REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the functioning of the arrangements for the computerised supervision of excise movements under duty suspension and on the application of the administrative cooperation rules in the area of excise duties, in accordance with Article 8(3) of Decision No 1152/2003/EC, Article 45(1) of Directive 2008/118/EC, Article 35(1) of Council Regulation (EC) No 2073/2004 and Council Regulation (EU) No 389/2012
Date: 2013-12-03
Institutions: European Commission
Subjects: administrative cooperation, alcoholic beverage, electronic document management, energy-generating product, exchange of information, excise duty, free movement of goods, information technology applications, internal border of the EU, intra-EU trade, tobacco













EUR-Lex - 52013DC0850 - EN











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52013DC0850

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the functioning of the arrangements for the computerised supervision of excise movements under duty suspension and on the application of the administrative cooperation rules in the area of excise duties, in accordance with Article 8(3) of Decision No 1152/2003/EC, Article 45(1) of Directive 2008/118/EC, Article 35(1) of Council Regulation (EC) No 2073/2004 and Council Regulation (EU) No 389/2012 /* COM/2013/0850 final */









REPORT FROM THE COMMISSION TO THE
EUROPEAN PARLIAMENT AND THE COUNCIL
on the functioning of the arrangements for
the computerised supervision of excise movements under duty suspension and on
the application of the administrative cooperation rules in the area of excise
duties, in accordance with Article 8(3) of Decision No 1152/2003/EC, Article
45(1) of Directive 2008/118/EC, Article 35(1) of Council Regulation (EC) No
2073/2004 and Council Regulation (EU) No 389/2012
TABLE OF CONTENTS
REPORT FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL 2
1........... Introduction.................................................................................................................. 4
2........... Summary....................................................................................................................... 4
3........... The computerisation of the
movement and surveillance of excisable products............ 5
4........... The printed version of the
electronic administrative document or other commercial document and
arrangements for fallback (Article 45(1) of Council Directive 2008/118/EC)............. 8
5........... Results of the consultation
concerning arrangements for administrative cooperation in the field of excise
duty............................................................................................................................... 9
6........... General conclusion and way
forward......................................................................... 10
1.           Introduction
In the European Union, the most commonly
applied excise duties are those on alcoholic beverages, manufactured tobacco
products and energy products (motor fuels and heating fuels, such as diesel and
gasoline, electricity, natural gas, coal and coke). All EU Member States apply
excise duties to these three product categories and the basic rules, notably
the structure of the taxes and minimum rates, are harmonized at EU level so as
to prevent distortions of competition within the Internal Market in which
controls of a fiscal nature at internal borders between Member States no longer
exist. 
In order for the excise system in the internal
market to function, general provisions that apply across the product categories,
are necessary. These provisions concern in particular the production, storage
and movement between Member States of excise products. Also, a well-functioning
administrative cooperation between Member States on all these excise duties is imperative
if distortions are to be minimised and excises be correctly applied in
cross-border situations. The product-specific excise legislation mentioned
above is therefore integrated in a set of horizontal rules, laid down in
various pieces of EU legislation on these aspects. The present report aims at assessing
the functioning of these horizontal rules, in line with respective reporting
obligations in the legislation, as regards two main aspects: 
the functioning of the arrangements for the
computerised supervision of excise movements under duty suspension and 
the application of the administrative
cooperation rules in the area of excise duties. 
It is thus a first ‘building-block’ of a formal
economic evaluation planned by the Commission in the years to come which will
also cover the whole set of other substantive legal rules laid down in Council
Directive 2008/118/EC concerning the general arrangements for excise duty and
review the functioning of the EU Excise Movement and Control System (EMCS), the computerised
system for monitoring movements of excise goods under suspension of excise duty within the EU.
It should be noted that the technicality of the
matter makes it impossible to re-explain all underlying concepts and terms in
this report. In this respect reference is made to the annexed Commission Staff
Working Document and the explanations on the Commission’s dedicated websites[1].The annexed Staff
Working document elaborates on the issues presented in this report in all
detail.
2.           Summary
In line with the legal obligations put on the
Commission via the relevant legislation this report comprises three sections
devoted to the implementation of determined horizontal aspects of EU excise
legislation. Each section is based on a comprehensive survey of the relevant
stakeholders, as well as other input from interested parties and the
Commission’s reflections on the issues raised. The annexed Commission Staff
Working Document provides a comprehensive overview of the input received through
three rounds of consultations of stakeholders, as well as the key findings and
the methodology applied.
Chapter 3
reports on the implementation of Decision 1152/2003/EC of the European
Parliament and Council on the computerisation of the movement and surveillance
of excisable products. This Decision established the governance arrangements
and the central development funding for the Excise Movement and Control System
(EMCS. 
The overwhelming majority of all stakeholders report
that the governance arrangements under the Decision work well and consider that
EMCS represents a major improvement over the previous paper based system. Nevertheless,
the stakeholders have made numerous useful suggestions for improvements,
particularly in the linkage of EMCS with customs applications. The Commission
will take these suggestions into account for future legal and technical work
Chapter 4
addresses the requirement under Article 45(1) of Directive 2008/118/EC for the Commission to provide a report concerning EMCS Fallback
Procedures, and the print-out of the electronic administrative document. The stakeholders were generally satisfied with the arrangements set
up under Directive 2008/118/EC, but called for standard templates for fallback
documents to ensure that they are easily recognisable as such by all interested
parties. The Commission will look at incorporating these suggestions into a
future revision of Commission Regulation (EC) 684/2009.
Chapter 5
summarises the consultation of Member States concerning their first experiences
with Council Regulation (EU) No. 389/2012 on administrative cooperation in the
field of excise duties and repealing Regulation (EC) No 2073/2004. Member
States feel that the new arrangements are an improvement over the previous systems
based on e-forms, giving better control of workflow and a readily available
archive of administrative cooperation information. Various suggestions for
improvements to EMCS functionality were made, which the Commission will take up
for inclusion in the future evolution of EMCS and where necessary the
corresponding implementing acts.
3.           The
computerisation of the movement and surveillance of excisable products
In 2003 the European Parliament and the Council
adopted a Decision 1152/2003/EC mandating the computerisation of the movement
and surveillance of excise products. The Decision requires the Commission to
report to the Parliament and the Council on its implementation.
On the basis of this Decision EMCS was to be specified
and developed by the Commission and the Member States in the period from 2004
to 2009. It was envisaged to start EMCS Core Business on 1st April
2009 (all operators in all Member States were to be able to discharge
electronic administration documents by sending electronic reports of receipt,
whilst the paper based system continued in operation.) The full application of
EMCS was planned for 1st January 2010 (all movements of goods under suspension
of excise duty were to be carried out using EMCS). 
On the basis of discussions held between the
Commission and all Member States and taking account of discussions at the
Committee on Excise Duty, it was found out that the original planning was no
longer realistic. Several Member States confirmed that there were technical
problems with the deployment of the EMCS. There were also legal constraints, as
the discussions in the Council on the proposal for the Directive, which would
provide the legal basis for EMCS, were taking more time than originally
expected.
Therefore, the Commission proposed to review
the planning for the implementation of EMCS and suggested 2 options: 
(1)     Postponement of the implementation and
the roll-out of EMCS by one year (until 1 April 2010) without changing the
strategy laid down in the Phasing and Scope Specifications;
(2)     Allowing those Member States who would
be ready to start the implementation and the use of EMCS among themselves
before April 2010 (e.g. on 1 September 2009) to go ahead. 
At the 25th meeting of the Customs
Policy Group (2nd July 2008) the Directors General responsible for
excise decided by a large majority to support scenario no 1. 
The first operational phase of EMCS was put
into operation in April 2010, running in parallel with the paper based system
that had been in use since 1993. EMCS completely replaced the previous paper
based system from 1st January 2011 onwards.
On 1st January 2012 the second
operational phase of EMCS was put into operation. This incorporated the
recording of control actions, the report of events during movements and the
exchange of information for administrative cooperation between Member States.
The Commission has conducted three surveys of
economic operators and Member State Administrations involving various aspects
of EMCS. This section deals with the results of the survey conducted on aspects
of the implementation of the Decision. The results of the other surveys are
discussed in subsequent chapters of this report.
131 replies were received to this survey,
consisting of 104 individual economic operators and European trade federations,
and 27 replies from 23 Member States. The overwhelming majority of stakeholders
consider that in general the aims of the Decision have been implemented
satisfactorily.
Stakeholders report that the governance
arrangements set out in the Decision work well: the EMCS Project has given sufficient
input to all stakeholders and the decision making process generally meets
expectations. Therefore the Commission will not be proposing a revision of the
Decision.
Economic operators are on the whole satisfied
with the current consultation arrangements for the EMCS project, based around
the Excise Contact Group (ECG). However, some economic operators would like to
see more meetings of the ECG with more discussions on practicalities. They
would also like to see the Commission running more frequent surveys targeted at
traders concerning EMCS. The Commission will investigate how best to meet these
requests.
The overwhelming majority of all stakeholders
also believe that EMCS represents a major improvement over the previous paper
based system. This is also evidenced by the extremely low technical error rates
(technical errors occur in less than 1% of movements) and the very short times
needed to discharge excise movements (on average 6.8 days between validation of
the electronic administration document and the sending of a report of receipt
at destination.)
However, there are still some aspects of EMCS
that require attention:
          The links between EMCS and customs
applications do not work satisfactorily, requiring manual interventions by
economic operators and the Member State Administrations. This is particularly
the case for the link with export where the export procedure begins in a Member State other than the Member State where the excise economic operator is based, or where
the goods exit the European Union from another Member State;
          The arrangements for the handling of
exceptions to normal sequence of events during a movement are not always well
defined, leading to legal uncertainty and additional burdens on economic
operators and Member States;
          Economic operators still sometimes
suffer delays due to delayed distribution of information about the
authorisations of economic operators in other Member States;
          Some consignees and some Member
States acting as Member States of Destination still experience problems with
the quality of data received from consignors.
To solve the problems associated with links to
customs systems a future release of EMCS will be specified, which will include
improved links to customs systems. The Commission will also endeavour to incorporate
the special requirements for excise goods into the new customs applications
that will be developed for the full implementation of the Union Customs Code.
This will also involve a revision of the provisions in Directive 2008/118/EC
relating to customs procedures.
The Commission is investigating how to improve
the handling of exceptions, for incorporation of new functionality into a
future release of EMCS. This may involve revising Directive 2008/118/EC in
order to clarify and expand the existing provisions in this area.
The Commission has adopted a new Implementing
Regulation (Commission Implementing Regulation (EU) No. 612/2013) which
provides for the real-time distribution of economic operator authorisations
between Member States. Real time distribution will be operational by 1st
January 2015 at the latest.
The Commission is working with Member States on
improving the conformance testing of EMCS applications in order to reduce the
likelihood of problems due to incorrect data.
Finally, stakeholders were asked to suggest
means for measuring the performance of EMCS in the future. There is a large level
of agreement between stakeholders on future measurements:
          Time taken to close movements;
          Time taken to respond to requests for
administrative cooperation;
          Percentage of movements with errors;
          Percentage of export movements that
need to be closed manually;
          Measurable reduction in administrative
burden / improvement in revenue collection.
The measurements described in points 1 to 3
above can in principle be obtained automatically. Points 4 and 5 will require
further investigation to establish the best means to collect this information.
The Commission is preparing an Implementing
Regulation concerning statistics on the basis of Article 34 of Council Regulation
(EU) No. 389/2012 and will take these recommendations into account, in drawing
up the Implementing Regulation and in revising the functioning of the EMCS
CS/MISE component.[2]
4.           The
printed version of the electronic administrative document or other commercial
document and arrangements for fallback (Article 45(1) of Council Directive
2008/118/EC)
This chapter of the report has been prepared on
the basis of Article 45(1) of Council Directive 2008/118/EC, which requires the
Commission to provide a report to the European Parliament and the Council
concerning EMCS FallBack Procedures, which are covered by Articles 26 and 27 of
the Directive, and the print-out of the accompanying document provided for
under Article 21(6) of the Directive. In order to build this report the
Commission ran a survey addressed to Member States and to representatives of
traders in order to help evaluate the effectiveness and usefulness of these
arrangements. Also some questions were asked about EMCS in general to provide
orientation for further research. The questionnaire received a total of 104
replies and two different samples could be identified; the Member States’
sample and the traders’ sample.
The replies to the questionnaire give valuable
insights into the current fallback procedure and possible issues with the
print-out of the accompanying document. A large majority of the Member States’
sample and the traders’ sample were satisfied with the fallback procedure as it
is now. However, the majority of both samples expressed the need for a
standardised fallback document across all Member States with a fixed lay-out.
The majority of Member States felt that a standard template that only included
the essential data would reduce the need to change the fallback documents every
time there was a new version of EMCS. Reducing the need to resort to the
fallback procedure by investigating ways to improve the availability of
national EMCS access is also a priority for some trader respondents. 
Concerning the print-out of the electronic accompanying
document (e-AD) 50% of Member States thought that the addition of a bar code containing
the document’s administrative reference code would be useful. Almost 40% of the
Member States’ sample and the traders’ sample express the need for a
standardised document. A standardised template, which should include a barcode,
could be designed. This would aid recognition of the print-out and help resolve
the linguistic problems of having print-outs in all official languages.
Nevertheless, respondents put a higher priority on work on fallback as a large
majority of both samples indicated a need for a standardised fallback document.

In response to the general questions concerning
EMCS a large majority of both the Member States’ sample and the traders’ sample
state that their operational experience with EMCS is good to excellent. To
improve the system respondents suggest such actions as making it possible to
correct data in the (e-AD) after validation and the faster updating of the SEED
database ( a distributed register of traders authorized to move goods under
EMCS), to keep it up to date. Investigation into the problems with EMCS in the
export procedure is also of great importance. Further research will be
performed on the feedback received via the questionnaire to fine-tune the
forthcoming surveys on the methods and criteria for future evaluation of EMCS
and on the implementation of Directive 2008/118/EC in general. 
The Commission recommends:
·              
The development of standardised templates for
fallback documents across all Member States with a fixed lay-out.
·              
Investigating improvements in the availability
of national EMCS systems in order to avoid having to use the fallback
procedure.
·              
For the print-out of the e-AD a standardised
template could be proposed. This would help reduce linguistic difficulties. The
template could be based on standard commercial documents, such as the CMR
Consignment Note for Road Transport. This should be introduced on a voluntary
basis in a pilot project.
·              
The ARC[3]
number, identifying each movement uniquely, should be reproduced as a barcode
on the print-out, in order to aid road controls, and to assist traders in
identifying consignments.
The Commission will, where applicable,
incorporate the above recommendations in the next amendment to Commission
Regulation (EC) No. 684/2009, which specifies the content of the EMCS
electronic messages and the structure of the fallback documents.
5.           Results
of the consultation concerning arrangements for administrative cooperation in
the field of excise duty
Council Regulation (EU) No. 389/2012 came into
force in July 2012, replacing Council Regulation (EC) No. 2073/2004. The new
Regulation clarifies and harmonises arrangements for the registration of
economic operators, exchange of information, the production of operational
statistics and the duty of the Commission and the Member States to maintain and
develop EMCS.
The first report on functioning of the
Regulation is due in 2017, but it was considered useful to gather the first
reactions of Member States to the use of the Regulation, particularly in the
context of EMCS, since the Regulation mandates the use of EMCS under all normal
circumstances.
So far, the new Regulation has not led to big
changes in the way that Member States cooperate with each other. This is despite
the increase in the responsibilities of the role of the Central Excise Liaison
Office. 
The replacement of e-forms by EMCS Phase 3 (as
of January 2012) has been very successful and is seen as an improvement by the
vast majority of Member States. Nevertheless, the existing content and workflow
should be reviewed to see if further improvements to meet expressed business
needs are possible. 
Member States would like to see the development
of a feedback message in EMCS, together with a provision in the appropriate
Implementing Regulation, which would allow requesting Member States to inform,
requested Member States about subsequent actions that they have taken on the
basis of information received.
Some Member States criticised the current EMCS
fallback arrangements. The document flow does not necessarily involve the
Member States and is considered to provide opportunities for fraud. These Member
States would like to see the flow of documents pass via the concerned Member
States, corresponding to the flow of the e-AD. 
Some Member States would like to see a new
message to allow for the transfer of information where the economic operator that
is being checked is unable to produce documentation for the excise goods
present.
Some Member States report that a proportion of
requests for administrative cooperation are not answered within the one month
or three month time-limits, or are not answered at all. A contributory factor
may be that EMCS does not support the possibility allowed by Regulation (EU)
389/2012 of refusing a request for administrative cooperation, or of providing
a justification for such a refusal, although it is possible to refuse a request
for the history of an EMCS movement. Some Member States also suggested that the
system might be enhanced to support partial replies to requests.
SEED is perceived as working well and is mostly
reliable and up to date. Further improvements can be expected with the bringing
into force of the service level requirements in Commission Implementing
Regulation (EC) No. 612/2013.
Better support for risk analysis should be
incorporated into EMCS in the future. 
These considerations will be taken into account
by the Commission in its future legal and technical work.
6.           General
conclusion and way forward
The surveys launched by the Commission on the
functioning of the main horizontal rules concerning the functioning of the
arrangements for the computerised supervision of excise movements under duty
suspension and the application of the administrative cooperation rules in the
area of excise duties clearly demonstrate that the current rules are working
satisfactorily. Nevertheless, numerous useful suggestions for improvements,
particularly in the linkage of EMCS with customs applications, more
standardisation of the fallback documents, and specific suggestions for some EMCS
functionalities, have been received. The Commission intends to take these up,
together with Member States in the relevant technical work, where appropriate
including implementing acts.
On this basis a more comprehensive evaluation
of the EU excise system and notably of the whole of EMCS
and the implementation of Directive 2008/118/EC in its
entirety will be carried out with a view to a possible legislative reform
initiative as of 2015. 
[1]               http://ec.europa.eu/taxation_customs/taxation/excise_duties/circulation_control/index_en.htm
[2]               This
EMCS component is responsible for extracting operational data and generating
statistical reports and will therefore provide the majority of information for
reporting on performance.
[3]               Administrative
reference code – see also : http://ec.europa.eu/taxation_customs/common/faq/faq_2898_en.htm
for further details and explanations