2008/417/EC: Council Decision of 3 June 2008 authorising Portugal to apply a reduced rate of excise duty on locally produced beer in the autonomous region of Madeira
Date: 2008-06-03
Institutions: Council of the European Union
Subjects: Madeira, Portugal, beer, derogation from EU law, excise duty, location of production, tax relief

6.6.2008

EN

Official Journal of the European Union

L 147/61

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COUNCIL

COUNCIL DECISION

of 3 June 2008

authorising Portugal to apply a reduced rate of excise duty on locally produced beer in the
autonomous region of Madeira

(2008/417/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
establishing the European
Community, and in particular the second subparagraph of
Article 299(2) thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament (1),

Whereas:

(1)

lower

than the national

By a request dated 30 May 2007 and referring to
Article 299(2) of the Treaty, Portugal seeks a derogation
from Article 90 of the Treaty in order to apply a rate of
excise duty,
in
accordance with Council Directive 92/84/EEC of
19 October 1992 on the approximation of the rates of
excise duty on alcohol and alcoholic beverages (2) to beer
produced in Madeira,
annual
production of
the brewery does not exceed 300 000
hectolitres. Production in excess of 200 000 hectolitres
would benefit from the reduced only to the extent it is
consumed locally.

in cases where

rate

the

set

local markets. Under

the harmonisation of the structures of excise duties on
alcohol and alcoholic beverages (3) are not sufficient to
the disadvantages suffered by the breweries in
offset
Madeira on account of their remote location, fragmented
terrain and tight
that Article,
breweries whose annual beer production does not
exceed 200 000 hectolitres may benefit from reduced
rates of excise duty, provided that those rates are not
set at more than 50 % below the standard national
rate. Portugal has made use of this provision, applying
a 50 % reduction to breweries whose annual production
does not exceed 200 000 hectolitres. However,
it does
not signify that breweries located in Madeira that reach
production in excess of that threshold would be in a
sufficiently strong position to face up to competition
(or mainland
from beers
from mainland Portugal
Europe). Their
local market would
continue to diminish as a result of the strong compe-
tition that they would continue to face from foreign
beers owing to the additional costs that
they would
have to meet as a result of their remoteness, namely
maintaining high level of stocks, transport of raw and
secondary materials,
and packaging from mainland
Portugal. Thus, even though such breweries would,
upon reaching 200 000 hectolitres annual production,
cease to be ‘small’ as defined in Article 4 of Directive
92/83/EEC, they would nonetheless continue to be small
and multinational
compared to the
large national
breweries with whom they compete.
therefore,
essential for the continued survival of the local industry
that breweries should benefit from a reduced rate in the
their annual production exceeds 200 000
event
hectolitres, without however going beyond 300 000
hectolitres.

share of

that

the

is,

It

(2)

justification for

its request, Portugal has
By way of
explained that the possibilities offered by Article 4 of
Council Directive 92/83/EEC of 19 October 1992 on

(1) Opinion of 11 April 2008 (not yet published in the Official Journal).
(2) OJ L 316, 31.10.1992, p. 29.

(3) OJ L 316, 31.10.1992, p. 21. Directive as amended by the 2005 Act

of Accession.

L 147/62

EN

Official Journal of the European Union

6.6.2008

(3)

(4)

(5)

(6)

(7)

(8)

rate,

the entitlement

therefore requests that

to a
Portugal
reduced rate, which would be set at 50 % below the
standard national
should be available to beer
produced locally by independent brewers situated in
Madeira whose annual production does not exceed
300 000 hectolitres. However, where annual production
exceeds 200 000 hectolitres the entitlement to a reduced
rate for quantities in excess of this figure will only apply
to beer which is to be consumed locally in Madeira.

if

request,

to grant Portugal's

A careful examination of the situation shows that it is
essential
the brewing
industry is to be maintained in the outermost region of
Madeira. It is clear that, in the circumstances of this case
the effect of
to the relevant conditions,
and subject
extending the
the
to place
tax reduction will be
brewing industry of Madeira on an equal footing with
its competitors in mainland Portugal and other Member
States. The tax advantages gained will do no more than
offset the extra costs necessarily incurred as a result of
the remoteness of the industry's location.

In order not to undermine the single market, the en-
for production above
titlement
200 000 hectolitres
beer
only
produced and consumed locally in Madeira.

to a reduced rate
should

apply

to

Although the requested derogation from Article 90 of
the Treaty is necessary to ensure that the development
of the outermost region of Madeira is not jeopardised, it
is also necessary to set a time limit on tax derogations.
On the other hand, however, it is important to ensure
that local economic operators have the requisite security
to develop their commercial activities. It is appropriate,
therefore, that the derogation be granted for a period of
six years.

Furthermore, the production of a mid-term report should
be required, so that the Commission can assess whether
the conditions justifying the granting of such a dero-
gation continue to be fulfilled.

The measures provided for in this Decision should be
without prejudice to the application of Articles 87 and
88 of the Treaty,

HAS ADOPTED THIS DECISION:

Article 1

By way of derogation from Article 90 of the Treaty, Portugal is
authorised to apply a rate of excise duty lower than the national
rate fixed in accordance with Directive 92/84/EEC in the case of
beer produced in the autonomous region of Madeira by inde-
pendent breweries situated in that region, whose total annual
production does not exceed 300 000 hectolitres. Production in
excess of 200 000 hectolitres annually may benefit from the
reduced rate only to the extent
is consumed locally in
Madeira.

it

The term ‘independent brewery’ shall mean a brewery which is
legally and economically independent of any other brewery,
which uses premises situated physically apart from those of
any other brewery and does not operate under
licence.
However, where two or more breweries cooperate, and their
combined annual production does not exceed 300 000 hecto-
litres, those breweries may be treated as a single independent
brewery.

The reduced excise duty rate, which may fall below the
minimum rate, shall not be set more than 50 % lower than
the standard national excise duty rate for Portugal.

Article 2

By 31 December 2010, Portugal shall send the Commission a
report on the situation,
to assess whether the
to enable it
reasons justifying the derogation provided for in Article 1 still
exist.

This Decision shall apply until 31 December 2013.

Article 3

This Decision is addressed to the Portuguese Republic.

Article 4

Done at Brussels, 3 June 2008.

For the Council
The President

A. BAJUK