REPORT FROM THE COMMISSION TO THE COUNCIL on the evaluation of Council Directive 92/83/EEC on the structures of excise duties on alcohol and alcoholic beverages
Date: 2016-10-28
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: EU Member State, alcoholic beverage, approximation of laws, chemical alcohol, ethanol, excise duty, single market, tax exemption, tax harmonisation, tax relief

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 28.10.2016  COM(2016) 676 final   REPORT FROM THE COMMISSION TO THE COUNCIL on the evaluation of Council Directive 92/83/EEC on the structures of excise duties on alcohol and alcoholic beverages {SWD(2016) 336 final} {SWD(2016) 337 final}  
 
 
TABLE OF CONTENTS 

1. INTRODUCTION ........................................................................................................... 3 

2. BACKGROUND ............................................................................................................. 3 

3. THE EVALUATION OF THE DIRECTIVE ................................................................. 4 

3.1 Scope of the evaluation ......................................................................................... 4 
3.2 Methodology ......................................................................................................... 4 
3.3 Results of the evaluation ....................................................................................... 5 

3.3.1 The proper functioning of the Internal Market, avoiding distortions in 

competition .......................................................................................... 5 
Safeguarding the budgetary interests of the Member States ............... 6 

3.3.2 
3.3.3  Cost  of  compliance  and  administrative  burdens  –  scope  for 

3.3.4 

3.3.5 

3.3.6 

reduction .............................................................................................. 6 
EU  added  value  –  the  added  benefits  for  the  stakeholders  of 
achieving the Directive’s objectives at the EU level ........................... 7 
 Responsiveness  of  the  Directive  to  the  needs  of  the  Member 
States and economic operators ............................................................ 7 
To what extent are the provisions of Directive 92/83/EEC coherent 
with  EU  and  international  legislation  on  excise  duties  on  alcohol 
and alcoholic beverages? ..................................................................... 9 

4. RECOMMENDATIONS OF THE EVALUATION .................................................... 10 

4.1 Quality of the evaluation ..................................................................................... 10 
4.2 Recommendations ............................................................................................... 10 
4.3 Status quo ............................................................................................................ 11 
4.3.1 Excise duty based on alcoholic strength................................................. 11 
4.3.2. Classification ......................................................................................... 12 
4.3.3 Reduced rates for small brewers ............................................................ 12 
4.3.4 Reduced rates for small distilleries ........................................................ 12 
4.3.5  Reduced  rates  and  exemptions  for  specific  products  in  specific 

Member States ................................................................................... 12 

5. FINAL CONCLUSIONS .............................................................................................. 13 

ANNEX I EXTERNAL EVALUATION RECOMMENDATIONS ................................ 14 

2 

 
 
 
1. INTRODUCTION 
According  to  Article  221,  paragraph  7  of  Directive  92/83/EEC2  on  the  harmonisation  of 
structures  of excise  duty on alcohol and alcoholic beverages (the "structures" Directive)  the 
Commission is required to review the arrangement for reduced rates for private production / 
own consumption of alcohol in Hungary, Romania and Slovakia during 2015 and report to the 
Council on possible modifications. 

The  Directive  as  a  whole  has  not  been  evaluated  since  its  adoption  in  1992,  as  there  is  no 
requirement  to  periodically  evaluate  and  report  to  the  Council  other  than  in  Article  22.  In 
view  of  its  commitment  to  ensuring  Regulatory  Fitness  and  Performance  (REFIT)  under  its 
better regulation agenda the Commission has decided to evaluate the Directive in its totality.  
This report presents the results and conclusions of this evaluation and responds to the review 
requirements in the Directive. 

2. BACKGROUND 

Directive 92/83/EEC sets out the rules on the structures of excise duty applied to alcohol and 
alcoholic beverages. In particular, it defines and classifies the different types of alcohol and 
alcoholic beverages, and provides a legal framework for reduced rates in some sectors, 
exemptions and certain derogations. 

The Directive aims to ensure the proper functioning of the internal market, including the 
avoidance of distortions of conditions of competition, ensuring the free movement of products 
in this sector. The Commission is committed to ensuring that EU law is fit for purpose and 
achieves its objectives at least cost and burdens.

1 Article 22(7) Hungary, Romania and Slovakia may apply a reduced rate of excise duty applied to ethyl alcohol 
produced by fruit growers' distilleries producing more than 10HL p.a. from fruit supplied to them by fruit 
growers' households, limited per household to 50 L of fruit spirit p.a. and destined exclusively for their own 
consumption. 

2 Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of structures of excise duty on alcohol 
and alcoholic beverages 

3 

 
 
 
 
                                                            
3. THE EVALUATION OF THE DIRECTIVE 

The  Commission  undertook  an  evaluation  of  the  functioning  of  the  Directive,  which  was 
supported by an external comprehensive study (hereafter: study).3  
Following consultation with Member States, it was agreed that the objective of the evaluation 
should  be  to  assess  whether  the  legislation  leads  to  unnecessary  administrative  costs  and 
burdens  for  both  national  administrations  and  economic  operators  and  to  identify  elements 
which could be further assessed as part of an impact assessment on the level of compliance 
and  security  in  collecting  excise  duties  on  alcohol  and  alcoholic  beverages.  The  evaluation 
started in December 2014 and was finalised in July 2016. A Steering Group composed of staff 
from all the relevant Commission Services oversaw the execution of the evaluation.  

The evaluation follows the new Better Regulation Guidelines of 19 May 20154, covering the 
five main evaluation criteria of effectiveness, efficiency, relevance, coherence and EU added 
value. The evaluation collected stakeholder views through targeted surveys and also through 
an open public consultation. The evaluation is presented in more detail in the accompanying 
Commission Staff Working Document. 

3.1 SCOPE OF THE EVALUATION 

The scope of this evaluation is a retrospective assessment of the Directive's functioning under 
the existing, general, legal framework. It covers all provisions, beginning with the definitions 
of  different  categories  of  alcoholic  beverage  for  excise  purposes,  reduced  rates,  exemptions 
and other legislative provisions. 

The  report  concentrates  exclusively  on  structures  of  excise  duties  on  alcohol  and  alcoholic 
beverages,  and  does  not  discuss  or  combine  the  findings  in  any  way  with  the  requirements 
laid down in Directive 92/84/EEC on the approximation of the rates of excise duty on alcohol 
and alcoholic beverages (the "rates Directive"). 

3.2 METHODOLOGY 

The evaluation was supported by an external comprehensive study, including: 

• 
• 

• 

• 

desk research 
survey questionnaires - open to responses between August and November 2015 - to 
Member States (all 28 replied), economic operators (323 replies) and to the public / 
EU citizen (328 replies) 
5 targeted case studies to Member States administrations (tax/customs/finance and 
health authorities) and economic operators active in the alcohol market and/or 
associations, in the areas of classification for tax purposes of alcoholic beverages, 
application of reduced rates for small producers, the functioning of the exemptions for 
denatured alcohol, exemptions applicable to provide production for own consumption 
and coherence of the Directive with health aspects.  
triangulation and analysis of the data and feedback 

3 https://circabc.europa.eu/faces/jsp/extension/wai/navigation/container.jsp - consortium led by Ramboll 
Management Consulting AS, Coffey and Europe Economics  

4 http://ec.europa.eu/smart-regulation/guidelines/toc_guide_en.htm 

4 

 
 
 
 
                                                            
• 

a series of recommendations was drawn up to address the problems identified.  

3.3 RESULTS OF THE EVALUATION 

3.3.1 The proper functioning of the Internal Market, avoiding distortions in competition 

The proper functioning of the internal market in the context of the excise structures on alcohol 
and alcoholic beverages, is understood to include three core components: 

i) 

ii) 
iii) 

a clear and consistent framework for excise duties to be paid on alcohol and alcoholic 
beverages; 
a “level playing field” in terms of competition between economic operators; 
limited risk of circumvention of excise duty. 

Overall, the Directive was found to be partially effective in achieving these three objectives. 
Through the harmonisation of structures, the approximation of rates and the definition of the 
scope of application of excise duty, at a general level, the Directive allows intra-EU trade to 
take  place  free  of  significant  tax-related  trade  barriers,  or  major  competitive  disruptions 
between economic operators operating in the same sector of activity.  

The  Directive  successfully  structures  the  taxation  of  alcoholic  beverages  in  the  categories 
specified in Directive 92/84/EEC which, in turn, sets minimum excise rates. There are clear 
rules with regard to the possibility of setting reduced rates for small producers or low-strength 
alcohol products. This provides a consistent framework for the taxation of alcohol.  

Despite this overall positive conclusion, there are several points where the Directive does not 
provide the necessary legal clarity, and  the issues  this  creates have an adverse effect on the 
functioning of the internal market.  

The classification of certain products (of which there are potentially hundreds in each product 
sector)  remains  unclear  because  they  could  fall  into  any  of  several  categories,  resulting  in 
different treatment in different Member States and complications when these products have to 
be  transported  between  Member  States.  Similarly,  the  difficulties  encountered  with  the 
interpretation of the provisions for exempting denatured alcohol hinder the proper functioning 
of  the  internal  market,  as  the  conditions  for  such  exemption  vary  considerably  across  the 
Member States. Not one Member State is applying the rules the same as another, across all the 
treatments  – e.g. national  formulation of one Member State,  recognised in  another  territory, 
the ability to manufacture another Member State formulation in their territory, third country 
denaturing  formulations  and  the  general  principle  of  mutual  recognition  differs  across  the 
EU28. 

Where  the  Directive  does  set  clear  rules,  it  also  ensures  similar  conditions  for  economic 
operators across the EU. Their products are taxed on the basis of principles that apply in all 
the Member States. However, the absence of clarity regarding the exemptions for denatured 
alcohol  permits  wide  room  for  interpretation  by  the  Member  States.  In  turn,  this  leads  to 
imbalances  in  competition,  because  the  producers  and  users  of  denatured  alcohol  located  in 
some Member States have a much wider choice of denaturing formulations than those in other 
Member States. 

Furthermore, the legislation prevents Member States from consistently applying reduced rates 
to small producers in respect of all the categories of alcoholic beverage. This limits the ability 
of Member States to correct potential market imbalances where such a policy objective might 
be otherwise worth pursuing. 

5 

 
3.3.2  Safeguarding the budgetary interests of the Member States  

Concerning the potential loss of excise duties for Member States, this evaluation considered: 

i) 

ii) 

fraud involving alcohol and alcoholic beverages, and specifically the extent to which 
fraud involving denatured alcohol is taking place;  

the  potential  misclassification  of  alcoholic  beverages  into  a  tax  category  lower  than 
was intended by the Member States. 

The  Directive’s  provisions  for  ensuring  the  denaturation  of  alcohol  intended  for  industrial 
purposes aim to protect the integrity of the exemption, and prevent such alcohol from being 
converted  back  into  consumable  alcohol.  Overall,  the  available  data  on  fraud  showed  that 
misuse  of  the  exemption  for  denatured  alcohol  represents  a  very  low  proportion  of  total 
alcohol-related fraud. This is because many Member States do not collect and / or analyse the 
data to the level of detail required to make an evidence based judgement. However, in a few 
Member States the findings suggest that fraud with denatured alcohol is non-trivial. Further 
investigation – working with the national authorities such as health and consumer protection 
who may well collect data on illicit product removed from the market - would be needed to 
identify whether this fraud can be traced back to a deficiency in the Directive and whether as 
a  result  of  that  investigation,  it  would  be  necessary  to  define  denatured  alcohol,  how  it  is 
manufactured and used in order to qualify for the exemption, and require economic operators 
to use denaturing formulations which cannot easily and cheaply be removed from the product. 
It  is  clear  that  the  ambiguities  in  the  current  Directive  are  responsible  for  the  wide 
interpetation of the rules. Whether this can be linked to fraud can only be proven with more 
extensive research with non-fiscal authorities. 

Several different product types were identified whose classification is not straightforward, and 
which could arguably be assigned to two or more different tax categories. The problem lies at 
the root of what the correct definition is of a fermented beverage. Some of these products (e.g. 
wine based drinks with ethyl alcohol added) have been regarded as deliberately manufactured 
in  such  a  way  as  to  take  advantage  of  /  abuse  a  favourable  tax  category.  Besides  creating 
competitive  distortions,  the  failure  to  provide  unambiguous  classificatory  definitions  may 
result  in  the  Member  States  losing  revenue.  The  study  has  conducted  preliminary  research 
into how the differing classification categories affect revenue collection, but what is needed 
now  is  a  further  examination  of  the  impact  any  potential  changes  to  those  classifications 
would  have  on  the  current  revenues  of  the  EU  28,  where  both  are  affected.  This  would 
involve  detailed  analysis  of  the  main  product  sectors,  and  an  exercise  to  re-classify  them 
under each potential new category.  

3.3.3  Cost of compliance and administrative burdens – scope for reduction 

Directive  92/83/EEC  does  not  directly  impose  compliance  costs  on  economic  operators.  By 
including  certain  products  in  the  scope  of  excise  duty,  it indirectly  subjects those sectors  to 
the provisions of Directive 2008/118/EC5, which sets out the rules and conditions for holding 
and moving excise duty goods. 

5 COUNCIL DIRECTIVE 2008/118/EC, of 16 December 2008 concerning the general arrangements for excise 
duty and repealing Directive 92/12/EEC 

6 

 
 
 
                                                            
The evaluation of Directive 92/83/EEC has identified multiple areas in which the application 
of the provisions of the Directive is resulting in increased costs for both economic operators 
and Member States. Consequently, it is concluded that the Directive is inefficient, specifically 
of  most  significance  in  the  areas  of  classification  of  other  fermented  beverages,  and  the 
exemption applied to denatured alcohol. 

These  increased  administrative  and  compliance  costs  identified  are  the  result  of  the 
complications,  disputes  and  the  inconsistent  application  of  the  Directive’s  provisions  that 
arise  from  situations  in  which  stakeholders  disagree  on  their  correct  national  interpretation. 
The number of examples supporting this assessment, plus their geographical extent, indicates 
that these complications are the result of a failure of the Directive to provide sufficient clarity 
to the stakeholders. 

In summary, issues surrounding the classification of products which have been identified as 
‘difficult to classify’ and the management of exemptions for denatured alcohol is resulting in 
increased  costs,  such  as  increased  guarantees  in  some  Member  States  for  movements  of 
denatured alcohol, the costs of resolving legal disputes, and manipulation of the classification 
rules resulting in price differentials  

3.3.4  EU added value – the added benefits for the stakeholders of achieving the 
Directive’s objectives at the EU level 

The evaluation has assessed the added value of establishing common rules at the EU level for 
the  classification  of  alcoholic  beverages,  the  granting  of  reduced  rates  for  small  producers, 
and the exemption of denatured alcohol from the scope of excise duty.  

The  findings  of  this  study  clearly  show  that  only  an  EU-wide  system  can  provide  the 
uniformity and harmonised conditions that are necessary to ensure the proper functioning of 
the internal market. It would not have been possible to achieve the same results in terms of 
effectiveness  and  efficiency  –  let  alone  more  positive  ones  –  via  an  alternative,  bilateral  or 
international approach. 

Moreover,  the  stakeholders’  divergent  interpretations  of  the  Directive  show  that  its 
effectiveness could be improved by expanding the EU-level approach.  

Overall,  the  evidence  collected  shows  that  all  types  of  stakeholder  strongly  support  an  EU-
level approach regarding the excise duty levied on alcohol and alcoholic beverages, which in 
turn,  facilitates  trade,  prevents  competitive  distortions,  reduces  administrative  costs  and 
prevents fraud. 

 Responsiveness of the Directive to the needs of the Member States and economic 

3.3.5 
operators 

This part sought to understand whether the provisions of the Directive as formulated are still 
fulfilling the needs of Member States and economic operators. As a result, it was assessed:  

(i) 
(ii) 

whether the needs that the Directive sought to address still exist;  
to what extent those needs have evolved, and how;  

7 

 
 
 
 
 
 
 
 
 
 
(iii)  whether the arrangements meet the current needs.  

While important progress has been made in the past twenty years towards the establishment of 
the  Internal  market,  the  Directive’s  objectives  of  providing  a  clear  and  consistent  legal 
framework, ensuring fair competition and reducing the risk of excise duty being circumvented 
continue to be highly relevant. In this context, the provision of common rules regarding the 
levying of excise duty on alcohol and alcoholic beverages has continued to be important. 
Consideration  was  given  to  whether  the  objectives  of  the  Member  States  have  evolved  in 
relation to the imposition of excise duty on alcohol, in so far as they might today also include 
the objective of influencing alcohol consumption habits via adjustments in excise duty rates. 
In practice, only a few Member States mentioned health policy objectives in connection with 
the overall relevance of the provisions; accordingly, no definitive conclusions can be drawn in 
this area. However, public health considerations should be included in any further process. 

Overall,  the  specific  provisions  of  the  Directive  were  reported  by  the  stakeholders  to 
correspond  to  their  needs.  The  assigning  of  alcohol  and  alcoholic  beverages  to  different 
categories for excise duty purposes continues to be relevant. Although some Member States 
(and spirits producers in particular) argued in favour of taxation based on alcohol strength but 
without  specific  product  categories,  the  evidence  shows  that  the  maintenance  of  different 
categories is important for preserving socio-cultural traditions (e.g. the continuous production 
and  consumption  of  traditional  products  often  made  from  natural  ingredients  grown  in  a 
particular  location),  and  for  supporting  the  creation  or  preservation  of  jobs,  practices  and 
traditional crafts. 

The findings reveal that there are a few provisions that no longer seem to be needed, such as 
rules in Article 286 for the United Kingdom which that Member State no longer applies. The 
UK has indicated that it does not consider the provision relevant to its current needs.  In the 
interest  of  clarity,  it  can  be  removed  in  the  context  of  a  potential  revision  of  Directive 
92/83/EEC.  

In  addition,  as  several  Member  States  have  introduced  positive  excise  duties  on  wine,  the 
omission of reduced rates for small producers of wine and other fermented beverages can no 
longer be justified. 

Finally, the relevance of reduced rates for products of low alcoholic strength was questioned. 
Further analysis at the impact assessment stage would be needed to draw any conclusion as to 
whether  these  reduced  rates  correspond  to  national  practices  linked  to  health  policy 
objectives, and whether they correspond to any of the overall objectives that are stated in the 
Directive and identified in the evaluation criteria. Specifically, reduced rates for intermediate 
products and ethyl alcohol are rarely used by the Member States, and they might actually be 
undermining  the  objectives  of  the  provision  in  the  first  place,  as  they  could  unintentionally 
increase  the  consumption  of  a  product  benefiting  from  the  reduced  rate  in  its  own  duty 

6 The UK no longer applies the exemption for aromatic bitters of an actual alcoholic strength from 44,2 to 49,2 
% vol., containing from 1,5 % to 6 % by weight of gentian, spices and other aromatic ingredients and from 4 to 
10 % by weight of sugar, delivered in containers holding 0,2 litres or less of product, and concentrated malt 
beverage the worts of which prior to fermentation were of a specific gravity of 1 200 of Original Gravity (47° 
Plato) or more 

8 

 
 
 
 
 
 
                                                            
category  despite  its  alcohol  strength  actually  being  higher  than  that  of  a  similar  product 
belonging to a different duty category.  

3.3.6  To what extent are the provisions of Directive 92/83/EEC coherent with EU and 
international legislation on excise duties on alcohol and alcoholic beverages? 

The evaluation has assessed the external coherence of the Directive with EU legislation and 
international  agreements.  Because  the  Directive was  adopted  more  than 20  years  ago,  some 
changes  have  been  made to  ancillary legislation. However, these  changes  do not  undermine 
the  coherence  of  the  provisions.  While  there  are  a  number  of  references  in  the  Directive  to 
other EU legislation and to CN codes that need to be updated, besides two points described 
below the inconsistencies identified were not reported to be causing any significant practical 
problems.  

Two  points  with  regard to  coherence  are  creating  problems  for  economic  operators,  namely 
the CN codes for denatured alcohol, and the treatment of wine precursors: 

The Member States are not using the CN codes for denatured alcohol in a consistent 
• 
manner. While there is a CN code for denatured alcohol (2207 20), a number of other codes 
are being used for particular products that may contain denatured alcohol. This can have an 
impact on the conditions applying to the movement of these products, as well on the ability of 
the Member States to monitor and control the movements.  
• 
 Two Member States reported issues with the treatment of wine precursors (i.e. must 
and  juices  that  are  due  to  be  turned  into  wine).  The  Directive  does  not  define  them  as 
excisable goods, but (in those Member States) the practice is that they can be moved under the 
Excise Movement and Control System (EMCS). There is currently no legal requirement to do 
this  

No inconsistencies between the Directive and international agreements were found.  

9 

 
 
 
 
 
 
4. RECOMMENDATIONS OF THE EVALUATION  

4.1 QUALITY OF THE EVALUATION 

The  Commission  has  carefully  examined  the  study  supporting  the  evaluation  and  has  also 
taken  account  of  the  feedback  received  from  stakeholders.  The  work  carried  out  by  the 
evaluation team was in accordance with the better regulation guidelines of the Commission.7 
The judgements and conclusions in the study were derived directly from findings based on the 
evidence  collected.  To  ensure  the  robustness  of  the  findings,  the  study  used  several  data 
collection  methods,  including  surveys,  interviews,  desk  research  and  case  studies.  This 
methodological mix was overall considered as sufficient by the Commission.  

4.2 RECOMMENDATIONS 

On the basis of the evidence gathered, the evaluators put forward 17 recommendations with 
the view to improving the functioning of the regulatory framework concerning the structures 
of excise duty on alcohol and alcoholic beverages. These are presented in as annex I to this 
report. 

7 http://ec.europa.eu/smart-regulation/guidelines/toc_guide_en.htm 

10 

 
 
 
                                                            
 
 
The Commission has examined the relevance of each of the recommendations and finds the 
following  to  be  worthy  of  further  consideration.  However,  it  is  not  the  purpose  of  this 
evaluation report to make recommendations for the future. The Commission therefore makes 
the following provisional assessment. More definite conclusions for the future will be decided 
in the light of any reactions from the European Parliament, the Council, stakeholders or other 
interested parties. 

  Recommendations  1,  3,  4,  5,  6,  7,  8  and  10  suggest  creating  more  accurate  definitions  / 
greater  clarity  in  the  legislation  in  order  to  reduce  legal  uncertainty,  avoid  different 
approaches  in  Member  States  and  distortion  of  the  internal  market.  Addressing  these 
recommendations would have an impact on the work parameters of other recommendations 
and could take priority. 

  The  aim  of  recommendations  9,  11,  12  and  13  is  to  undertake  further  research  on  the 

impacts of extending the scope and / or making improvements in these areas. 

  Recommendations  14,  15  and  16  concern  minor  technical  changes  which  could  be 

addressed during a possible review of the Directive. 

The other recommendations are considered to either fall outside the scope of possible revision 
of Council Directive 92/83/EEC or to be only indirectly linked to it. These include: 

  Recommendation  2  is  more  relevant  to  Council  Directive  2008/118/EC  of  16  December 

2008 concerning the general arrangements for excise duty.  

  Recommendation  17  –  regarding  the  excise  treatment  of  pre-cursors  of  wine  e.g.  grape 
juice  and  grape  must.  This  has  no  current  basis  in  either  Directive  92/83  or  in  Directive 
2008/118/EC,  as  pre-cursors  of  wine  are  not  excise  products.  Therefore,  the  holding  and 
movement  provisions  cannot  be  extended  to  include  them,  nor  can  a  legal  base  in 
secondary law for these products to be defined in either the structures or rates Directives 
for alcohol taxation.  

4.3 STATUS QUO 

Besides the recommendations to take action which are presented in annex I to this report and 
described  in  the  previous  section,  the  evaluators  also  put  forward  recommendations  to 
maintain the status quo in certain areas. These areas are listed and explained in this section. 

4.3.1 Excise duty based on alcoholic strength  

11 

 
  
 
 
 
 
 
 
 
4.3.2. Classification 
The current system of classifying alcoholic beverages for excise purposes allows the Member 
States  to  use  the  EU  rules  to  pursue  a  multi-dimensional  set  of  national  policy  goals  which 
include both economic objectives and health objectives.  

Despite the views expressed by several groups of stakeholders to the effect that the structures 
of excise duties on alcoholic beverages would be simplified if the duty was applied equally to 
all excisable alcoholic beverages on the basis of their alcohol strength, it seems unlikely that 
such a fundamental change to the structures of excise duties, one which would eliminate the 
current  excise  categories  and  link  excise  duty  to  alcohol  content,  would  be  feasible  to 
implement and achieve satisfying outcomes for all the relevant stakeholders.  

Because a majority of the Member States and other stakeholders maintain strong views on the 
appropriateness  of  the  status  quo,  as  well  as  uncertain  outcome  regarding  the  potential 
impacts  (either  positive  or  negative)  of  any  potential  change  to  this  regime,  the  attention  of 
the  Commission  might  better  be  directed  towards  improving  the  functioning  of  the  system 
within the current framework. 

4.3.3 Reduced rates for small brewers 

The research has shown that not all the Member States make use of Article 4.1 up to the full 
extent  of  200,000  hl.  However,  most  Member  States  do  provide  reduced  rates  for  small 
brewers; only two Member States expressed discontent with the available limit. 

As there is no evidence to suggest that those Member States which do not make full use of the 
provision are unduly negatively affected by the application of the provision in other Member 
States, and taking into account the limited degree of consensus in favour of any change, the 
balance of advantage may lie in keeping in place the existing applicable limits. 

4.3.4 Reduced rates for small distilleries 

The research conducted in this evaluation suggests that the quantitative limit of 10 hl (20 hl in 
special  circumstances)  of  pure  alcohol  produced  by  small  distilleries,  below  which  the 
Member  States  may  grant  reduced  rates  (Article  22.1),  may  be  too  small  to  have  a  sizeable 
impact on the internal market. There might, therefore, be scope to raise the limit in order to 
increase the effectiveness of the Article.  

However,  13  out  of  28  Member  States  indicated  that  they  considered  this  limit  to  be 
appropriate, while only two Member States disagreed. As a result, the case does not seem to 
have been fully made out for legislative change in this area.  

4.3.5 Reduced rates and exemptions for specific products in specific Member States 

Those  Member  States  which  have  requested,  and  been  granted,  special  derogations  to  the 
application of the Directive strongly support maintaining them in order to continue to pursue 
various policy objectives nationally.  

12 

 
 
 
 
 
 
 
 
 
 
 
As there is no evidence to suggest that those derogations create any significant adverse effects 
on the EU market as a whole, on neighbouring Member States or on the Member State where 
they apply, maintaining the status quo in this respect is appropriate. 

5. FINAL CONCLUSIONS 

Levying taxes on the consumption of products, such as excise duties on alcohol and alcoholic 
beverages,  should  neither  distort  competition  nor  hinder  the  possibility  for  goods  to  move 
freely  within  the  EU  in  a  proper  functioning  internal  market.  This  evaluation  has  examined 
questions  of  effectiveness,  efficiency,  relevance,  coherence  and  EU  added  value  and 
administrative burden arising from Directive 92/83/EEC in order to ensure that EU legislation 
on  the  structures  of  excise  duties  on  alcohol  and  alcoholic  beverages  achieves  its  policy 
objectives at least cost. 

Overall, the evaluation found that the general principles which define the current structures of 
alcohol and alcoholic beverages allow for neutral conditions of competition. At the same time, 
the  evaluation  findings  show  that  there  are  some  distortions  within  the  internal  market,  and 
that they are significantly detrimental that the Commission must act upon them. 

The  evaluation 
tax 
administrations and economic operators. These costs result from certain definitions which can 
lead to legal uncertainty over the treatment of specific products.  

identifies  unnecessary  administrative  and  compliance  costs  for 

Finally,  the  Directive  has  proven  to  be  effective  and  generally  appropriate  for  enabling 
adequate collection of excise duties for the large majority of stakeholders. 

13 

 
   
 
 
 
 
 
 
ANNEX I EXTERNAL EVALUATION RECOMMENDATIONS8 

No 
         Recommendations relating to classification 

Recommendation 

1  Clarify the scope of application of the excise category of “other fermented beverages 

Create  another  excise  category  code  within  the  Excise  Movement  &  Control  System 
(EMCS):  Annex  II,  Table  11  (Excise  Product)  of  Regulation  684/2009  to  include  two 
additional  Excise  Product  Codes  (EPC):  one  for  still  fermented  beverages  other  than 
wine and beer, and another for sparkling fermented beverages other than wine and beer. 
Clarify the notion of “entirely of fermented origin” within the understanding of Articles 8, 12(1) 
and 17 
Clarify the interpretation of Article 3.1 with respect to the application of excise duty on beer by 
reference to the number of hectolitres/degrees Plato  

2 

3 

4 

Recommendations relating to exemptions  

5 

6 

Continue efforts to revise the composition of the "Euro" denaturant formulation for completely 
denatured alcohol (CDA) 
Ensure a common interpretation of mutual recognition regarding the conditions under which the 
denaturing methods listed in Regulation 162/2013 for complete denaturation can be used. 

7  Ensure a common understanding of which products can be exempted under Article 27.1 (b) 

8 

9 

Ensure a consistent approach towards the exemptions applied to  denatured alcohol coming into 
the EU from a third country 
Conduct  further  research  into  the  volume  and  value  of  fraud  stemming  from  the  abuse  of 
exemptions for denatured alcohol 

10 

Implement measures aimed at increased mutual trust between Member States 

Recommendations relating to reduced rates 

11 

12 

Consider  extending  the  application  of  reduced  rates  to  small  producers  of  still  and 
sparkling wines, other fermented beverages and intermediate products 
Further investigate the extent to which provisions on reduced rates for low-strength alcohol can 
support restated policy objectives 

Recommendations relating to private production / own consumption 

13 

Investigate the impacts of allowing the Member States to exempt the production of ethyl alcohol 
and intermediate products for own consumption 

Recommendations relating to outdated references / good housekeeping 

14 

Ensure  coherence  of  the  definition  of  sparkling  beverages  with  the  definition  employed  for 
customs purposes 

15  References in the Directive to outdated legislation and CN codes should be updated 
16  Remove Article 28 
17 

Investigate the need to clarify the treatment of precursors of wine 

14