Communication from the Commission to the Council in accordance with Article 19(1) of Council Directive 2003/96/EC (differentiated rates of taxation for petrol distributed from specially equipped petrol stations)
Date: 2007-06-07
Institutions: European Commission
Subjects: distributive trades, petrol, tax system

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.6.2007 
COM(2007) 307 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 

in accordance with Article 19(1) of Council Directive 2003/96/EC (differentiated rates of 
taxation for petrol distributed from specially equipped petrol stations) 

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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, Denmark submitted a request for authorisation to apply from 2007 onwards 
for a period of two years a differentiated rate of excise duty between petrol distributed from 
petrol  stations  equipped  with  a  return  system  for  petrol  fumes  and  petrol  distributed  from 
other  petrol  stations,  provided  that  the  differentiated  rates  are  in  accordance  with  the 
obligations  laid  down  in  the  Directive,  and  in  particular  the  minimum  rates  of  excise  duty. 
The letter 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 

Denmark would like to apply a differentiated rate of excise duty to petrol distributed from all 
petrol  stations  equipped  with  a  return  system  for  petrol  fumes  and  petrol  distributed  from 
other  petrol  stations,  respecting  the  obligations  laid  down  in  the  Directive,  and  in  particular 
the minimum rate of excise duty.  

The purpose of the measure is to maintain the incentive for petrol stations to install a return 
system  for  petrol  fumes  which  limit  the  distension  of  volatile  organic  compounds  into  the 
atmosphere with the subsequent benefit for the environment. 

The request foresees a date of termination by 31 December 2008. 

3. 

BACKGROUND TO THE REQUEST 

The derogation granted to Denmark dates back to 19953 and was extended for the last time in 
20014. In 2003 it was incorporated into the Energy Tax Directive with a view to expire by the 
end of 2006.  

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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). 
Letter registered on 13 November 2006 
Council Decision 95/585/EC of 22 December 1995. 

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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 June 2006 
Communication")5  the  Commission  stated  that  the  measure  might  have  served  to  encourage 
the  introduction  of  specific  equipment  when  first  introduced  but  it  is  logical  that  the 
derogation should be phased out after a certain period of time. The Commission expressed the 
view that from 2007 onwards the derogation should no longer be renewed. 

Although  the  Commission  did  not  propose  the  renewal  of  any  of  the  derogations  set  out  in 
Annexes II and III to the Directive, it indicated, that Member States could introduce a request 
in accordance with Article 19 of the Directive, in case they considered that for specific policy 
considerations a further derogation was still necessary. 

4. 

EVALUATION BY THE COMMISSION 

The  Commission  considers  that  the  control  of  volatile  organic  compounds  (VOCs)  emitted 
from  the  refuelling  of  vehicles  constitutes,  in  general,  a  useful  measure  in  favour  of  the 
environment. This has more recently been confirmed through the objectives set by Directive 
2001/81/EC6.  Moreover,  in  the  context  of  a  new  legislative  proposal  on  petrol  and  diesel 
quality and again as measure for environmental protection, the Commission has indicated its 
willingness to bring forward another proposal in the near future, with a view to ensuring that 
petrol vapor recovery is undertaken throughout the EU.7 

For these reasons, Denmark was granted a derogation for the first time in 1995 and which has 
since been extended, most recently with a view to expiry in 2006 (cf. above). Since initiation 
of the scheme and according to the information provided, 1,802 stations out of a total of 1,843 
have installed  the  special  equipment,  which corresponds to 97 %. The positive effect of the 
measure has not been linear during the 11 years of application of the differentiated rate. The 
impact  has  been  decreasing  over  the  past  six years during which only 180 stations installed 
the system, leaving 41 without the equipment. During the year 2006 only 15 stations installed 
the equipment in comparison to 437 in 1996. It would, therefore, appear that the impact of the 
derogation is almost exhausted. 

Taking  into  account  the  concrete  current  situation  in  Denmark,  as  described  above,  the 
measure no longer appears proportionate to its objective, which has remained unchanged.  

As  regards  the  stations  already  equipped,  and  due  to  the  time  that  has  elapsed  since  the 
derogation  was  originally  granted,  the  costs  of  the  investment  have,  in  most  cases,  already 
been written-off. Therefore, the measure requested by Denmark, to apply a rate lower than the 
standard  national  rate  of  excise  duty  to  petrol  distributed  from  all  petrol  stations  equipped 
with a return system for petrol fumes, would mean an unjustified benefit for a large number of 
the stations already equipped today. In this regard, the measure can no longer be justified by 
the above mentioned objective. . 

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Council  Decision  2001/224/EC  of  12  March  2001  concerning  reduced  rates  of  excise  duty  and 
exemptions  from  such  duty  on  certain  mineral  oils  when  used  for  specific  purposes  (OJ  L 84  of  23 
March 2001, p. 23). 
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. 
Directive  2001/81/EC  of  23  October  2001  on  national  emission  ceilings  for  certain  atmospheric 
pollutants, OJ L 309, p. 22. 
Cf. COM(2007)18 final/2, at page 8. 

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The  considerations  set  out  above  equally  imply  that  the  measure  is  disproportionate,  to  the 
extent  the  objective  in  question  now  concentrates  on  the  equipment  of  the  small  number  of 
remaining stations (41 stations), i.e. consists in maintaining a corresponding incentive in their 
regard. 

5. 

CONCLUSION 

Whilst  recognising  the  sound  environmental  justification  for  the  control  of  VOCs  emitted 
during refuelling of  vehicles8,  the  Commission considers  that the arguments put forward  by 
Denmark  can  no  longer  justify  the  need  to  further  derogate  from  Community  rules  on  the 
harmonisation of excise duties, as set out in Directive 2003/96/EC. 

If  Denmark  considers  that  further  support  in  favour  of  the  equipment  of  service  stations  is 
needed, and provided that Community law is complied with in all respects9, it could resort to 
means  more  appropriate,  both  in  nature  and  in  scope,  and  which  would  not  involve  an 
anomalous exemption from harmonised taxes.  

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

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Cf. the first paragraph of the Commission's evaluation and the references set out there. 
Including the rules on State aids. 

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