Communication from the Commission to the Council in accordance with Article 19(1) of Council Directive 2003/96/EC (ambulant vendors)
Date: 2006-12-12
Institutions: European Commission
Subjects: France, derogation from EU law, itinerant trade, less-favoured region, motor fuel, regional policy, tax exemption

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.12.2006 
COM(2006) 794 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 

in accordance with Article 19(1) of Council Directive 2003/96/EC (ambulant vendors) 

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1. 

INTRODUCTION  

In  accordance  with  Article  19(1)  of  Council  Directive  2003/96/EC1  restructuring  the 
Community framework for taxation of energy products and electricity (hereafter referred to as 
the “Energy Tax Directive” or the "Directive"), in addition to the provisions foreseen in the 
Directive,  in  particular  in  its  Articles  5,  15  and  17,  the  Council  acting  unanimously  on  a 
proposal  from  the  Commission,  may  authorise  any  Member  State  (that  so  requested)  to 
introduce further tax exemptions or tax reductions for specific policy considerations. 

The Commission  shall examine the request. Afterwards, it shall either present a proposal to 
the Council or, alternatively, shall inform the Council of the reasons why it has not proposed 
the authorisation of such a measure. 

Within a broader framework of review of derogations expiring in the Energy Tax Directive by 
the end of 2006 France submitted a request for authorisation to derogate from 2007 onwards 
from  the  provisions  of  the  Energy  Tax  Directive  and  to  apply  tax  exemption  (subject  to  an 
annual  quota)  to  fuel  used  by  ambulant  vendors  established  in  regions  suffering  from 
depopulation.  The  request  was  registered  with  the  Directorate  General  for  Taxation  and 
Customs Union2. 

The  purpose  of  this  communication  is  to  inform  the  Council  of  the  reasons  why  the 
Commission does not propose the authorisation requested. 

2. 

SUMMARY OF THE REQUEST 

France  would  like  to  exempt  from  taxation  motor fuels within an annual individual limit of 
1500 litres used by retailers established in communes with less then 3000 inhabitants, which 
realise part of their turnover through ambulant sales. 

The purpose of the measure is to provide support to retailers carrying out ambulant sales and 
thus  providing  a  service  of  primary  necessity  to  the  population  concerned.  According  to 
France,  the  measure  thus  contributes  to  rural  development.  The  measure  forms  part  of  the 
national  policy  of  territorial  planning  and  combating  desertification  of  regions  with  low 
population density, notably mountainous areas. 

The request foresees a date of termination by 31 December 2012. 

3. 

BACKGROUND TO THE REQUEST 

This request for derogation was tabled in the context of the expiry of a specific authorisation 
granted  to  France  in  the  past  under  the  procedure  referred  to  in  Article  8(4)  of  Council 

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Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for taxation 
of energy products and electricity (OJ L 283 of 31.10.2003 p. 51); Directive last amended by Directives 
2004/74/EC and 2004/75/EC (OJ L 157 of 30 April 2004, p. 87 and p.100). 
On 16 October 2006. 

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Directive  92/81/EEC3  currently  contained  in  Annex  II  of  the  Energy  Tax  Directive.  This 
authorisation expires by the end of 2006. 

In  its  June  2006  Communication  Review  of  derogations  in  Annexes  II  and  III  of  Council 
Directive  2003/96/EC  that  expire  by  the  end  of  2006  (hereafter  referred  to  as  "the  2006 
Communication")4  the  Commission  provided  an  overview  of  the  wide-ranging  flexibility 
contained  in  the  Directive  and  concluded  that  for  situation  where  objectives  underlying 
certain derogations have already been duly taken into account by Community legislator while 
adopting  the  directive,  no  further  action  was  needed.  For  derogations  corresponding  to 
objectives  not  taken  into  account  by  the  general  provisions  of  the  Directive,  the 
Communication concluded that should an individual Member States consider that, for specific 
policy  considerations,  a  derogation  from  the  Directive  was  still  necessary  and  could  be 
compatible with the objectives of the Directive, i.e. with the interests and policies set out in its 
Article 19 (1), third indent, that Member States should submit a request to the Commission in 
accordance with the procedure referred to in the set article. 

4. 

EVALUATION BY THE COMMISSION 

With  respect  to  the  specific  policy  considerations  put  forward  by  the  Member  State 
concerned, the Commission would like to point out that such arguments relate to concerns of 
national policies primarily of regional nature and that these might, in a Member State's view, 
justify  corresponding  public  support.  The  derogation  has  however  never  been  considered  as 
an instrument of such policies. 

Furthermore,  the  Commission  considers  that  there  is  a  mismatch  between  the  specificity 
of the situations targeted and the related policy considerations put forward, on the one hand, 
and the general character of the tax advantage envisaged on the other. Indeed the advantage is 
not limited to services rendered in areas where they are specifically needed, but is granted to 
all  ambulant  vendors  with  a  fixed  establishment  in  a  small  commune,  on  account  of  fuel 
consumption  caused  by  ambulant  sales  activity.  More  importantly,  and  more  generally,  the 
situations  under  consideration  would  be  dealt  with  more  appropriately  by  instruments 
compatible  with  Community  law  and  better  reflecting  the  specific  services  rendered  by  the 
operators in question, as opposed to exemption from taxes accruing merely as a consequence 
of  consumption.  It  must  be  stressed  in  this  relation  that  additional  costs  incurred  by  the 
persons exercising this specific activity are not caused by fuel consumption only and therefore 
a more targeted instrument would appear to be more appropriate for the purposes referred to 
by France. 

The  design  of  the  scheme  (full  tax  exemption  up  to  an  annual  quota)  does  not  take 
appropriately into account the objectives of the Energy Tax Directive; in particular to create 
incentives  towards  energy  efficiency  and  protection  of  the  environment.  In  this  relation  the 
Commission  considers  that  the  interests  and  policies  set  out  in  Article  19  (1),  third  indent, 
oppose the granting of such an authorisation. 

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Council  Directive  92/81/EEC  of  19  October  1992  on  the  harmonization  of  the  structures  of  excise 
duties  on  mineral  oils  (OJ  L  316  of  31.10.1992);  Directive  repealed  together  with  Council  Directive 
92/82/EEC  of  19  October  1992  on  the  approximation  of  the  rates  of  excise  duties  on  mineral  oils  as 
from 31 December 2003 by means of Council Directive 2003/96/EC. 
COM(2006) 342  of  30  June  2006  Review  of  derogations  in  Annexes  II  and  III  of  Council  Directive 
2003/96/EC that expire by the end of 2006. 

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5. 

CONCLUSION 

The arguments made by France in order to justify the derogation relate to concerns of national 
policies, primarily of a regional nature and that these might, in a Member State's view, justify 
corresponding  public  support.  However,  there  are  means  of  supporting  such  aims  that  are 
much  better  fitted,  both  in  nature  and  in  scope,  without  the  community  interests  mentioned 
above being affected by an anomalous exemption from harmonised taxes. 

On this basis, the Commission does not propose the authorisation requested. 

This  conclusion  does  not,  however,  prevent  France  from  adopting  instruments,  outside  the 
field of harmonised excise duties and compatible with Community law in all respects5, other 
than excise duties that would serve the same purposes better and in a more targeted way then 
the intended derogation. 

5 

Including the rules on State aids. 

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