Proposal for a Council Directive amending Directive 92/84/EEC on the approximation of the rates of excise duty on alcohol and alcoholic beverages
Date: 2006-09-08
Institutions: European Commission
Subjects: alcohol, alcoholic beverage, excise duty, tax harmonisation

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 8.9.2006 
COM(2006) 486 final 

2006/0165 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 92/84/EEC on the approximation of the rates of excise duty on 
alcohol and alcoholic beverages 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1) 

CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise 
duty on alcohol and alcoholic beverages lays down minimum rates of duty for each product 
category.  Under  Article  8  of  the  Directive  the  Commission  is  required  to  undertake  regular 
reviews and to produce a report, and where appropriate a proposal, upon which the Council 
shall examine the rates of duty laid down in that Directive.  

The Commission's report, presented on 26 May 2004, concluded that more convergence of the 
rates  of  excise  duty  in  the  different  Member  States  is  needed  so  as  to  ensure  the  proper 
functioning of the internal market, in particular with regard to the potential for distortions of 
competition and fraud. However, it was not accompanied by a proposal but instead was aimed 
at stimulating a debate in the Council, the European Parliament and the Economic and Social 
Committee. 

Following such debates, the Council called on the Commission, on 12 April 2005, "to come 
forward with a proposal to adjust the minimum rates of excise duty in order to avoid a fall in 
the  real  value  of  the  Community  minimum  rates,  providing  transitional  periods  and 
derogations for those Member States who may have difficulties in increasing their rates; the 
Commission should also duly take into account the overall political sensitivity of this special 
issue". 

Having assessed the position, the Commission proposes to amend Directive 92/84/EEC by: 

–  revalorising  the  minimum  rates  on  alcohol,  intermediate  products  and  beer  in  line  with 
inflation from 1993 to 2005, which is in the order of 31%, to take effect from 1 January 
2008;  

–  providing,  by  way  of  derogation,  transitional  periods  up  to  1  January  2010  for  those 
Member  States  that  may  have  difficulties  in  increasing  their  national  rates  by  1  January 
2008  to  meet  the  revalorised  minima,  such  transitional  periods  being  determined  by  the 
efforts required of the Member States concerned;  

–  rendering  the  review  procedure  under  Article  8  of  the  Directive  more  flexible  and  less 

onerous and to prolong the review period from 2 years to 4 years.  

The primary purpose of revalorising the minimum rates is to restore their real value of 1992. 
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 which the Council agreed 
in  1992,  as  a  requirement  to  ensure  the  functioning  of  the  Internal  Market  without  fiscal 
borders.  

It should be noted that the categories of alcoholic drinks for which positive minimum rates of 
excise  duty  were  agreed  in  1992  and  are,  therefore,  the  subject  of  revalorisation  are  beer, 

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intermediate products and alcohol. The minimum rate for wine is set at zero and consequently 
a revalorisation of that rate is not applicable. 

•  General context 

The Community framework concerning excise duty on alcohol and alcoholic beverages is laid 
down  in  two  Directives.  Council  Directive  92/83/EEC  of  19  October  1992  on  the 
harmonization of the structures of excise duties on alcohol and alcoholic beverages lays down 
common definitions of the products subject to the duty, specifies the method of calculating the 
duty  and  the  criteria  under  which  certain  products  may  qualify  for  exemptions  or  reduced 
rates. Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of 
excise  duty  on  alcohol  and  alcoholic  beverages  lays  down  minimum  rates  of  duty  for  each 
product  category.  This  proposal  concerns  only  Council  Directive  92/84/EEC  on  the 
approximation of the rates of excise duty on alcohol and alcoholic beverages. 

Under Article 8 of Council Directive 92/84/EEC a regular review procedure shall take place.  

In  accordance  with  this  provision,  the  Commission's  first  report  appeared  on  13  September 
1995. However, it was not accompanied by any proposal but merely drew attention to certain 
difficulties.  

The  Commission's  second  report  was  presented  on  26  May  2004  and  followed  a  wide 
consultation  process  involving  national  authorities,  business  representatives  and  interest 
groups.  The  report  concluded  that  more  convergence  of  the  rates  of  excise  duty  in  the 
different  Member  States  is  needed  so  as  to  reduce  distortions  of  competition  and  fraud. 
However, given the widely differing views in the Member States about the appropriate levels 
of  the  minimum  rates,  and  given  that  any  change  would  require  unanimous  agreement,  the 
Commission  did  not  make  a  proposal  at  that  time.  Instead  the  Commission  indicated  that  it 
wished to launch a broad debate in the Council, the European Parliament and the Economic 
and  Social  Committee  and  that  on  the  basis  of  the  outcome  of  this  debate  the  Commission 
would then decide whether or not to submit proposals on all or some of the issues raised in the 
report.  

Debates  subsequently  took  place.  As  a  result,  the  Council  pointed  in  particular  to  a  broad 
convergence  of  views  that  minimum  rates  of  excise  duty  should  be  adjusted  in  order  to 
compensate for inflation and so restore their real value. The Commission has calculated that 
based  on  Eurostat  data  on  the  annual  rate  of  change  of  the  HICP  (Harmonised  Index  of 
Consumer  Prices)  between  1993  and  2005,  the  total  EU-wide  inflation  rate  for  the  period 
between 1 January 1993 and 31 December 2005 is of the order of 31%1. 

1 

The genuine HICP series starts with the index for 1997. Data before 1997 are based on proxy-HICP. 
The  following  annual  rates  of  change  of  the  HICP  have  been  used:  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%; 2003: 
2,0%; 2004: 2,0%; 2005: 2,1%. 

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•  Existing provisions in the area of the proposal 

Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise 
duty on alcohol and alcoholic beverages which lays down the minimum rates of duty, set in 
1992 and applicable from 1 January 1993, for each product category, as follows: 

Product 

Rate expressed 

Present minimum rate 

Wine (Still and 
sparkling) 

Beer 

Intermediate 
products 
Alcohol 

Per 

Hl 

Hl degree Plato 
or 
Hl degree alcohol* 
Hl 

Hl of pure alcohol 

0 € 

0.748 € 
or 
1.87 € 

45 € 

550 € 

*The Directive provides Member States with the option to levy excise duty either by degree Plato or degree alcohol by volume. 

•  Consistency with the other policies and objectives of the Union 

This  proposal  is  in  line  with  the  main  policies  and  objectives  of  the  Union.  The  proposed 
increases in the minimum rates are necessary in order to maintain the level of rates which the 
Council  agreed  in  1992,  as  a  minimum  requirement  to  ensure  the  proper  functioning  of  the 
Internal Market without fiscal borders. As hitherto, the fixing only of minimum rates enables 
Member  States  to  set  their  national  rates  at  levels  which  they  consider  appropriate  to  their 
own national circumstances and for integration of their own national policies, including health 
objectives if appropriate. 

2) 

CONSULTATION  OF 
ASSESSMENT 

INTERESTED 

PARTIES  AND 

IMPACT 

•  Consultation of interested parties 

The  Commission’s  report  of  26  May  2004  was  meant  to  give  the  Council,  the  European 
Parliament,  and  the  Economic  and  Social  Committee  the  opportunity  to  debate  the  issues 
raised.  Following  discussions  between  Member  States  within  the  Council,  the  latter  has 
presented its conclusions on the Commission’s report in April 2005, which are as follows: 

–  A  vast  majority  of  Member  States  believe  that  enhanced  approximation  would  help  to 
reduce  distortions  of  competition  and  fraud,  but  reservations  were  expressed  as  concerns 
the level and the direction of such approximation.  

–  No  consensus  could  be  reached  on  the  introduction  of  a  positive  minimum  rate  for  all 
alcoholic beverages. Twelve Member States are firmly against any proposition to introduce 
a positive minimum rate on wine.  

–  There  is  a  broad  convergence  of  views  that  minimum  rates  of  excise  duty  should  be 

adjusted in order to compensate for inflation and so restore their real value.  

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–  The vast majority of Member States do not consider that health and social aspects should 

be a major determinant in setting rates. 

The  Council,  therefore,  called  upon  the  Commission  "to  come  forward  with  a  proposal  to 
adjust  the  minimum  rates  of  excise  duty  in  order  to  avoid  a  fall  in  the  real  value  of  the 
Community minimum rates, providing transitional periods and derogations for those Member 
States who may have difficulties in increasing their rates; the Commission should  also duly 
take into account the overall political sensitivity of this special issue". 

•  Collection and use of expertise 

Given  the  limited  scope  of  this  proposal,  it  was  not  necessary  to  collect  and  use  particular 
expertise. 

•  Impact assessment 

The purpose of the proposal is to update the existing Directive 92/84/EEC by increasing the 
minimum rates in order to restore their real value agreed by Council in 1992 as the minimum 
necessary to ensure the proper functioning of the Internal Market without fiscal borders.  

The  Commission’s  enquiry  conducted  in  preparation  of  its  2004  report  has  not  brought  to 
light  any  new  developments  which,  in  today’s  perspective,  would  plead  against  such  an 
adjustment. 

However, this adjustment could create difficulties for some of the Member States required to 
increase their national rates substantially and within a relatively short period of time in order 
to meet the revalorised minima – see Tables 2, 3 and 4 below. To offset such difficulties, the 
proposal  contains  a  derogation  allowing  transitional  periods  up  to  1  January  2010,  such 
transitional periods being determined by the efforts required of the Member States concerned. 
In  this  respect,  it  is  proposed  to  refer  to  an  objective  criterion,  expressed  in  terms  of  the 
percentage by which the existing national rates would need to be increased to meet the new 
minima.  For  those  Member  States  that  are  required  to  increase  their  national  rates  by  more 
than  10%  but  less  than  20%,  a  transitional  period  to  1  January  2009  is  proposed;  for  those 
Member  States  that  are  required  to  increase  their  national  rates  by  more  than  20%,  a 
transitional  period  to  1  January  2010  is  proposed  (cf.  below,  sub  Summary  of  the  proposed 
action). 

The economic and social impact of the proposal can be considered as minimal. For example, 
for beer, this would have as a consequence that Malta, Latvia, Germany, Luxembourg, Czech 
Republic,  and  Lithuania  would  have  to  increase  their  national  excise  duty  by  €  0.01  (one 
eurocent) on half a litre of beer at 5% abv, at the latest by 1 January 2010. In addition, as far 
as  SME  are  concerned,  provisions  already  exist  whereby  small  businesses  (breweries  and 
distilleries) can benefit from reduced rates2, however, that is a matter for the Member States 
concerned to determine. For the consumer, and based on subsequent retail price adjustments, 
this increase is likely to represent less than the typical EU annual inflation rate. 

2 

OJ L316, 31.10.1992, p.21. Articles 4 and 22 of Council Directive 92/83/EEC on the harmonisation of 
the structures of excise duties on alcohol and alcoholic beverages. 

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3) 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The Commission proposes: 

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to  revalorise  the  minimum  rates  on  alcohol,  intermediate  products  and  beer  in  line 
with inflation from 1993 to 2005, which is in the order of 31%, to take effect from 1 January 
2008. 

Based  on  Eurostat  data  on  the  annual  rate  of  change  of  the  HICP  (Harmonised  Index  of 
Consumer  Prices)  between  1993  and  2005,  the  total  EU-wide  inflation  rate  for  the  period 
between  1  January  1993  and  31  December  2005  is  of  the  order  of  31%.  Therefore,  re-
valorising the minimum rates applying this percentage increase gives the following results: 

TABLE 1 

Product 

Rate expressed 
Per 

Present 
minimum rate 

Indexed minimum rate on 
31/12/2005 
(present rate x 1.31) 

Wine (Still and 
sparkling) 
Beer  

Intermediate 
products 
Alcohol  

Hl 

0 € 

Hl degree Plato 
or 
Hl degree 
alcohol 

Hl 

Hl of pure 
alcohol 

0.748 € 
or 
1.87 € 

45 € 

550 € 

0 € 

0.98 € 
or 
2.45 € 

59 € 

720 € 

It is proposed that the changes come into force on 1 January 2008. This will allow sufficient 
time for those Member States that are affected to make the necessary adjustments during their 
annual budget processes. 

- 
to provide, by way of derogation, a transitional period until 1 January 2010 for those 
Member States that may have difficulties in increasing their national rates by 1 January 2008 
to meet the revalorised minima. 

The  national  rates  already  applied  by  the  majority  of  Member  States  are  in  excess  of  the 
proposed revalorised minima and consequently no action will be required by them. However, 
the  national  rates  currently  applied  in  several  Member  States  are  below  the  proposed 
revalorised minima and consequently they will be required to increase their national rates, as 
follows: 

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TABLE 2 - BEER 

Member State 

Current national rate € (1) (2) 
Abv 
Plato 

% increase required to meet new 
minimum rate  
0.98 € Plato or 2.45 € abv 

Malta 
Latvia 
Germany 
Luxembourg 
Czech Rep 
Lithuania 
Spain 

0.746 

0.787 
0.7933 
0.81 

0.91 

TABLE 3 - INTERMEDIATE PRODUCTS 

1.87 

2.03 

31.3% 
31% 
24.5% 
23.5% 
20.9% 
20.6% 
7.7% 

Member State 

Current national rate € (1) (2) 

% increase required to meet new 
minimum rate – 59€ 

Greece 
Cyprus 
Malta 
Portugal 
Spain 

TABLE 4 - ALCOHOL 

45.00 
45.89 
46.57 
54.57 
55.53 

31% 
28.5% 
26.6% 
8.1% 
6.2% 

Member State 

Current national rate € (1) (2) 

% increase required to meet new 
minimum rate – 720€  

Cyprus 
Slovenia 

Footnotes:  

610.71 
695.14 

17.9% 
3.6% 

(1)  For  non  Eurozone  Member  States,  exchange  rates  used  are  those  published  in  the  Official  Journal  of  the  European  Union  -  C  244  of 
4/10/2005 

(2) Member States national rates are those notified as at January 2006. 

It should be noted, however, that not all these Member States will necessarily have difficulties 
in  increasing  their  national  rates  to  meet  the  revalorised  minima  as  at the  date  of  entry  into 
force of the revalorised minima, 1 January 2008. Consequently, it is not proposed to provide 
for transitional periods where the required increases to meet the revalorised minima are less 
than 10% and for which sufficient time is already provided, i.e. between the adoption of the 
proposal  and  its  coming  into  force.  Therefore,  for  the  Member  States  concerned  (Spain, 
Portugal, and Slovenia) the necessary increases in the national rates should come into force on 
or before 1 January 2008. However, for those Member States that would need to increase their 
national  rates  by  more  than  10%,  transitional  periods  up  to  1  January  2010  are  proposed. 
Namely,  for  those  Member  States  that  are  required  to  increase  their  national  rates  by  more 
than  10%  but  less  than  20%,  a  transitional  period  to  1  January  2009  is  proposed;  for  those 
Member  States  that  are  required  to  increase  their  national  rates  by  more  than  20%,  a 
transitional period to 1 January 2010 is proposed. 

to render the review procedure under Article 8 more flexible and less onerous and to 

- 
prolong the review period from 2 years to 4 years. 

It is appropriate to make the review procedure more flexible and less onerous, in particular by 
allowing the Commission to judge whether a report is warranted or not. Moreover, a two-year 
period  is  too  short  to  perform  the  necessary  in-depth  examination  of  the  operation  of  the 

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Internal Market and of 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. For the 
purposes of assessing all these aspects, a four-year period would be more appropriate than the 
presently applicable two-year period. 

•  Legal basis 

Treaty establishing the European Community, and in particular Article 93 thereof. 

•  Subsidiarity principle 

The  proposal  falls  under  shared  Community  and  Member  State  competence.  Therefore,  the 
subsidiarity  principle  applies.  In  the  light  of  the  objective  of  the  proposal  for  an  amending 
Directive, which is to increase the minimum rates in order to restore their real value agreed by 
Council  in  1992  as  the  minimum  necessary  to  ensure  the  proper  functioning  of  the  Internal 
Market without fiscal borders, a Community approach is required. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reason(s). 

The  Directive  increases  the  minimum  rates  in  order  to  restore  their  real  value  agreed  by 
Council  in  1992  as  the  minimum  necessary  to  ensure  the  proper  functioning  of  the  Internal 
Market  without  fiscal  borders.  A  Community  approach  is,  therefore  required.  Above  the 
minima,  Member  States  retain  sovereignty  to  set  excise  duty  rates  on  alcohol  and  alcoholic 
beverages at levels they consider appropriate according to their own national circumstances. 

•  Choice of instruments 

Proposed instruments: Directive 

Other means would not be adequate as the nature of the proposal is to amend certain Articles 
of the existing Directive 92/84/EEC. Therefore, it is appropriate that the proposed instrument 
should be a Directive amending Directive 92/84/EEC. 

4) 

BUDGETARY IMPLICATIONS 

The adoption of the proposal will not lead to budgetary implications. 

5) 

ADDITIONAL INFORMATION 

•  Repeal of existing legislation 

The adoption of the proposal will amend rather than repeal existing legislation. 

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•  Correlation table 

For  the  majority  of  Member  States  no  action  will  be  required  in  terms  of  implementing  the 
Directive as their national rates already respect the revalorised minima. For several Member 
States,  however,  national  rates  will  need  to  be  increased  in  order  to  respect  the  revalorised 
minima.  However,  for  the  sake  of  good  administration,  the  Member  States  are  required  to 
communicate to the Commission the text of national provisions transposing the Directive to 
confirm their respect of the revalorised minima. 

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2006/0165 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 92/84/EEC on the approximation of the rates of excise duty on 
alcohol and alcoholic beverages 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
93 thereof, 

Having regard to the proposal from the Commission3, 

Having regard to the opinion of the European Parliament4, 

Having regard to the opinion of the European Economic and Social Committee5, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of 
excise  duty  on  alcohol  and  alcoholic  beverages6  specifies  minimum  rates  of  excise 
duty, subject to which Member States are free to set their national rates at levels which 
they  consider  appropriate  for  pursuing  national  policy  objectives,  including  those 
relating to health. 

In  accordance  with  Article  8  of  that  Directive,  an  examination  of  the  rates  of  excise 
duty on alcohol and alcoholic beverages has been carried out. 

The Commission's first report on the subject, of 13 September 19957, drew attention to 
certain  difficulties  and  subsequently,  a  consultation  process  took  place  involving 
national authorities, business representatives and interest groups.  

Those consultations led to a second Commission report8, presented on 26 May 2004. 
The report concluded that more convergence of the rates of excise duty in the different 
Member States is needed so as to ensure the proper functioning of the internal market, 
in particular with regard to the potential for distortions of competition and fraud.  

3 
4 
5 
6 
7 
8 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L 316, 31.10.1992, p. 29. 
COM(1995)285. 
COM(2004)223 

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(5) 

(6) 

(7) 

In  this  respect,  it  is  necessary  to  compensate  for  the  fall  in  the  real  value  of  the 
Community  minimum  rates  of  excise  duty  on  alcohol  and  alcoholic  beverages.  The 
minimum rates should therefore be increased in line with inflation.  

In order to ease the difficulties that may be faced by those Member States that would 
need to increase their national rates substantially in order to meet the new minima, it is 
appropriate to provide for transitional periods.  

It  is  also  necessary  to  make  the  regular  review  procedure  more  flexible  and  less 
onerous, and to adjust the frequency with which it is to take place. The present period 
of  two  years  is  too  short  for  changes  in  the  legislation  of  the  Member  States  to  be 
properly evaluated. Reviews should take place every four years.  

(8) 

Directive 92/84/EEC should, therefore, be amended accordingly, 

HAS ADOPTED THIS DIRECTIVE: 

Article 1 

Directive 92/84/EEC is amended as follows: 

(1) 

Article 1 is replaced by the following: 

"Article 1 

Not  later  than  1  January  2008,  Member  States  shall  apply  minimum  rates  of  excise  duty  in 
accordance with the rules laid down in this Directive." 

(2) 

In Article 3(1), the first subparagraph is replaced by the following: 

"As from 1 January 2008, the minimum rate of excise duty on alcohol and alcohol contained 
in beverages other than those referred to in Articles 4, 5 and 6 shall be fixed at EUR 720 per 
hectolitre of pure alcohol." 

(3) 

Article 4 is replaced by the following: 

"Article 4 

As from 1 January 2008, the minimum rate of excise duty on intermediate products shall be 
fixed at EUR 59 per hectolitre of product."  

(4) 

Article 6 is replaced by the following: 

"Article 6 

As from 1 January 2008, the minimum rate of excise duty on beer shall be fixed at one of the 
following rates, by reference to the finished product: 

(a)  EUR 0.98 per hectolitre/degree Plato; 

(b)  EUR 2.45 per hectolitre/degree of alcohol." 

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(5) 

The following Article 7a is inserted: 

"Article 7a 

By  way  of  derogation  from  Article  1,  Member  States  which  on  31  December  2007  applied 
excise duty at a rate such that an increase of 10% or more would be required in order to reach 
the  minima  laid  down  in  Articles  3,  4  and  6  may  postpone  the  application  of  the  minimum 
rates  of  excise  duty  until  1  January  2009.  Where  an  increase  of  20%  or  more  would  be 
required, application of the minimum rates of excise duty may be postponed until 1 January 
2010."  

(6) 

Article 8 is replaced by the following: 

"Article 8 

Every  four  years,  and  for  the  first  time  not  later  than  31 December  2010,  the  Commission 
shall examine the rates of excise duty laid down in this Directive. Where appropriate, it shall 
adopt a report or a proposal. The Council, acting in accordance with Article 93 of the Treaty, 
shall adopt the necessary measures." 

Article 2 
Transposition 

1. 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions  necessary  to  comply  with  this  Directive  by  31  December  2007  at  the 
latest.  They  shall  forthwith  communicate  to  the  Commission  the  text  of  those 
provisions and a correlation table between those provisions and this Directive. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

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

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 3 

Article 4 

This Directive is addressed to the Member States. 

Done at Brussels, […] 

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For the Council 
The President 
[…] 

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