

 
 
  
 
                                                 
is in contradiction to the current trend. Thus, in many circumstances, the switching to 
wine  will  be  independent  of  the  price  of  wine  relative  to  other  drinks,  i.e.  the 
switching would occur even if relative prices were stable over time. The consultant 
indicated that this made estimating price effects on consumption extremely difficult, 
as  changing  consumer  tastes  are  likely  to  be  a  critical  factor  influencing  switching 
between drinks. It is a fact however that consumption of both quality and table wine 
has decreased in the last years18. 

42. 

For those countries/products for which there was sufficient price data, the consultant 
made  estimates  of  both  own-price  and  cross-price  elasticities.  The  majority  of  his 
estimates of the own-price elasticity of each product category were negative but not 
significantly different from zero, which could indicate that the demand for any type 
of  alcoholic  beverage  is  relatively  inelastic  (the  demand  is  not  very  sensitive  to 
changes  in  its  own  price).  As  far  as  his  estimates  of  cross-price  elasticities  are 
concerned,  on  the  whole,  the  results  also  showed  relatively  inelastic  responses, 
indicating that the demand for one type of alcoholic beverage does not appear to be 
substantially dependent on prices of other alcoholic beverages. 

Competition between alcoholic beverages - Conclusions 

43. 

It is difficult to draw any firm conclusions on this issue, based on the different views 
expressed and on the results of the study of competition. The choice of the consumer 
for  a  certain  product  category  depends  on  a  variety  of  factors,  one  of  which  is  the 
price, which in its turn is a function of the duty level applicable. The extent to which 
duty levels affect consumer choice will differ from one Member State to another, and 
tends  to  be  more  important  in  Member  States  where  duty  is  high  and  constitutes  a 
bigger proportion of the price. 

3.4. 

The real value of the rates 

44. 

Another element to be considered according to Article 8 of Directive 92/84/EEC is 
the  real  value  of  the  rates  of  duty.  In  other  words,  should  account  be  taken  of  the 
effect of inflation since the introduction of the minimum rates or should this be left 
open to Member States? According to Eurostat data on the annual rate of change of 
the HICP (Harmonised Index of Consumer Prices) between 1993 and 2002, the total 
EU-wide inflation rate for the period between 1 January 1993 and 31 December 2002 
is of the order of 24,04%19. 

45. 

The  re-valorisation  of  the  minimum  rates  applying  this  percentage  increase  would 
give the following results: 

18 

19 

At EU 15 level, overall per capita consumption is estimated to have gone down from about 37 l in 1990 
to about 33 l in 2002. Consumption of table wine has gone down from 20,5 l to about 15 l. These trends 
are stronger in some southern wine producing countries. For example overall per capita consumption in 
Italy fell from about 63 l to about 47 l and in France from about 67 l to about 58 l. 
The genuine HICP series starts with the index for 1997. Date before 1997 are based on proxy-HICP. 
The 
used:  
change 
1993: 3,4%; 1994: 2,8%; 1995: 2,8%; 1996: 2,4%; 1997: 1,7%; 1998: 1,3%; 1999: 1,2%; 2000: 1,9%; 
2001: 2,2%; 2002: 2,1%. 

the  HICP 

following 

annual 

rates 

been 

have 

of 

of 

17 

 
 
  
 
                                                 
Product 

Rate expressed 
per 

Present minimum rate 

Indexed minimum rate on 
1/1/2003 
(present rate x 1,24) 

Wine  (Still  and 
sparkling)  

Beer 

Intermediate 
products 

Alcohol 

Hl 

0 EUR 

0 EUR 

Hl degree Plato
or 
Hl degree 
alcohol 

0,748 EUR 
or 
1,87 EUR 

0,93 EUR 
or 
2,32 EUR 

Hl 

45 EUR 

56 EUR 

Hl of pure 
alcohol 

550 EUR 

682 EUR 

46. 

Such a re-valorisation on 1 May 2004 would have required some Member States to 
increase their rates as follows: 

47. 

a)  An increase of the rate applied to beer in seven Member States (LU, DE, ES, CZ, 
LT, LV, MT); 

b)  An increase of the rate applied to intermediate products in seven Member States 
(EL, ES, IT, PT, HU, MT, CY); 

c)  An increase of the rate applied to spirits in three Member States (IT, CY and SK). 

Most Member States, in their replies to the questionnaire, pronounced themselves in 
favour  of  increasing  the  minimum  rates  in  line  with  inflation  in  order  to  maintain 
their real value. For some of them, this is however conditional upon the introduction 
of a positive rate on wine, so as not to increase distortions between wine and other 
alcoholic  beverages,  even  though  an  alignment  for  inflation,  without  introducing  a 
positive  rate  on  wine,  merely  re-establishes  the  situation  as  it  existed  on  1  January 
1993. The first report noted that there was a marked stagnation in duty rates applied 
and indicated that this suggested that the zero rate for wine could limit the scope for 
change on other alcohol products within the same Member State and in neighbouring 
Member States. Many among the Member States are however of the opinion that the 
situation  differs  from  one  Member  State  to  another  and  that  it  depends  on  factors 
such as traditions, culture as well as place and time of consumption. 

The real value of the rates - Conclusions 

48. 

Increasing  minimum  rates  to  account  for  inflation  does  not,  by  definition,  produce 
real  value  increases.  On  the  other  hand,  failure  to  maintain  the  specific  minimum 
rates in line with inflation would result in erosion of their real value. Consequently, 
such increases in the minimum rates are necessary in order to maintain the level of 
rates to which the Council agreed in 1992, as a minimum requirement to ensure the 
functioning of the Internal Market without fiscal borders. In this context, it should be 
noted that the minimum rates on other excise products (tobacco products and mineral 
oils)  have  been  increased  in  line  with  inflation.  The  current  alcohol  excise  duty 
system however is a system of minimum rates and Member States can increase the 

18 

 
 
  
 
rates applied in order to take inflation into account, without any change to the current 
system. 

49. 

As  far  as  alcoholic  beverages  are  concerned,  a  number  of  Member  States  however 
link this question to the question of the introduction of a positive minimum rate for 
wine, which remains a very controversial issue (see section 3.5.2.). 

3.5. 

The wider objectives of the Treaty 

50. 

Article 8 of Directive 92/84/EEC requires account to be taken of the wider objectives 
of the Treaty on the occasion of any review of the rates of duty applied to alcoholic 
beverages. Health policy, agricultural policy, regional objectives, rural development 
and cultural matters are also relevant in the context of this report. Other issues to be 
considered  are  enlargement  and  the  impact  on  candidate  countries  of  the  measures 
proposed. 

3.5.1.  Health and social policy 

51. 

52. 

53. 

54. 

Article 152 of the Treaty provides that a high level of human health protection shall 
be  ensured  in  the  definition  and  implementation  of  all  Community  policies  and 
activities. On this issue, the first report mentioned that alcohol taxation is a potential 
means  of  discouraging  excessive  consumption,  which  can  have  positive 
consequences  in  terms  of  reduced  problems  associated  with  alcohol  consumption, 
alcoholism and alcohol  abuse. However in  the  last  few  years,  medical  reports  have 
also pointed towards the positive contribution of some alcoholic beverages to health, 
if drunk moderately. 

At  national  level,  most  Member  States,  in  their  replies  to  the  questionnaire,  have 
indicated  that  health  policy  considerations  do  not  influence  the  level  of  the  rates, 
even  though  some  of  them  added  that  there  is  pressure  from  health  organisations. 
Only  for  one  Member  State  (Sweden),  are  health  objectives  predominant  in 
determining the duty levels. For other high taxing countries (for instance Finland, the 
UK and Denmark), this has become less of an issue today than it was in the past. As 
a reason for this, the UK observed that there is conflicting scientific evidence on the 
benefits and risks of alcohol consumption. 

Producers  emphasise  their  efforts  to  promote  responsible  attitudes  towards  alcohol 
consumption.  In  the  opinion  of  the  producers,  the  great  majority  of  European 
consumers  drink  sensibly,  moderately  and  with  pleasure.  They  also  believe  that 
alcohol, if consumed moderately, may have positive health effects, independently of 
the  type  of  beverage.  They  feel  that  policies  aimed  at  reducing  overall  per  capita 
consumption through high taxation do not address those who abuse the product, and 
that  experience  shows  that  such  an  approach  can  even  have  unintended  adverse 
effects (e.g. smuggling and illegal production).  

Health  organisations,  and  more  particularly  Eurocare  (Advocacy  for  the  prevention 
of alcohol related harm in Europe), are of the opinion that taxation should ensure a 
high  price  level,  as  there  is  a  clear  relationship  between  price  and  consumption. 
Furthermore,  they  feel  that  alcohol  taxes  should  be  used  to  fund  alcohol  control 
activities  including  health  education,  research  into  alcohol  policy  and  support  to 

19 

 
 
  
 
health  services.  As  to  the  latter  aspect,  they  point  out  that,  in  its  White  Paper  on 
Growth, Competitiveness and Employment20, the Commission had already called for 
the internalisation of the external costs of the consumption of alcoholic drinks. As to 
the  issue  of  beneficial  effects  of  alcohol  consumption,  Eurocare,  while  calling  for 
great caution in attributing beneficial effects to alcohol consumption, shares the view 
that beverage differences are minimal: most of the benefit appears to come from the 
alcohol in wine, beer and spirits, and not from other constituents of the beverages. 

Health and social policy - Conclusions 

55. 

The  majority  of  Member  States  usually  do  not  take  into  account  health  policy 
considerations  when  they  fix  their  rates,  even  though  the  present  EC  legislation, 
fixing only minimum rates, offers them substantial room for manoeuvre to integrate 
public health  considerations in their  tax policies. In any case, for excise duty to  be 
able to play a long term role, both as a means of reducing overall consumption and as 
a means  for internalising  external or  societal costs of alcohol  abuse, some  Member 
States feel that a minimum requirement appears to be to increase the minimum rates 
in line with inflation. 

3.5.2.  Agricultural policy 

56. 

57. 

Wine is an agricultural product defined as such in the Treaty. In 14 of 25 Member 
States there is either no or a very low excise duty on wine (12 have none, France and 
Hungary  have  a  very  low  one).  An  introduction  of  a  positive  excise  duty  for  wine 
could have consequences on the consumption of wine and on the Common Market 
Organisation  of  Wine.  Agricultural  policy  has  always  been  invoked  by  wine 
producing  Member  States  as  a  reason  justifying  the  application  of  a  zero  rate  for 
wine. Some of them point to the difficult situation of the wine growers, which would 
leave no margin to apply a positive rate of duty to wine. 

At the time of the adoption of the first report, the common organisation of the wine 
market was subject of reform in the framework of the Common Agricultural Policy. 
The  aim  of  the  reform  was  to  address  the  existing  situation  of  overproduction 
combined  with  declining  consumption  in  the  wine  producing  Member  States, 
particularly  of  table  wines.  This  reform  of  the  common  organisation  of  the  wine 
market  was  completed  in  199921.  The  new  Common  Market  Organisation  (CMO) 
aims  at  better  aligning  offer  and  demand  for  wine.  Some  of  the  main  aspects  are 
restrictions on new plantings and the restructuring of production potential in order to 
reduce production volume of table wines and to implant varieties that produce wine 
of  a  better  quality,  more  in  line  with  the  needs  of  the  market.  The  proper  market 
intervention measures (mainly financial support for distillation of wine, for storage, 
for utilisation of must for purposes other than for wine) were adapted. In particular 
obligatory distillation measures were reduced to two and a crisis distillation in case 
of  exceptional  market  disturbances  was  introduced.  This  new  CMO  constitutes  a 
move  towards  more  targeted  measures  and  the  reorientation  of  viniculture  towards 
products of a higher quality. 

20 

21 

"Growth,  Competitiveness,  Employment  -  The  challenges  and  ways  forward  into  the  21st  century  - 
White Paper" – COM(93) 700 of 5.12.93. 
Council Regulation (EC) No. 1493/1999 of 17 May 1999 (OJ L 179 of 14.7.1999). 

20 

 
 
  
 
                                                 
58. 

59. 

It is argued, in favour of a zero rate for wine, that it is a necessary auxiliary measure 
in  order  not  to  contradict  one  of  the  basic  policy  objectives  of  the  CMO  for  wine, 
namely a balanced market situation. Indeed, a possible decline of consumption that 
might occur following the introduction of a positive rate would negatively influence 
the market balance. Furthermore, such a decline of consumption needs, in the short 
run,  to  be  compensated  by  increased  market  intervention  measures,  mainly  in  the 
form of distillation of surplus wine into alcohol. The high costs of this distillation are 
covered by the Community budget. On the other hand, the zero-rate is a general, non-
targeted measure, also applying to the expanding market segments of higher quality 
wines  and  imported  wines,  having  fewer  or  no  problems  in  finding  a  market. 
Furthermore,  the  fundamental  structural  problems  are  mainly  a  consequence  of 
changing  consumption  patterns  in  the  wine  producing  Member  States.  This  can  be 
illustrated  by  the  results  of  the  study  on  competition,  which  also  looked  at  the 
evolution  of  per  capita  consumption  of  the  various  products.  Per  capita  wine 
consumption  in  Southern  Member  States  (Spain,  France,  Italy  and  Portugal)  has 
shown a marked decline over the last three decades, although still remaining at a high 
level  compared  to  non  producer  countries.  This  has  partly  been  balanced  by  an 
increase  in  wine  demand  in  those  countries  that  apply  high  rates  of  excise  duty  on 
wine and have traditionally been perceived as being dominated by beer drinking. In 
contrast, per capita beer consumption in Southern European Member States (Greece, 
Portugal, Italy and Spain) has increased significantly, whereas it has declined slightly 
in  many  Northern  Member  States  (Austria,  Belgium,  Germany,  Denmark,  UK, 
Luxembourg and the Netherlands) during the 1990s. 

Wine producing countries and producers in general strongly oppose the introduction 
of  a  positive  minimum  rate  on  wine.  They  argue  that,  in  most  producing  Member 
States, wine has never been subject to excise duties, that wine is an integral part of 
their culture and that it would be difficult to introduce obligatory wine taxation for 
political reasons. They add that wine producing Member States, which apply a zero 
rate  or  only  a  very  low  control  duty,  account  for  about  85%  of  total  EU  wine 
consumption and that, consequently, possible Internal Market problems only relate to 
a small fraction of 15% of the EU wine consumption. They also argue that the zero-
rate on wine is a necessary auxiliary measure supporting the objectives of the CMO 
for wine and that, in the present situation of the wine market the introduction of any 
new  –  even  low  –  obligatory  taxation  in  the  wine  producing  countries  would  be 
regarded as harmful. Moreover, there are fears that further steps, leading towards a 
higher minimum  level  of wine taxation might follow. Additionally, they feel that a 
positive  duty  on  wine  would  not  contribute  at  all  to  solving  the  Internal  Market 
problems caused by the huge differences in tax levels between high and low taxing 
Member States. 

60. 

Finally,  it  is  also  argued  that  wine  taxation  would  entail  the  introduction  of,  or  an 
increase  in  the  administrative  burden  for  hundreds  of  thousands  of  small  wine 
growers,  and  administrations,  in  the  producing  Member  States  to  an  extent  that 
would be disproportionate to the revenue that this measure would generate. However, 
as wine production is already subject to strict quality and movement controls under 
the  CMO  for  wine  as  well  as  under  Directive  92/12/EEC,  this  burden  may  be  less 
than expected, as far as intra Community movements are concerned. 

21 

 
 
  
 
Agricultural policy - Conclusions 

61. 

62. 

As  appears  from  the  description  of  the  various  positions  above,  wine  taxation 
remains  a  very  controversial  and  politically  sensitive  issue.  Some  of  the  Member 
States which do not produce wine would require any changes to the minimum rates 
on  any  type  of  alcoholic  beverages  to  be  conditional  upon  the  introduction  of  a 
positive minimum excise duty rate for wine. Wine producing countries, on the other 
hand,  generally  continue  to  oppose  the  introduction  of  a  minimum  excise  duty  rate 
for wine. 

If it appears very difficult to change the present level of the minimum rates, another 
important question arises. Namely, if it is justified to maintain the present system of 
monitoring  of  excise  products  (a  system  of  movements  under  duty  suspension 
arrangements,  between  authorised  tax  warehouses,  the  setting  up  of  guarantees, 
accompanying documents, etc.), for products such a wine and beer, which are subject 
to  an  excise  duty,  the  absolute  level  of  which  is  lower  than  the  VAT  applied  upon 
them in at least 10 out of 15, and now 20 out of 25, Member States. 

3.5.3.  The enlargement of the European Union 

63. 

The  Member  States  which  joined  the  EU  on  1  May  2004  already  apply  rates  to 
alcoholic beverages which are at or above the present minimum rate levels. The other 
candidate  countries  with  which  accession  negotiations  are  ongoing  (Romania  and 
Bulgaria) have also not requested transitional periods after their date of accession in 
order to reach the present level of the minimum rates. Annexes B1 to B4 include the 
rates of excise duty on alcohol and alcoholic beverages applied by the Member States 
which joined the EU on 1 May 2004 and the candidate countries. 

3.6. 

The examination period 

64. 

65. 

4. 

66. 

Article 8 of Directive 92/84/EEC stipulates that every two years, the Council, acting 
on  the  basis  of  a  report  and,  where  appropriate,  a  proposal  from  the  Commission, 
shall examine the rates of duty laid down in that Directive and, acting unanimously 
after consulting the European Parliament, shall adopt the necessary measures. 

The  Commission  takes  the  view  that  a  two-year  period  is  too  short  to  perform  the 
necessary  in-depth  examination  of  the  operation  of  the  Internal  Market  and  of  the 
other aspects to be taken into account in the Commission’s report and to provide the 
proper perspective for assessing changes in Member States’ legislation. A four-year 
period would be more appropriate for assessing the operation of the Internal Market 
and  the  consequences  of  any  possible  changes  in  legislation.  For  that  reason,  any 
future  proposal  to  modify  the  existing  Community  framework  of  alcohol  taxation 
should include an amendment to Article 8 of  Directive  92/84/EEC to provide for a 
review every four years instead of every two years. 

THE STRUCTURE OF EXCISE DUTY APPLIED TO ALCOHOLIC BEVERAGES 

Even  though  the  review  requirement  of  Article  8  of  Directive  92/84/EEC  only 
obliges the Commission to report on the rates of duty laid down in that Directive, the 
Commission  feels  that  the  reviews  could  also  consider  changes  to  the  structure  of 
taxation, as this is an issue which is closely linked to the issue of the rates. This is 

22 

 
 
  
 
especially the case for matters concerning the classification of alcoholic beverages in 
each of the categories defined in the structures directive (Directive 92/83/EEC). The 
following three issues have emerged from the consultation process that preceded this 
report: 

a)  Different treatment of wine and sparkling wine; 

b)  Adaptation of the CN (Customs Nomenclature) codes used to define the product 
categories; 

c)  Classification of products for excise purposes. 

4.1. 

Different treatment of wine and sparkling wine 

67. 

68. 

69. 

70. 

4.2. 

71. 

At present, Directives 92/83/EEC and 92/84EEC provide the possibility for Member 
States  to  apply  different  rates  of  duty  to  wine  and  sparkling  wine.  As  can  be  seen 
from the table in Annex B1, 8 Member States (IE, UK, DK, NL, BE, FR, DE, AT) 
presently make use of this option.  

At present, Germany and Austria apply a zero-rate to still wine, but a relatively high 
rate to sparkling wine. In Belgium, Denmark, France, the United Kingdom, Ireland 
and  the  Netherlands  the  rate  applied  to  sparkling  wine  is  higher  than  the  (positive) 
rate for still wine (see Annex B1). Four Member States (DE, BE, NL, AT) also apply 
a different rate to sparkling intermediate products than to still intermediate products 
(see Annex B3). 

This  distinction  in  the  Directives  follows  from  the  fact  that  these  Member  States 
historically  consider  sparkling  wines  to  be  “luxury  products”.  The  question  arises 
whether  such  a  distinction  is  still  justified,  as  both  products  are  increasingly 
consumed on similar occasions. Moreover, both categories contain wine that can be 
regarded as “luxury” products but also very cheap products (e.g. classified wines as 
opposed to table wines). 

The definition of "sparkling wines" in Article 8 of Directive 92/83/EEC may lead to 
unfair results as regards taxation. According to the definition provided by Article 8, 
the  term  “sparkling  wine”  covers  products  that  are  “contained  in  bottles  with 
mushroom  stoppers  held  in  place  by  ties  or  fastenings,  or  have  an  excess  pressure 
due  to  carbon  dioxide  in  solution  of  three  bar  or  more”.  Both  criteria  could  be 
regarded  as  arbitrary.  Semi-sparkling  wines  that  have  an  excess  pressure  of  just 
below three bar will escape excise duty levied on sparkling wines, and benefit from a 
lower (even zero) rate on still wine, if the producer merely uses a different kind of 
stopper  for  the  bottle.  This  raises  the  question  of  whether  this  different  treatment 
should be maintained or if sparkling wines and intermediate products should receive 
the same treatment as still wines and intermediate products. 

Adapt  the  CN  (Customs  Nomenclature)  codes  used  to  define  the  product 
categories 

For  the  definition  of  the  various  categories  of  alcoholic  beverages,  Directive 
92/83/EEC  largely  refers  to  CN  codes.  Article  26  of  this  Directive  stipulates  that 
references in the Directive to CN codes shall be those of the version of the combined 
nomenclature in force when the Directive was adopted (19 October 1992). In case of 

23 

 
 
  
 
changes  of  classification,  operators  have  to  use  different  CN  codes  for  the  same 
products,  for  movements  between  Member  States  and  for  movements  between  the 
EU  and  third  countries.  To  reflect  possible  changes  of  CN  codes  and  changes  of 
interpretation (e.g. amendments to the explanatory notes to the Harmonised System), 
and  to  simplify  the  situation  for  both  operators  and  administrations,  reference 
should  be  made  to  the  CN  codes  applicable  on  data  as  recent  as  possible. 
Furthermore, in order to simplify the updating of this reference to the applicable CN 
codes,  the  Commission  submits  to  the  Member  States  for  debate  whether  such 
decisions  should  in  the  future  be  taken  in  accordance  with  the  procedure  laid 
down  in  Article  24  of  Directive  92/12/EEC  (procedure  involving  the  Excise 
Committee  as  agreed  for  energy  products  in  Article  2(5)  of  Council  Directive 
2003/96/EC22). 

4.3. 

Classification of products for excise purposes 

72. 

73. 

The  changes  suggested  in  section  4.2.  would  facilitate  the  life  of  operators  and 
administrations,  but  would  not  solve  the  problems  of  classification  of  alcoholic 
beverages  in  the  various  categories  of  alcoholic  beverages  foreseen  in  Directive 
92/83/EEC.  The  definitions  of  these  categories  always  imply  a  reference  to  CN 
codes.  Therefore,  the  decision  on  the  customs  classification  of  a  product  is  a 
preliminary question for a decision on its excise treatment. 

Both  traders  and  national  administrations  have  recently  brought  problems  of 
classification  to  the  attention  of  the  Commission  services,  whereby  they  complain 
about divergent classifications and − hence − diverging taxation of the same product 
in  different  Member  States.  Most  of  the  problems  raised  concern  the  distinction 
between products of CN codes 2206 (including other fermented beverages) and 2208 
(including  spirits).  The  Harmonised  System  Explanatory  Notes  to  heading  2206 
permit  the  addition  of  distilled  alcohol  to  “other  fermented  beverages”,  without 
specifying to what extent such addition is possible. Member States interpret this very 
differently, resulting in a situation whereby the same product is classified as "other 
fermented  beverages"  or  "intermediate  products"  by  some  Member  States  and  as 
"spirits" by other Member States. 

Possible solutions 

74. 

75. 

Within  the  framework  of  the  existing  EU excise  legislation  (Directive  92/83/EEC), 
which refers to the CN codes as a basis for the classification of alcoholic beverages, 
a solution to the problem of divergent classifications of alcoholic beverages can only 
be reached through a more uniform interpretation and application of the customs 
rules for classification of these products in the CN. 

For customs purposes, operators can obtain a Binding Tariff Information (BTI) from 
their customs authorities concerning the classification of products imported from or 
exported  to  third  countries.  BTIs  are  introduced  into  a  database  run  by  the 
Commission and are legally valid in all Member States. Even though BTIs are given 
on a case-by-case basis and do not fix general rules for classification of products in 
the CN, they do give some guidance to administrations and traders and can lead to a 

22 

Council  Directive  2003/96/EC  of  27  October  2003  restructuring  the  Community  framework  for  the 
taxation of energy products and electricity (OJ L 283, 31.10.2003, p. 51). 

24 

 
 
  
 
                                                 
more common application of the CN rules for classification in the CN. However, a 
BTI  cannot  be  requested  for  products  for  which  no  customs  interest  can  be 
demonstrated (e.g. new products produced within the EU and marketed only within 
the  EU).  In  order  to  enhance  the  value  of  BTIs  for  excise  purposes,  consideration 
could be given to extending the possibility for operators to obtain a BTI from their 
customs authorities, to excise products not intended to be imported or exported. This 
would require an amendment to the relevant Customs provisions23. 

As  indicated above, BTIs  are  only  issued by  the Customs authorities on a case-by-
case  basis,  upon  request  of  operators.  In  order  to  try  and  establish  clearer  general 
rules  for classifying alcoholic beverages in the CN, a working group constituted of 
the Commission's services and the Customs Administrations of a number of Member 
States has been set up. This working group will, in particular, try to determine a clear 
dividing  line  between  CN  codes  2206  and  2208.  This  is  however  a  very  complex 
issue and may not lead to results very quickly. Moreover, it should not be overlooked 
that any  new  customs rules for classification of alcoholic beverages in the CN will 
have no consequences at all for excise purposes, as long as the reference to the CN 
codes in Article 26 of Directive 92/83/EEC is not updated as suggested in paragraph 
71  above.  Finally,  the  classification  in  the  CN  does  not  −  and  should  not  −  take 
account of the consequences of this classification upon the classification of a product 
for  excise  purposes  and  might  even  lead  to  undesired  results  as  far  as  the 
classification of certain products for excise purposes is concerned. 

Therefore, the Commission is of the opinion that consideration should also be given 
to  more  drastic  solutions,  making  the  classification  of  alcoholic  beverages  for 
excise purposes less dependant on the classification in the CN. 

A first possibility would be to redefine the categories of excise products merely by 
the  use  of  verbal  descriptions,  without  reference  to  CN  codes,  comparable  to  the 
definitions  used  for  tobacco  products,  in  Directive  95/59/EC.  However,  this  might 
prove to be extremely complex having regard to the big diversity of products offered 
on  the  market  of  alcoholic  beverages.  Moreover,  new  products  appear  regularly  on 
the market, which may result in new classification problems. 

A  second  possibility  would  be  to  combine  both  customs  codes  and  additional 
elements  to  be  provided  for  in  Directive  92/83/EEC.  Such  additional  elements  for 
excise purposes, like the maximum quantity of distilled alcohol that may be added to 
beverages of fermented origin before they loose their character of “other fermented 
beverages”  or  “intermediate  products”,  could  help  to  draw  a  borderline  between 
different  categories  of  alcohol  products,  in  cases  where  the  mere  application  of  the 
CN codes does not show clear results or leads to unsatisfactory results in the field of 
taxation. The application of such rules in practice, however, could meet considerable 
difficulties,  since  it  may  be  extremely  difficult  and/or  expensive  to  determine  the 
origin of ethyl alcohol in a product. 

Finally,  consideration  could  be  given  to  introducing  a  new  category  of  alcoholic 
beverages  including  "other  fermented  beverages"  to  which  alcohol  has  been  added. 

Article 12 of Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community 
Customs Code and Articles 5 to 14 of the implementing provisions of the Community Customs Code 
(Commission  Regulation  (EEC)  No.  2454/93  of  2  July  1993,  laying  down  provisions  for  the 
implementation of Council Regulation (EEC) No. 2913/92). 

25 

76. 

77. 

78. 

79. 

80. 

23 

 
 
  
 
                                                 
While leaving the present definitions, basis for calculation and rates for excise duties 
on beer, wine and ethyl alcohol in Directive 92/83/EEC unchanged, “other fermented 
beverages”  (CN  2206)  could  be  taxed  according  to  their  alcoholic  content.  In 
addition,  following  the  example  of  Article 3(2)  of  Directive  92/83/EEC,  Member 
States could be permitted to divide such beverages into categories, consisting of not 
more than two or three degrees of alcohol per category, and charge the same rate of 
duty  per  hectolitre  on  all  beverages  falling  within  each  category.  The  level  of  EU-
minimum rates for these products could be fixed in a linear manner, or could increase 
progressively,  as  the  alcohol  content  of  the  product  increases.  This  solution  would 
enable  Member  States  to  tax  comparable  products  (fermented  products  to  which 
alcohol has been added) equally, on the basis of their alcohol content, while reducing 
the  need  to  draw  a  clear  distinction  between  products  classified  under  CN-heading 
2206  and  2208.  It  should  be  noted  that  the  present  definition  of  "other  fermented 
beverages"  would  remain  unchanged  and  that  the  products  which  at  present  fall 
within the scope of that definition (e.g. cider or perry), would continue to be taxed as 
wine, in application of Article 15 of Directive 92/83/EEC. 

26 

 
 
  
 
Conclusions 

81. 

82. 

83. 

EU  legislation  concerning  excise  duty  on  alcoholic  beverages,  adopted  in  1992  to 
facilitate  the  abolition  of  controls  of  a  fiscal  nature  at  internal  borders,  has  been 
unaltered since then. It was meant to establish the minimum requirements that, at that 
time,  were  considered  to  be  necessary  for  the  Internal  Market  to  function.  In  this 
context, the Council has to review the situation regularly, based on a report from the 
Commission. 

The present report - the second on this issue since the establishment of the Internal 
Market - has highlighted a number of remaining problems with the functioning of the 
Internal  Market,  faced  by  a  number  of  Member  States.  The  problems  highlighted 
result  from  the  sometimes  high  tax  burden  on  the  products  relative  to  their 
underlying value and the fact that there are significant divergences between the rates 
of  duty  applied  by  Member  States.  Enhanced  approximation  could  provide  a 
significant contribution to a solution of these problems. 

Taking  account  of  the  complexity  and  the  many  politically  sensitive  aspects  of  the 
issue,  which  include  wider  objectives  of  the  Treaty,  as  well  as  regional,  rural  and 
cultural factors, the present report is not accompanied by a proposal for a Directive. 
At  this  stage,  the  report  is  intended  to  launch  a  broad  debate  in  the  Council,  the 
European  Parliament  and  the  European  Economic  and  Social  Committee.  On  the 
basis  of  the  outcome  of  this  debate,  the  Commission  will  decide  whether  or  not  to 
submit any proposals on all or some of the issues raised in this report. 

27 

 
 
  
 
Revenue from excise duties on alcoholic beverages, tobacco products and mineral oils (year 2001) in absolute terms,  
as a percentage of total excise revenue and as a percentage of GDP 

ANNEX A 

GDP       

in million 
EUR

254.282
177.840
2.071.200
130.927
651.641
1.463.722
114.479
1.220.147
21.510
429.172
211.857
122.978
135.791
244.905
1.596.986
8.847.436

B
DK
D
EL
E
F
IRL
I
L
N
A
P
FIN
S
UK
EU

. 

Excise duty receipts

In million EUR

As a % of total excise receipts

As a % of GDP

Total  Mineral oil Tobacco 
products

Alcoholic 
drinks

Mineral oil Tobacco 
products

Alcoholic 
drinks

Total Mineral oil Tobacco 
products

Alcoholic 
drinks

24,4%
23,1%
21,9%
44,0%
31,3%
24,4%
34,3%
22,8%
35,6%
21,6%
28,0%
30,8%
14,2%
12,3%
21,1%
23,4%

10,9% 2,06%
13,1% 2,48%
6,3% 2,65%
5,9% 3,48%
7,1% 2,35%
7,7% 2,29%
24,3% 2,91%
2,3% 2,67%
3,1% 4,53%
10,9% 1,80%
6,7% 2,08%
6,9% 2,91%
31,3% 3,06%
18,7% 2,69%
18,9% 3,70%
10,5% 2,72%

1,33%
1,58%
1,90%
1,74%
1,45%
1,56%
1,20%
2,00%
2,78%
1,22%
1,36%
1,81%
1,67%
1,85%
2,22%
1,80%

0,50%
0,57%
0,58%
1,53%
0,74%
0,56%
1,00%
0,61%
1,61%
0,39%
0,58%
0,89%
0,43%
0,33%
0,78%
0,63%

0,23%
0,33%
0,17%
0,21%
0,17%
0,18%
0,71%
0,06%
0,14%
0,20%
0,14%
0,20%
0,96%
0,50%
0,70%
0,29%

5.235
4.418
54.806
4.558
15.340
33.549
3.326
32.602
974
7.746
4.406
3.575
4.152
6.577
59.113
240.377

3.387
2.819
39.331
2.283
9.450
22.780
1.375
24.412
597
5.223
2.876
2.228
2.264
4.540
35.454
159.019

1.275
1.019
12.025
2.006
4.798
8.190
1.142
7.444
347
1.677
1.234
1.100
588
807
12.489
56.141

573
580
3.450
269
1.091
2.578
809
746
30
846
296
247
1.300
1.230
11.169
25.216

64,7%
63,8%
71,8%
50,1%
61,6%
67,9%
41,3%
74,9%
61,3%
67,4%
65,3%
62,3%
54,5%
69,0%
60,0%
66,2%

28 

 
 
   
 
ANNEX B1 

Excise duty rates applied to wine and sparkling wine (1/5/2004) 

29 

 
 
  
 
 
 
 
Excise duty rates applied to wine and sparkling wine (1/5/2004)   

30 

 
 
   
 
 
 
 
ANNEX B2 

Excise duty rates applied to beer (1/5/2004) 

31 

 
 
  
 
 
Excise duty rates applied to beer (1/5/2004)   

32 

 
 
   
 
 
 
 
ANNEX B3 

Excise duty rates applied to intermediate products (1/5/2004) 

33 

 
 
  
 
 
 
 
Excise duty rates applied to intermediate products (1/5/2004) 

34 

 
 
   
 
 
 
 
ANNEX B4 

Excise duty rates applied to ethyl alcohol and spirits (1/5/2004) 

35 

 
 
  
 
 
 
 
 
Excise duty rates applied to ethyl alcohol and spirits (1/5/2004) 

36 

 
 
   
 
 
 
 
ANNEX C 

Excise duty rates applied by Member States expressed per hl per degree alcohol (in EUR) 
(1/5/2004) 

37 

 
 
  
 
Excise duty rates applied by Member States expressed per hl per degree alcohol (in EUR)(1/5/2004) 

38