COMMISSION STAFF WORKING DOCUMENT On the REFIT evaluation of Directive 2008/118/EC and on the implementation of the Directive Accompanying the document Report from the Commission to the Council and the European Parliament on the implementation and evaluation of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty
Date: 2017-04-21
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: application of EU law, carriage of goods, distance selling, excise duty, free movement of goods, information system, simplification of formalities, tax collection, tax exemption, tax harmonisation

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 21.4.2017  SWD(2017) 131 final   COMMISSION STAFF WORKING DOCUMENT On the REFIT evaluation of Directive 2008/118/EC and on the implementation of the Directive Accompanying the document Report from the Commission to the Council and the European Parliament on the implementation and evaluation of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty {COM(2017) 184 final}  
 
 
Contents 

1. 

INTRODUCTION ....................................................................................................... 4 

1.1.  Purpose of the evaluation .................................................................................. 4 

1.2.  Scope of the evaluation ..................................................................................... 4 

2.  BACKGROUND TO THE INITIATIVE ................................................................... 6 

2.1.  Description of the initiative ............................................................................... 6 

Chapter I ...................................................................................................................... 6 

Chapter II ..................................................................................................................... 7 

Chapters III and IV ...................................................................................................... 8 

2.2.  Objectives of Chapters III and IV (Holding and moving  goods  under 

excise duty suspension) ..................................................................................... 9 

2.2.1.  Removing  tax  obstacles  to  the  movement  of  excise  duty 
goods across borders by minimising costs for both economic 
operators and tax administrations. ....................................................... 9 

2.2.2.  Establish a clear and consistent framework which permits the 

free movement of goods. ................................................................... 10 

2.2.3.  Ensure a “level playing field” for businesses operating within 

the internal market ............................................................................. 11 

2.2.4.  Allow the proper monitoring of movement of excise goods. ............ 11 

2.2.5.  Reduce illicit trade, evasion and abuse (fight against fraud) ............. 11 

2.3.  Objectives of Chapter V (Duty paid movements) ........................................... 12 

2.4.  Baseline ........................................................................................................... 14 

Arrangements for the Holding and Movement of Excise Goods under Duty 

Suspension ....................................................................................................... 14 

Arrangements under Directive 92/12/EEC for the Holding and Movement of 

Goods that have been released for consumption ............................................. 14 

3.  EVALUATION QUESTIONS .................................................................................. 15 

Table 1. Evaluation questions ................................................................................... 15 

4.  METHODOLOGY .................................................................................................... 17 

4.1.  General methodology ...................................................................................... 17 

4.2.  Methodology issues specific to the evaluation of Chapter III and IV of 

the Horizontal Directive .................................................................................. 17 

4.2.1.  Survey of Member States .................................................................. 17 

4.2.2.  Survey of economic operators ........................................................... 17 

4.2.3.  Case studies ....................................................................................... 18 

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4.3.  Potential limitations of the evaluation approach ............................................. 18 

4.4.  Methodology specific to the evaluation of Chapter V of the Horizontal 

Directive .......................................................................................................... 19 

4.5.  Stakeholders' feedback on the evaluation ........................................................ 19 

5. 

IMPLEMENTATION/STATE  OF  PLAY  AND  ANSWERS  TO  THE 
EVALUATION QUESTIONS .................................................................................. 21 

5.1.  Chapters I – IV (Duty suspended movements) ................................................ 21 

5.1.1.  The  extent  to  which  the  arrangements  for  holding  and 
movement  of  excise  duty  goods  under  suspension  contribute 
to the proper functioning of the Internal Market ............................... 24 

5.1.2.  The  extent  to  which  current  arrangements  protect  the 

financial interest of the Member States ............................................. 26 

5.1.3.  Continued  relevance  of  arrangements  to  the  needs  of  the 

Member States and the economic operators ...................................... 28 

5.1.4.  Scope for simplification and administrative burden reduction .......... 29 

5.1.5.  The  extent  to  which  the  current  arrangements  work  in  a 

coherent manner with the custom applications ................................. 32 

5.1.6.  Observed  impacts  of  the  current  arrangements  reasonably 

attributable to the EU action .............................................................. 35 

5.2.  Chapter V (Duty paid arrangements) .............................................................. 36 

6.  CONCLUSIONS AND RECOMMENDATIONS .................................................... 43 

6.1.  Conclusions ..................................................................................................... 43 

6.2.  Recommendations ........................................................................................... 43 

7.  TABLE OF ABBREVIATIONS ............................................................................... 46 

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1. 

INTRODUCTION 

1.1. 

Purpose of the evaluation 

Council Directive 2008/118/EC1 Article 45(2) states: “By 1 April 2015, the Commission 
shall submit to the European Parliament and the Council a report on the implementation 
of  this  Directive.”  To  gather  evidence  for  this  report,  the  Commission  requested  two 
external evaluation studies. The first evaluation study, on Chapter V of the Directive (i.e. 
rules on commercial movements of excise goods on which duty has already been paid) 
was published in 20152. The second study, which concentrated on Chapters III and IV of 
the  Directive  (i.e.  provisions  on  tax  warehousing  and  electronic  control  system),  was 
published in 20163. 

Each of the above studies consisted of a question based survey to Member States and to 
traders, the results of which were compared to ensure a coherent and consistent view of 
the issues in question. For both studies a series of case studies, which went into greater 
depth, were carried out in approximately a third of Member States. The Member States 
selected  are  considered  representative,  based  on  size  of  the  country,  geographical 
location and whether the Member State is a producer or a consumer of excise goods.  

The  studies  assessed  the  mandatory  evaluation  criteria,  in  accordance  with  the  Better 
Regulation Guidelines4:  

Effectiveness: to what extent have the objectives of the legislation been met? Are 

Coherence:  to what extent are customs and excise arrangements coherent? Is the 

1) 
direct results and broader impacts of the legislation in line with the objectives? 
2) 
Efficiency: are existing arrangements cost-effective? Is there a scope for 
simplification and administrative burden reduction? 
3) 
level of harmonisation optimal? 
4) 
the current needs of Member States and economic operators? 
5) 
Where can further EU action bring most benefits? 

EU added value: what are the advantages/ benefits of acting at the EU level? 

Continuing relevance: to what extent does the scope of the legislation still match 

1.2. 

Scope of the evaluation 

The functioning of the mechanisms prescribed by Directive 2008/118/EC relies on other 
the  evaluation  focussed  on  Directive 
legislative  acts.  The  studies  supporting 
2008/118/EC as the core component of a system based on a wider set of legislation. The 
resulting assessment has therefore looked at Directive 2008/118/EC not in isolation. The 
studies  covered  procedures  relating  to  all  excise  goods  mentioned  in  Article  1  of 

1   Council  Directive  2008/118/EC  of  16.12.2008  concerning  the  general  arrangements  for  excise  duty 

and repealing Directive 92/12/EEC, OJ L 9 of 14.1.2009. 

2   http://bookshop.europa.eu/en/evaluation-of-current-arrangements-for-the-cross-border-movements-of-

excise-goods-that-have-been-released-for-consumption-pbKP0614146/ 

3   http://bookshop.europa.eu/en/evaluation-of-current-arrangements-for-the-holding-and-moving-of-

excise-goods-under-excise-duty-suspension-pbKP0215865/ 

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

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Directive  2008/118/EC  (i.e.  energy  products,  alcohol  and  manufactured  tobacco 
products.) The time frame covered was 2008–2014, which includes periods both before 
and after the implementation of the European Movement and Control System (EMCS).  

Two separate studies for different Chapters of Directive 2008/118/EC (i.e. Chapters III & 
IV  and  Chapter  V  respectively)  were  carried  out.  Chapters  III  and  IV  concern  duty 
suspended movements,  which are monitored through  EMCS and  which  represent about 
99% of all intra-EU movements of excise goods. Chapter V covers duty paid movements, 
which are still paper based and which represent 1% to 3% of all intra-EU movements of 
excise  duty  goods.  Accordingly,  this  report  presents  the  findings  of  the  two  evaluation 
exercises in separate subsections.    

5 

 
 
 
 
2.  BACKGROUND TO THE INITIATIVE 

2.1. 

Description of the initiative  

Council  Directive  2008/118/EC  replaced  Council  Directive  92/12/EEC5.  It  defines  the 
arrangements  for  the  holding  and  movement  of  excise  goods  within  the  territory  of  the 
European  Union,  with  the  exception  of  a  small  number  of  territories6,  where  its 
provisions do not apply. The Directive's objectives and the manner in which they interact 
at different levels of policy have been captured in the intervention logic diagram below:  

Figure  1:  The  overall 

intervention 

logic  of  Directive  2008/118/EC 

Source: Ramboll Management Consulting A/S, Final evaluation report, 2015 

Chapter I 

Chapter  I  of  the  Directive  specifies  which  goods  are  subject  to  these  provisions  by 
referring  to  specific  Directives  (the  so  called  vertical  and  rates  Directives)7.  These 

5 Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to 
excise duty and on the holding, movement and monitoring of such products, OJ L 076 of 23.3.1992 

6 The so called Third Territories or Special Fiscal Territories that are within the Customs Territory of the 
European Union, where Directive 2008/118/EC does not apply.  For a list of such territories please see 
Article 5 of the Directive. 

7 Council Directive 92/83/EEC of 19 October 1992 on the harmonization of the structures of excise duties 
on  alcohol  and  alcoholic  beverages  OJ  L  316  of  31.10.1992;  Council  Directive  92/84/EEC  of  19 
October 1992 on the approximation of the rates of excise duty on alcohol and alcoholic beverages OJ 
L 316 of 31.10.1992; Council Directive 2003/96/EC of 27 October 2003 restructuring the Community 
framework  for  the  taxation  of  energy  products  and  electricity  OJ  L  283  of  31.10.2003  and  Council 
Directive  2011/64/EU  of  21  June  2011  on  the  structure  and  rates  of  excise  duty  applied  to 
manufactured tobacco OJ L 176 of 5.7.2011 

6 

 
 
 
                                                 
Directives  cover the structure of excise  duty  categories and  minimum excise  duty  rates 
for  alcohol  and  alcoholic  beverages,  manufactured  tobacco,  and  energy  products  and 
electricity8. 

Establishing which goods are subject to the Directive is necessary in order to ensure that 
clear  and  consistent  rules  are  established  for  the  treatment  of  the  excise  good  (i.e.  the 
good is treated in the same way in all Member States). This is intended to remove legal 
uncertainty,  distortions  of  competition  (for  example  differing  treatment  might  result  in 
higher risk of an unexpected tax liability) and possibly increased administrative costs if 
clarification is needed on the tax treatment. While an analysis of the structure of excise 
duty  categories  of  excise  goods  themselves  is  not  within  scope  of  this  evaluation,  the 
evaluation looks at the effect of variations that tax treatment of excise goods has on the 
proper functioning of the internal market.  

Chapter  I  defines  excise  duty  as  a  tax  on  consumption  and  defines  concepts  such  as 
“authorised  warehousekeeper”  and  “tax  warehouse”.  Common  definitions  of  economic 
operator types ensure a clear and consistent framework for the operation of the Directive.  

Chapter II 

Chapter  II  establishes  the  time  and  place  of  chargeability,  who  is  liable,  the  effect  of 
destruction and irretrievable loss, irregularities, refunds and remissions and exemptions.  

Chargeability begins with production or the entry of excise goods into the territory of the 
European Union, as defined in Article 5 of the Directive9. Chargeability may be deferred 
where  goods  that  enter  the  territory  are  immediately  placed  under  temporary  storage,  a 
customs special procedure10 or are place in a free zone. Excise goods produced within the 
territory may also benefit from a deferral of chargeability, if they are placed under excise 
duty  suspension,  i.e.  being  held  in  a  tax  warehouse  or  being  moved  under  excise 
supervision.  Importation  for  excise  purposes  is  defined  as  occurring  when  goods  are 
released  for  free  circulation  after  being  under  customs  supervision,  or  when  they  are 
irregularly  introduced  into  the  customs  territory.  Liability  for  excise  duty  follows  the 
usual  principles  of  joint  and  several  liability.  Destruction  and  irretrievable  loss  remove 
liability  for  excise  duty  on  the  quantities  of  the  product  affected.  Article  10  deals  with 
irregularities  that  occur  during  a  movement  of  excise  goods  and  determines  which 
Member  State  or  States  is  entitled  to  claim  excise  duty  in  the  event  of  an  irregularity. 
Refunds and remissions are subject to national rules that should prevent fraud and abuse. 
Finally, exemptions from excise duties cover the categories of person who are entitled to 
receive excise goods free of excise duty and the operation of duty free shops.  

8  Member  States  may  apply  other  national  taxes  under  certain  conditions  to  excise  goods  and  national 
indirect taxes to goods and to services not covered by the vertical and rates Directives. These taxes are 
sometimes  described  as  excise  duties,  national  excise  duties,  but  their  specific  characteristics  are 
outside the scope of this evaluation. 

9 The territory of the European Union, excluding certain territories where the Directive does not apply. 

10 Customs special procedures are laid out in Title VII of the Union Customs Code, they replace customs 

suspensive procedures that were laid out in the Community Customs Code 

7 

 
                                                 
Chapters III and IV 

The  major  change  introduced  by  Directive  2008/118/EC  concerning  the  holding  and 
movement of excise goods under duty suspension has been the introduction of the Excise 
Movement  and  Control  System  (EMCS).  EMCS  electronically  monitors  movements  of 
excise goods under excise duty suspension between authorised and registered locations. 

Chapter III takes over the concept of ‘tax warehouse’ from Directive 92/12/EEC as one 
of the types of authorised locations where excise goods may be held and produced under 
excise  duty  suspension,  facilitating  checks  of  the  production  and  storage  facilities.  The 
detailed rules for authorisation are decided nationally, but the system as a whole is set out 
in  Chapter  III  of  the  Directive.  Each  tax  warehouse  is  associated  with  an  authorised 
warehouse keeper who is responsible for the management of the tax warehouse. The tax 
warehouse and the authorised warehousekeeper each receive a unique excise number. 

Chapter  IV  added  two  new  types  of  economic  operator  associated  with  a  location:  the 
‘registered  consignee’  which  can  receive  but  not  hold  goods  under  excise  duty 
suspension, and the 'registered consignor,' a  type of economic operator that can transport 
goods under excise duty suspension from a place of importation. 

The data provided by the SEED system (System for Exchange of Excise Data) make it 
possible to check whether an authorisation for the excise number exists and which excise 
goods  can  be  handled  by  the  trader  or  tax  warehouse  concerned.  Both  consignor  and 
consignee  are  registered  in  the  SEED  database  by  their  respective  Member  State 
administration. 

The figure below provides a visual representation of the tasks described above for each 
of the actors involved.  

Figure 2. EMCS basic movement scenario as set out in Directive 
2008/118/EC (compulsory use of e-AD from 1 Jan 2011 onwards) 

8 

 
 
 
Sources:  FESS  v3.61  (Section  2  Core  Business  –  2.1.1  Basic  Scenario);  Directive 
2008/118/EC. 

On 1 January 2012, Phase 3 11of the EMCS was put into operation. This extended EMCS 
to include the recording of control actions, the reporting of events that occurred during 
movements, and the exchange of information for facilitating administrative cooperation 
between the Member States. 

While  Chapters  III  and  IV  of  Directive  2008/118/EC  comprise  the  legal  basis  for  the 
functioning of the EMCS, Council Regulation (EU) No 389/2012 provides the legal basis 
for administrative cooperation for excise and the use of EMCS for this purpose as well as 
the  legal  base  for  the  registration  of  economic  operators  in  SEED.  Reporting  on  this 
Regulation  is  outside  the  scope  of  this  evaluation,  except  where  it  relates  to  the 
registration of economic operator authorisations. 

More detailed rules and procedures relating to the exchange of such messages, as well as 
the structure and content of the messages, are set out in  Commission Regulation (EC) 
No  684/200912,  Commission  Implementing  Regulation  (EU)  No  612/201313  and 
Commission Implementing Regulation (EU) 2016/32314 

2.2. 
excise duty suspension) 

Objectives  of  Chapters  III  and  IV  (Holding  and  moving  goods  under 

2.2.1. 
borders by minimising costs for both economic operators and tax administrations. 

Removing tax obstacles to the movement of excise duty goods across 

The  proposal  for  Directive  2008/118/EC15  stated  that  amendments  to  Directive 
92/12/EEC were considered necessary “to simplify and modernise the excise procedures, 

11  The  EMCS  Project  was  divided  into  Phases.  Phase  0  covered  the  development  of  e-forms  for 
administrative  cooperation and the initial development of the register of economic operators, SEED. 
These  developments  put  in  place  between  2004  and  2006,  in  parallel  with  the  continued  use  of  the 
paper based systems for monitoring excise movement, provided for by Directive 92/12/EEC. Phase 1 
comprises the development and agreement of EMCS specifications. This started in 2004 and continues 
today.  EMCS  Phase  2  covered  the  replacement  of  the  paper  based  AAD  system  for  the  supervision 
under excise duty suspension by EMCS, and the development of a new version of SEED to align with 
the requirements of the Directive. It came into operation in 2010. Phase 3 incorporated administrative 
cooperation into EMCS, thereby leading to a phasing out of the Phase 0 e-forms by the end of 2012. 

12  COMMISSION  REGULATION  (EC)  No  684/2009  of  24  July  2009  implementing  Council  Directive 
2008/118/EC  as  regards  the  computerised  procedures  for  the  movement  of  excise  goods  under 
suspension of excise duty 

13 COMMISSION IMPLEMENTING REGULATION (EU) No 612/2013 of 25 June 2013 on the operation 
of the register of economic operators and tax warehouses, related statistics and reporting pursuant to 
Council Regulation (EU) No 389/2012 on administrative cooperation in the field of excise duties 

14  COMMISSION  IMPLEMENTING  REGULATION  (EU)  2016/323  of  24  February  2016  laying  down 
detailed  rules  on  cooperation  and  exchange  of  information  between  Member  States  regarding  goods 
under excise duty suspension pursuant to Council Regulation (EU) No 389/2012 

15 Proposal for Directive 2008/118/EC, p.2. 

9 

 
 
                                                 
 
with the aim of reducing excise obligations for traders in particular for traders carrying 
out cross-border business without compromising excise controls.” 

Administrative  costs  may  stem  from  tax  obstacles  such  as  resources  required  to  clarify 
varying  interpretations  of  the  Directive,  or  to  resolve  instances  of  double  taxation. 
Tackling  these  requires  simplifying  and  enforcing  EU  law,  as  well  as  strengthening 
coordination  amongst  Member  States  to  more  efficiently  remedy  cross-border  tax 
disputes.16 These aspects of the internal market are discussed further below. 

EMCS aims to do this by providing a paperless (electronic) environment. The importance 
of  designing  systems  which  minimise  administrative  burden  is  also  underlined  in  the 
Strategy for the evolution of the Customs Union.17 

However,  administrative  costs  relate  not  only  to  the  EMCS:  the  evaluation  also 
considered other  obligations  imposed  on  stakeholders  stemming  from  the  arrangements 
as  a  whole.  Costs  associated  with  compliance  with  national  rules  were  also  considered 
(e.g.  the  consultation  procedure  after  an  irregularity,  requirements  to  become  an 
authorised excise operator etc.). 

2.2.2. 
movement of goods. 

Establish  a  clear  and  consistent  framework  which  permits  the  free 

Chapters  III  and  IV  of  the  Directive  aim  to  introduce  a  transparent  framework  which 
allows excise goods, prior to their release for consumption, to move freely within the EU 
under  suspension  of  excise  duty.18  Such  a  framework  must  have  clear  rules  for  the 
holding  and  movement  of  excise  goods,  which  are  applied  consistently  in  all  Member 
States. 

The  importance  of  clear  and  consistent  rules  is  highlighted  in  the  2009  Commission 
Recommendation  on  measures  to  improve  the  functioning  of  the  single  market.19 
However, correct national implementation of the rules is only one aspect. A lack of legal 
certainty  or  variation  on  rules  can  imply  additional  tax  risks  for  businesses,  or  higher 
compliance  costs  stemming  from  having  to  clarify  procedures  with  the  national  tax  or 
customs administrations. 

The  proper  functioning  of  the  single  market  also  extends  to  coherence  with  other 
procedures.  In  the  context  of  Directive  2008/118/EC,  legal  and  technical  coherence 
means  that  there  should  be  smooth  interaction  between  applications,  avoiding  legal 

16  This  is  mentioned  as  one  of  the  areas  of  focus  in  the  DG  Taxation  and  Customs  Union,  Management 

Plan 2014. http://ec.europa.eu/atwork/synthesis/amp/doc/taxud_mp_en.pdf 

17 COM(2008) 169 final, p.6. “[…] designing and improving control systems which reduce the interference 
in the flow of goods as well as the administrative burden to the minimum necessary to achieve other 
public policy objectives such as security requirements […]”. 

18 Recital 17 of Directive 2008/118/EC. “It should be possible for excise goods, prior to their release for 

consumption, to move within the Community under suspension of excise duty.” 

19  Commission  Recommendation  of  29  June  2009  on  measures  to  improve  the  functioning  of  the  single 
market (2009/524/EC), Recital 2. “It is essential for a well-functioning single market to have correctly 
transposed, applied, enforced, monitored and satisfactorily harmonised Community rules affecting the 
functioning of the single market.” 

10 

 
                                                 
“loopholes” and that IT applications should interoperate correctly and smoothly. This is 
of particular relevance to excise and customs legislation and implementation. 

2.2.3. 
internal market 

Ensure  a  “level  playing  field”  for  businesses  operating  within  the 

Arrangements  for  the  holding  and  movement  of  excise  goods  under  duty  suspension 
should  provide  a  “level  playing  field”.  Common  rules  and  procedures  should  be 
harmonised  across  Member  States  in  order  to  ensure  that  traders  are  not  put  at  a 
disadvantage  or  face  discriminatory  conditions  based  on  where  they  or  their  customers 
are established. 

There are a number of areas in Chapter III where Member States are entitled to lay down 
their own rules, such as for the authorisation of tax warehouses and warehouse keepers. 
The  evaluation  summarises  the  impact  that  these  arrangements  might  have  in  terms  of 
creating distortions of competition. The level of harmonisation of rules (e.g. conditions to 
become an authorised excise operator), may also have an important impact on the fight 
against fraud, which is discussed further below. 

The  following  two  objectives  are  necessary  to  safeguard  the  budgetary  interests  of  the 
Member States (i.e. ensure the proper collection of tax revenues). 

2.2.4. 

Allow the proper monitoring of movement of excise goods. 

The protection of financial interests of the Member States in the area of excise hinges on 
the capacity to be able to properly monitor cross-border movements of excise goods. 

Checking trader authorisations using data from the System for Exchange of Excise Data 
(SEED) in conjunction with EMCS allows authorities to follow cross-border movements 
and ultimately enable the proper collection of the tax debt when necessary. 

EMCS  should  provide  better  facilities  for  monitoring  than  the  previous  paper-based 
system and is designed to improve risk analysis and provide Member States with advance 
notice of movements.  

2.2.5. 

Reduce illicit trade, evasion and abuse (fight against fraud) 

High  duty  rates  that  vary  widely  between  Member  States  and  goods  that  are  moved 
without having to pay excise duty before delivery provide incentives for tax evasion and 
fraud.  One  of  the  core  objectives  of  EMCS  was  to  combat  certain  types  of  fraud,  as 
described  in  the  1998  High  Level  Group  Report  on  Alcohol  and  Tobacco  Fraud20  and 
address  a  number  of  weaknesses  in  the  system  at  the  time  (i.e.  the  paper-based 
arrangement provided for in Directive 92/12/EEC). The most important weaknesses were 
the lack of control of traders and consignments in the Member State of departure and the 
lack of advance information in the Member State of arrival, making it impossible to carry 
out timely, targeted, selective controls, based on risk analysis criteria.21 Chapters III and 
IV  of  the  Directive  and  the  related  EMCS  and  SEED  specifications  were  designed  to 

20 High Level Group on fraud in the tobacco and alcohol sectors, Report to Directors General for Customs 

and Indirect Taxation, 1998. 

21 Ibid p.32 

11 

 
                                                 
address these weaknesses and ensure that Member States had access to appropriate prior 
information about dispatches. 

2.3. 

Objectives of Chapter V (Duty paid movements) 

The  Directive  (Articles  33-38)  establishes  the  common  rules  for  two  types  of  intra-EU 
commercial  movements  of  excise  goods  on  which  duty  has  already  been  paid  before 
being  dispatched:  consignments  between  traders  (B2B)22  and  the  distance  selling  of 
excise  goods  to  a  private  individual  in  another  Member  State  (B2C).  The  following 
diagram  illustrates  the  intervention  logic  for  Chapter  V  of  the  Directive,  showing  the 
relationship  between  the  objectives  of  the  Directive,  its  provisions  and  the  expected 
changes it was meant for it to achieve:  

Figure 3: Logic model of Directive 2008/118/EC – Chapter V 

Source: Ramboll Management Consulting A/S, Final evaluation report, 2015 

Articles  33  and  34  of  the  Directive  set  out  the  requirements  for  movements  between 
traders  (B2B),  and  stipulate  that  movements  should  be  covered  by  a  simplified 

22 Duty paid B2B movements do not require tax warehouses. Therefore the traders can move goods without 
having any special authorisation. This makes the arrangements potentially interesting for SMEs. 

12 

 
 
                                                 
administrative  accompanying  document  (SAAD)23,  the  detail  of  which  is  set  out  in 
Regulation (EEC) No 3649/9224. 

The excise duty should be paid in the Member State of destination, at the rate imposed by 
that  Member  State  (MS),  and  if  relevant,  the  economic  operator  may  then  apply  for 
reimbursement of the excise duty already paid upon release for consumption. 

Article 34 states that the person liable to pay the excise duty must: 

  Before the goods are dispatched, declare the consignment to the administration in the 

Member State of destination and guarantee its payment; 

  Pay the excise duty in accordance with the procedure of the destination MS; 

  Consent to any checks by the Member State of destination to ensure the goods have 

been received and the excise duty paid. 

Article 36 of the Directive sets out the requirements for the movement of excise goods 
which are sold to a private individual in another Member State, known as distance selling 
(B2C). Excise duty is chargeable in the Member of State of destination when the goods 
are delivered. As under B2B, excise duties paid in the Member State of the consignor of 
the goods may be reimbursed after payment in the Member State of destination. 

The vendor, or alternatively an appointed tax representative, is required to: 

  Register  his  identity  with  the  Member  State  of  destination  and  guarantee  payment 

according to the conditions laid out in that Member State; 

  Pay the excise duty after the excise goods arrive; 

  Keep accounts of deliveries of excise goods. 

Article  37  of  the  Directive  provides  that  where  the  excise  goods  are  destroyed  or 
irretrievably  lost,  as  a  result  of  specific  events,  during  the  transport  in  a  Member  State 
other than the Member State where they were released for consumption, the excise duty 
is  not  chargeable  in  that  Member  State.  Article  38  of  the  Directive  lays  down  the 
provisions in case of irregularities occurring during a movement of duty paid goods. An 
irregularity  is  defined  by  the  Directive  as  a  situation  in  a  B2B  or  distance  selling 
transaction due to which a movement has not duly ended and which neither entails a loss 
nor a destruction of the goods. 

The external evaluation also looked at Article 40 of Chapter V which nevertheless relates 
to  a  simplification  of  a  duty  suspension  arrangement  for  the  movement  of  wine  from 
small producers. 

23  Strictly  speaking  the  Regulation  refers  to  a  simplified  accompanying  document  but  the  acronym  SAD 
refers  to  the  single  administrative  document  used  for  customs  declarations.  To  avoid  confusion  the 
alternative name is used. 

24  Commission  Regulation  (EEC)  No  3649/92  of  17  December  1992  on  a  simplified  accompanying 
document  for  the  intra-Community  movement  of  products  subject  to  excise  duty  which  have  been 
released for consumption in the Member State of dispatch 

13 

 
                                                 
2.4. 

Baseline 

Arrangements  for  the  Holding  and  Movement  of  Excise  Goods  under  Duty 
Suspension 

The  only  major  change  between  the  previous  arrangements  covered  by  Directive 
92/12/EEC  and  the  current  arrangements  concern  Chapter  IV  of  the  Directive,  which 
cover  the  movement  of  excise  goods  under  duty  suspension  and  which  replace  a  paper 
based system with a real time computerised system. 

Arrangements for the holding of good under excise duty suspension did not substantially 
change  as  a  result  of  the  adoption  of  Chapter  III  of  Directive  2008/118/EC. 
Authorisations  for  the  operation  of  tax  warehouses  were  established  under  Directive 
92/12/EC and have been largely subject to national rules. In 2006 the first version of the 
SEED  system  was  put  into  operation,  which  replaced  bilateral  exchanges  between 
Member  States  of  operator  authorisations  by  e-mail.  Whilst  this  improved  the 
dissemination and the accuracy of the shared information, any checks on the destination 
of goods dispatched under excise duty suspension were still done manually and largely 
by  the  operators  themselves.  The  introduction  of  SEED  only  started  to  have  a  major 
effect when it was combined with checks carried out in EMCS on the basis of SEED data 
as part of the control of goods moving under duty suspension, as described in Chapter IV 
of  the  Directive.  Therefore  the  results  of  the  evaluation  of  the  arrangements  under 
Chapter III of Directive 2008/118/EC can be seen to reflect equally the situation between 
1992 and 2008. 

Before  the  introduction  of  the  computerised  EMCS  system,  the  movement  of  excise 
goods within the EU was covered by Directive 92/12/EEC, which required the use of a 
paper Accompanying Administrative Document (AAD). Traders had to use the AAD to 
inform the tax authorities of the Member States of deliveries dispatched or received. This 
meant  that  all  consignments  between  Member  States  were  accompanied  by  an  AAD 
drawn up by the consignor. The following copies were required: 

— one to be kept by the consignor, 

— one for the consignee, 

— one to be returned to the consignor for discharge, 

— one for the competent authorities of the Member State of destination.  

After  a  transitional  period  (April  2010  –  Jan  2011)  EMCS  completely  replaced  the 
previous  paper-based  system;  from  1  January  2011  onwards,  the  use  of  an  electronic 
Administrative Document (e-AD) was compulsory. 

Arrangements under Directive 92/12/EEC for the Holding and Movement of Goods 
that have been released for consumption 

The  arrangements  under  Chapter  V  of  the  Directive  that  have  been  evaluated  do  not 
differ significantly from the arrangements provided for under Directive 92/12/EEC. The 
structure  and  content  of  the  SAAD  is  defined  in  Commission  Regulation  (EEC)  No 
3649/92.  Therefore  the  evaluation  of  the  implementation  of  Chapter  V  is  considered 
equally to reflect the situation that existed under Directive 92/12/EEC for the movement 
of goods under these arrangements. 

14 

 
3.  EVALUATION QUESTIONS 

This section presents the high level evaluation questions for both evaluations. The results 
of evaluating the answers to these questions can be found in Section 6 of this report 

Table 1. Evaluation questions 

Evaluation Question 

Evaluation 
criteria/Perspective 

Duty suspended goods (Chapters III and IV)  

How was Council Directive 2008/118/EC implemented into 
national law of Member States? 

Implementation 

To what extent do the arrangements for holding and 
movement of excise duty goods under suspension contribute 
to the proper functioning of the Internal Market? 

To what extent are current arrangements protecting the 
financial interest of the Member States? 

To what extent are these arrangements still relevant to the 
needs of the Member States and the economic operators? 

Is there a scope for simplification and administrative burden 
reduction? 

To what extent do the current arrangements work in a 
coherent manner with the custom applications? 

Effectiveness 

Effectiveness 

Relevance 

Efficiency 

Coherence 

Which of the observed impacts of the current arrangements 
can be reasonably attributed to the EU action? 

EU Added value 

Which of the problems identified would most merit an EU 
action (and thus deserve further study by the Commission)? 

EU Added value / 
Recommendations 

Duty paid goods (Chapter V)  

What  is  the  reported  volume  of  transactions  (per  Member 
State/year),  commercial  value  (by  sector)  and  the  tax 
revenue associated with the current arrangements for excise 
duties  in  intra-EU  B2B  transactions  and  distance  selling 
situations? 

To  what  extent  are  these  arrangements  protecting  the 
financial  interest  of  the  Member  States?  Please  provide  an 
assessment of the types and magnitude of risk of fiscal fraud 
associated  with  these  arrangements,  including  estimates  of 
irregularities and potential revenue loss 

Implementation 

Effectiveness 

To  what  extent  are  the  arrangements  still  relevant  to  the 
needs  of  the  Member  States  and  the  economic  operators, 

Relevance 

15 

 
Evaluation Question 

Evaluation 
criteria/Perspective 

taking into account the technological progress and the large 
growth  in  intra-EU  distance  selling  in  recent  years?  What 
are  the  practical  experiences  and  perceived  problems  as 
reported by both groups of stakeholders? 

From  the  point  of  view  of  the  economic  operators  and  the 
Member  states  administrations  are  these  arrangements 
setting  the  right  balance  between  revenue  collection  and 
administrative  burden  on  traders  imposed  by  compliance 
with  registration,  reporting  and  payment  requirements?  To 
what extent these costs constitute an obstacle to cross border 
trading or lead to discriminatory situations? 

To  what  extent  are  consumers  affected  by  the  current 
arrangements for buying excise goods from sellers in other 
Member  States?  To  what  extent  do  they  impact  their 
consumer  choices  and  the  market  for  any  given  good,  for 
example  by  distorting  competition  or  discouraging 
consumers from making use of the possibilities available? 

Which of the observed impacts of the current arrangements 
for excise goods in B2B and distance selling situations can 
be  reasonably  attributed  to  EU  action?  Which  of  the 
problems  identified  would  most  merit  an  EU  action  (and 
thus  deserve further study by the Commission)? For which 
problems 
to  bring  any 
considerable 
impact?  To  what  extent  do  current 
arrangements  promote  harmonization  of  rules  throughout 
the internal market? 

is  an  EU  action  not 

likely 

Efficiency 

Effectiveness 

EU Added value / 
Recommendations 

16 

 
 
 
 
4.  METHODOLOGY 

4.1. 

General methodology 

The  studies  relied  on  qualitative  and  quantitative  data,  namely  existing  studies, 
monitoring data and business statistics, and primary data collected through  consultation 
with all relevant stakeholders (i.e. Member State administrations and economic operators 
holding and moving excise duty goods under suspension). Primary data collection for the 
studies  involved:  (i)  a  written  consultation  of  all  Member  States’  administrations, 
followed up by phone interviews; (ii) an online survey of economic operators, and (iii) 
case studies in Member States involving face-to-face meetings with MS authorities and a 
sample of economic operators. 

In order to reach its final conclusions, the studies used a transparent analytical strategy 
detailed in the appendices of the studies and triangulated evidence from multiple sources 
and stakeholders. 

4.2. 
the Horizontal Directive 

Methodology  issues  specific  to  the  evaluation  of  Chapter  III  and  IV  of 

4.2.1. 

Survey of Member States 

In the first phase of data collection, a broad consultation of national tax authorities was 
undertaken by means of a survey questionnaire.  

Member  States  were  consulted  between  mid-February  2015  and  July  2015.  Member 
States were asked to respond in writing, and answers were followed up by phone in order 
to  ensure  consistency  and  avoid  possible  misunderstandings.  The  three  working 
languages of the European Commission (English, French and German) were used. 

The  survey  questions  can  be  found  in  Appendix  2  of  the  “Evaluation  of  current 
arrangements for the holding and moving of excise goods under excise duty suspension” 
pp 165 – 185. 

27 out of 28 Member States25 participated in the study, providing detailed answers to the 
questionnaire and taking part in follow-up interviews. 

4.2.2. 

Survey of economic operators 

Economic operators were consulted by means of an online survey between February and 
September  2015.  The  online  survey  was  in  English,  but  respondents  were  able  to 
download  PDF  versions  of  the  questionnaire  in  English,  French  and  German.  A  PDF 
copy of the survey is attached in Appendix 3 of the “Evaluation of current arrangements 
for the holding and moving of excise goods under excise duty suspension” pp 186 – 208. 

The survey was distributed to the European industry associations/federations of relevant 
sectors,  as  well  as  to  all  the  members  of  the  Excise  Contact  Group.  All  contacts  were 
invited to disseminate the survey link further to all interested economic operators. 

The  total  number  of  replies  to  the  survey  was  343,  and  included  individual  economic 
operators  as  well  as  trade  associations  and  federations.  A  detailed  description  of  the 

25 The exception was Malta 

17 

 
                                                 
survey  population  and  the  delivery  methods  can  be  found  in  Appendix  4  of  the 
“Evaluation of current arrangements for the holding and moving of excise goods under 
excise duty suspension” pp 209 – 224. 

4.2.3. 

Case studies 

Six countries (Belgium, France, Germany, Lithuania, Sweden and the United Kingdom) 
were selected as case study countries. They were chosen on the basis of a pre-analysis of 
the results of the first round of consultation, as well as of an analysis of the authorisation 
(SEED)26 and the operational statistics for the EMCS messages exchanged (CS/MISE).27 
The selection criteria are covered in detail in  the Evaluation Report.28 The  case studies 
were  conducted  through  a  series  of  face-to-face  interviews  with  representatives  from 
Member State authorities and economic operators. Nineteen face-to-face interviews were 
conducted  with  all  the  relevant  types  of  economic  operator  in  the  six  countries  in 
question. The results of the case studies can be found in Appendix 5 of the “Evaluation of 
current  arrangements  for  the  holding  and  moving  of  excise  goods  under  excise  duty 
suspension” pp 210 – 331. 

4.3. 

Potential limitations of the evaluation approach 

Although  they  were  partially  mitigated,  the  data  collection  and  analytical  approach 
exhibit a number of inherent limitations which are worth mentioning. Firstly, as with all 
surveys, the findings of the survey of economic operators are based on the answers from 
a  self-selected  sample  of  the  survey  population,  and  not  on  the  answers  that  would  be 
given  by  the  entire  population.  Nevertheless,  the  sample  size  and  composition  are 
considered to be fairly representative. The respondents cover the three product categories 
and  all  countries  well.  The  coverage  also  included  operators  at  different  levels  of  the 
logistics chain. In this context, the analysis performed at EU level and for each sector can 
be  considered  sufficiently  accurate.  At  the  level  of  the  individual  questions,  the  survey 
sample subsets cannot be seen as sufficiently representative to draw definite conclusions 
about the issues reported at the level of each Member State and sector. 

Other factors may also contribute to any errors in the results: for example, respondents 
may have been unable to answer a question accurately or unwilling to respond honestly. 
The  former  was  mitigated  by  including  the  option  “do  not  know”/“not  applicable”  or 
"other" as an option with most questions. The risk of the latter is more difficult to avoid, 
but can to a certain extent be inferred through the analytical process connected with the 
data triangulation. 

It is also important to consider that those economic operators who were most willing to 
invest  time  responding  to  the  survey  were  those who  were  generally less  satisfied  with 
the provisions of the Directive, thus contributing to a more negative picture than would 
otherwise be apparent if the entire population had been sampled. 

26 SEED: The System for Exchange of Excise Data is an online database which permits the verification of 

excise authorisations 

27 CS/MISE: Central System Services for the Management Information System for Excise 

28  Evaluation  of  current  arrangements  for  the  holding  and  moving  of  excise  goods  under  excise  duty 

suspension, p.17 -18 

18 

 
                                                 
While  perspectives  and  viewpoints  are  presented  that  reflect  the  type  of  stakeholder 
expressing  them,  whenever  relevant  (e.g.  Member  States,  different  types  of  economic 
operator, trade associations), the final conclusions are based on the triangulation of data 
from  several  sources  and  from  different  types  of  stakeholder,  and  have  been  subject  to 
the interpretation and judgement of the authors of this study. 

4.4. 
Directive 

Methodology  specific  to  the  evaluation  of  Chapter  V  of  the  Horizontal 

In  order  to  answer  the  survey  questions,  the  study  collected  data  from  a  sample  of  12 
Member States (Austria, Belgium, Czech Republic, France, Germany, Hungary, Ireland, 
Italy,  Latvia,  Poland,  Spain,  and  Sweden).  Criteria  for  selection  included  geographical 
coverage, size, business structure, trade patterns and use of the current arrangements. 

Data collection activities in the sample of 12 Member States included: 

  Written questionnaires to tax administrations and follow-up telephone interviews; 

  An  online  survey  of  economic  operators  with  432  responses,  available  in  five 

languages DE, EN, ES, FR, IT; 

 

Interviews with economic operators (some written responses also received). 

A  total  of  121  interviews  with  economic  operators  and  consumer  organisations  were 
conducted in the 12 sample Member States. It was initially difficult to identify users of 
the arrangements in some Member States, as the arrangements in some sectors of activity 
were little used. To address this, the evaluation team focused on specific business sectors 
(e.g.  breweries,  mineral  oil  distributors)  and  also  added  more  languages  to  the 
interviewer  teams.  The  interview  sample  reflects  the  most  dominant  types  of  relevant 
economic  activity  in  each  Member  State.  The  questionnaires  and  interviews  were 
complemented by desk research and analysis of EU and national legislation, past studies 
and economic literature. 

The limitations and caveats are similar those noted above for the surveys and case studies 
on Chapters III and IV. 

4.5. 

Stakeholders' feedback on the evaluation 

Traders  and  Member  States  were  asked  to  give  their  feedback  on  the  completed 
evaluation studies. Member States confined their comments to correcting factual errors in 
collected data, whilst traders made some comments on content and conclusions. 

For the Chapter I – IV study a stakeholders’ meeting, consisting of trade federations and 
national  experts  from  Member  States,  was  held  on  1  March  2016.  Written  comments 
were received from 7 Member States and 4 traders. 

A Member State pointed out that the current mechanism for developing EMCS penalised 
small countries, because of the costs that had to be supported by the national authorities. 
There  were  requests  to  extend  the  scope  of  EMCS  to  cover  lubricants  and  some  extra 
tobacco  products.  Both  Member  States  and  Trade  Federations  were  in  favour  of 
extending the use of existing EMCS reporting of incidents and irregularities to allow for 
a  more  consistent  and  fairer  approach.  Some  trade  federations  supported  the  need  for 

19 

 
greater  transparency  concerning  the  procedures  for  granting  authorisations  and  for 
assuring that guarantees were set at equitable levels. 

For  the  Chapter  V  study  a  stakeholders’  meeting,  consisting  of  trade  federations  and 
national  experts  from  Member  States  was  held on  26  June  2015.  Written  feedback  had 
been  provided  previously  by  6  Member  States  and  4  Trade  Federations.  Overall  the 
stakeholders supported the evaluation findings. Whilst generally being supporting of the 
recommendations  made, 
the 
recommendations on cost grounds (particular for automation of procedures) and said that 
they  would  like  options  for  improvements  to  be  investigated  further.  One  stakeholder 
requested  that  follow  up  work  should  include  investigating  the  possibility  of  an 
exemption from taxation and control provisions for small consignments intended for use 
purely as samples, as is the case under customs legislation. 

some  Member  State  expressed  caution  about 

20 

 
 
 
 
5. 

IMPLEMENTATION/STATE OF PLAY AND ANSWERS TO THE EVALUATION QUESTIONS 

5.1. 

Chapters I – IV (Duty suspended movements) 

Implementation of Directive 2008/118/EC 

Authorisation of economic operators 

Economic  operators  that  wish  to  hold  and  move  goods  under  excise  duty  suspension 
must  obtain  an  authorisation.  The  maximum  number  of  active  authorised  economic 
operators  within  the  EU  amounted  to  104,953  in  March  2015.  However,  the  real  total 
number  is  likely  to  be  smaller,  as  a  single  operator  can  hold  multiple  types  of 
authorisation across different Member States and across different types of product. 

      Figure 4: Number of authorisations per type of operator 2015 

Economic  operators  apply  for  different  types  of  authorisation,  each  of  which  carries 
specific  rights  and  obligations.  Whilst  the  implementation  of  the  authorisation 
requirements  and  the  simplification  provisions  between  the  Member  States  vary,  as 
authorisations  remain  a  national  matter,  the  study  has  shown  that  across  the  Member 
States authorisations entail similar types of technical, financial and legal requirements. 

Except for obligations relating to the set-up and management of guarantees, the economic 
operators  surveyed  did  not  consider  the  authorisation  requirements  to  be  particularly 
burdensome. On the authorities’ side, processing time has been reported to be relatively 
lengthy (between one and three months), and the thorough checking of each application 
was  found  to  require  significant  resources.  The  authorities  emphasised  that  the  time 
invested  was  not  driven  by  the  requirements  of  the  Directive,  but  by  their  individual 
needs to reduce the risk of fraud. 

Member States apply a wide range of methods for calculating guarantees. This leads to 
variation  in  the  levels  of  guarantee  that  economic  operators  must  establish.  Economic 
operators considered the levels to be significant burdens, despite the fact that reductions 
and waivers of guarantees are widely implemented in order to support smaller operators, 
particular products and tax-compliant operators. 

General arrangements for the holding and movement of excise duty goods 

Once  authorised,  economic  operators  can  use  EMCS  for  the  cross-border  dispatch  of 
goods  under  suspension  of  excise  duty,  or  the  receipt  of  goods  under  suspension  of 
excise duty, or both. Almost 99% of all intra-EU movements of excise duty goods take 
place under suspension of excise duty.  

21 

 
 
      Figure 5: Number of dispatches 2010 – 2014 (IE801) 

        Source: CS/MISE/ITSM statistics platform 

Annually,  this  amounts  to  approximately  3.5  million  individual  movements  of  energy, 
alcohol  and  manufactured  tobacco  products  with  a  total  financial  value  of  EUR  270 
billion and an associated excise duty of EUR 90 billion. 

  Figure  6:  Number  of  dispatches  per  Member  State  (IE801)  in  2014         
Source: CS/MISE/ITSM statistics platform 

22 

 
 
 
  
 
  Figure 7: Total flows of e-ADs between EU Member States in 2014   

Source: Ramboll Management Consulting A/S, Final evaluation report, 2015 

While almost all movements under duty suspension complete normally and without any 
problems, stakeholders continue to face operational problems in a few areas. These issues 
increase  administrative  costs  for  the  Member  State  administrations,  create  obstacles  to 
trade, and increase the risk of fraud. They are covered in detail later in this report. 

Special arrangements for particular categories of goods 

Directive  2008/118/EC  specifies  which  goods  are  subject  to  the  movement  and  control 
provisions by reference to specific Directives that cover alcohol and alcoholic beverages, 
manufactured tobacco, energy products and electricity . However, the required movement 
and control provisions can vary depending on the type of product, or on who is moving 
the product. 

Both Member States and economic operators reported problems relating to the movement 
and control of particular energy products. These issues stem from the interaction between 
Directive 2003/96/EC (Energy Taxation Directive) and Directive 2008/118/EC, meaning 
that it is not always clear which provisions of the Directive 2008/118/EC should apply. 
The problem results from uncertainties over whether an energy product should be treated 
as an excise good or not. The categorisation depends on the intended use of the product, 
which may be unclear or even unknown to the consignor. 

Excise  goods  that  fall  under  Article  20(1)  of  Directive  2003/96/EC  must  be  moved  in 
accordance with the ‘movement provisions’ of Directive 2008/118/EC.  Energy products 
that  fall  under  Article  2(1)  of  Directive  2003/96/EC,  but  not  under  Article  20  of  the 

23 

 
 
 
 
Directive  are  only  considered  to  be  excise  goods  if  they  are  used  for  heating  or 
propulsion or as additives and extenders of motor fuels29. These products typically have 2 
or more uses. When these goods are not intended to be used as fuel or as additives and 
extenders  of  fuel,  they  fall  outside  the  scope  of  the  Horizontal  Directive  and  therefore 
cannot be moved using EMCS, or the SAAD system. When they are so intended there is 
no  explicit  mention  of  the  provisions  to  be  used.  This  regularly  provokes  discussion 
about the correct interpretation of these rules. This  issue may be addressed  in  a further 
examination of the provisions of Directive 2003/96/EC. 

Directive  92/83/EEC  exempts  denatured  alcohol  from  excise  duty:  Article  27(1)  (a)  of 
the Directive states that completely denatured alcohol (CDA) should be exempted from 
excise duty and moved using the SAAD arrangements. Article 27(1) (b) provides for the 
exemption  of  alcohol  denatured  in  accordance  with  the  requirements  of  any  Member 
State and used for the manufacture of any product not intended for human consumption. 
The main problem with the exemption of denatured alcohol does not directly concern the 
movement,  but  the  classification  of  the  product  itself.  The  basis  for  the  exemption  in 
Article 27(1) (a) of Directive 92/83/EEC creates practical problems and inconsistencies. 
For  CDA  (which  is  moved  under  the  cover  of  a  SAAD),  some  Member  States  only 
accept  those  denaturants  listed  by  name  in  the  Annex  to  Regulation  3199/93,  whereas 
others exempt alcohol treated using any of the denaturing methods listed. The case of the 
exemption of alcohol in accordance with Article 27(1) (b) is even more complex, since 
the term “not intended for human consumption” is not interpreted consistently across the 
Member States. A separate study is addressing the issues that relate to the structures of 
excise duty on alcohol products. 

5.1.1. 
The extent to which the arrangements  for  holding and movement  of 
excise duty goods under suspension contribute to the proper functioning of the Internal 
Market 

EMCS  was  designed  to  provide  a  smooth  transition  to  a  paperless  (electronic) 
environment  from  a  paper  based  system,  removing  taxation-related  obstacles  to  the 
movement  of  excise  duty  goods  across  borders  by  minimising  costs  both  for  economic 
operators  and  for  tax  administrations.  Since  its  introduction  between  January  2010  and 
May 2015, over 13.6 million movements under duty suspension were recorded, 98.1% of 
which completed normally. 

Member States 

Member States  are convinced that EMCS has  reduced costs by reducing the amount of 
time needed to administer documents. 

29 ECJ C515/07 Afton Chemical Ltd v Commissioners for Her Majesty’s Revenue and Customs (Reference 
for  a  preliminary  ruling  from  the  Chancery  Division  of  the  High  Court  of  Justice  of  England  and 
Wales) 

 http://curia.europa.eu/juris/celex.jsf?celex=62007CJ0517&lang1=en&type=TXT&ancre= 

24 

 
 
 
 
                                                 
Figure  8:  Time  taken  to  process  a  typical  movement  before  (paper  based 
system)  and  after  the  introduction  of  EMCS  during  2014  (computerised 
system) 

Member 

State 

Time per movement (paper-based 
procedure) 

Time per movement (EMCS) 

No data 

30 min. 

6 min. 

120 min 

30 min. 

20 min. 

5 min. 

10 min. 
030 

6 min. 

9 min. (0.15 hrs) 

No data 

3-5  hrs  (for  alcohol);  0.5  hr  (for  other 
goods) 

3-5 hrs (for alcohol); 0.25 hrs (for other 
goods) 

BG 

CZ 

FI 

HU 

LT 

LV 

PL 

RO 

SI 

No data 

3 min. 

SK 
Source: Questionnaire to Member States 2015 

60 min 

0 

1 min. 

10 min. 

EMCS  has  reduced  the  overall  administrative  costs  for  many  Member  States.    The 
average time saved in hours per movement was reported to be 35 minutes (0.59 hours). 
This  means  that  in  2014  alone,  the  EMCS  should  be  credited  with  saving  more  than 
1,267,026 hours (about 720 full-time individuals, assuming 8 working hours per working 
day  and  220  working  days  per  year)  for  those  administrations  of  the  Member  States 
which reported a positive change.  

Economically  quantified,  this  means  that  the  EMCS  resulted  in  annual  savings  of 
between EUR 27.5 million or EUR 37 million (depending of the job profiles of the 
persons  involved)  in  2014  alone.31  However,  it  is  clear  that  its  advantages  cannot 
merely be viewed in cost terms. The elimination of paper and the associated increase in 
efficiency, the freeing up of resources in order to focus on higher-risk movements, and 
the  improved  control  of  movements,  have  all  been  identified  as  clear  advantages  that 
accrue from the electronic environment.  

For  the  economic  operators,  the  main  benefits  relate  to  a  reduction  of  time  needed  to 
process  excise  documents  the  ability  to  follow  up  movements  (for  both  sender  and 
receiver), and the facilitation of logistics and enterprise resource planning. The benefits 
of  EMCS  were  mentioned  by  both  large  and  small  businesses,  although  for  large 
businesses  the  economies  of  scale  associated  with  the  electronic  system  were  more 
advantageous. 

Economic operators 

The main benefits reported related to the ability to follow up movements (for both sender 
and receiver), to ease auditing, and to monitor any increase in the efficiency and quality 
of  movement  documentation.  The  responses  were  mixed  in  terms  of  the  impact  of  the 
EMCS  on  the  costs  of  compliance  with  the  rules;  when  movements  are  completing 

30 0 here means that the process is normally completed automatically. 

31  For  more  details please see:  Evaluation  of  current  arrangements  for  the  holding  and moving  of  excise 

goods under excise duty suspension, p. 53 

25 

 
                                                 
normally and there are no practical problems, EMCS is more efficient than the previous 
paper-based arrangements 

When asked directly about the impact of the EMCS on the costs of complying with the 
rules  as  compared  to  the  previous  paper-based  system,  the  economic  operators  gave  a 
wide  range  of  responses.  17%  of  the  respondents  (n=228)  indicated  a  significant 
reduction of costs, and 24% indicated a reduction of costs. However, 22% of respondents 
signalled  that  the  EMCS  had  led  to  additional  costs,  and  8%  thought  it  had  generated 
significant additional costs. 

Figure  9:  The  cost  impact  of  EMCS  compared  to  the  previous  paper-based 
arrangements (N=228) 

Source: Survey of economic operators 2015 

This  pattern is  very similar  to  the findings from a  consultation of  traders conducted by 
DG TAXUD in the context of a report on Decision No 1152/2003/EC which covered the 
creation  of  the  EMCS:  38%  of  the  trader  respondents  thought  that  the  administrative 
costs  of  the  operation  of  the  EMCS  compared  with  the  costs  of  operating  the  previous 
arrangements under Directive 92/12/EEC were lower (24% - higher; 38% - don’t know.) 
This  suggests  that  EMCS  may  benefit  larger  traders  proportionately  more  than  smaller 
traders. 

5.1.2. 
interest of the Member States 

The  extent  to  which  current  arrangements  protect  the  financial 

This question investigated the prevention and detection of fraud and the protection of the 
financial interests of Member States (collection of duties and taxes). 

One of the core objectives of EMCS is to combat certain types of fraud, and to address a 
number of the inherent weaknesses identified in the paper-based arrangements. EMCS, in 
conjunction with SEED (System for Exchange of Excise Data) has clearly improved the 
control  of  traders  and  consignments  in  the  Member  State  of  departure.  This  has  been 

26 

 
 
achieved by the validation of the consignee before dispatch using SEED. This prevents 
documents  being  issued  which  would  support  illegal  diversions  of  goods.  EMCS  also 
keeps  a  record  of  all  ongoing  and  completed  movements  and  gives  access  to  this 
information  to  competent  authorities  and  officials  in  other  Member  States,  facilitating 
timely, targeted and selective controls. 

Member  States  view  EMCS  as  an  effective  early  warning  system  for  detecting  fraud. 
Excise fraud is now considered to be more difficult than under the previous paper-based 
arrangements. There is nevertheless some uncertainty on how fraud may have changed as 
a consequence of introducing the EMCS. On the one hand, it may be that such operations 
have decreased because of more effective monitoring; on the other, it could be that the 
EMCS  has  given  the  Member  States  information  about  fraudulent  movements  that  was 
previously  unavailable,  or  has  allowed  more  audits  to  be  undertaken  using  the  same 
resources, all of which may have resulted in an increase in the number of audits. 

There  is  general  agreement  that  the  introduction  of  the  EMCS  has  reduced  the  cost  of 
audits. 17 Member States agree or strongly agree with a statement to that effect (DE, DK, 
EL, IT, LV, PL, PT, CY, RO, BG, CZ, HR, SK, UK). Another 7 Member States (FI, IE, 
SE, LU, AT, EE, and FR) neither agree nor disagree, or do not know, and only NL and 
ES disagree. EMCS improves access to movement information and allows for better risk 
analysis/monitoring.  Sixteen  Member  States  that  were  surveyed  highlighted  such 
advantages  as  “basic  data  is  available  at  earlier  point  in  time”,  “early  access  to 
information”,  or  “information  available  online  and  in  real-time”.  Similarly,  sixteen 
Member States point to the increased availability of information that is used for efficient 
monitoring  and  risk  analysis.  Member  States  specifically  mention  that  EMCS  allows 
better  administrative  cooperation,  strengthening  of  the  cooperation  between  Member 
States, and the facilitation and enhancement of inter-community trade through electronic 
means.  One  Member  State  noted  the  clear  advantage  compared  to  the  paper-based 
system,  while  2  other  respondents  highlighted  the  better  quality  of  the  data  (accurate 
trade statistics and low error rates).  

Nevertheless, some weaknesses in the current arrangements were identified: 

 
There is a lack of important data, according to respondents in SI, DE, FR and SK. 
This includes the inability to update the data if the transport method is changed, and the 
absence  of  checks  on  the  validity  of  vehicle  registration  plates  or  details  regarding  the 
transport routes. Other Member States mention that data for monitoring and risk analysis 
are  lacking  or  are  not  compulsory  (AT);  the  data  are  flawed  (UK);  or  entries  are 
inconsistent (IE); and the fact that not all data are included (for example, according to the 
HU  respondent  the  fact  that  wine  consignments  are  not  always  covered  by  EMCS  is  a 
limitation). 

 
Five  Member  States  (DE,  FR,  BE,  SI  and  EE)  pointed  to  the  absence  of  a 
requirement  to  provide  information  regarding  the  start  and  end  times  of  the  transport 
process, and the lack of an automatic check of the time limits for trips is reported to be a 
shortcoming. This is reflected in such views as “it is almost impossible to have a good 
overview  of  what  really  happens  with  the  goods”,  and  “sometimes  the  movement  is 
marked as taking too long, but in fact this is not the case”. 

 
Another major concern relates to the recording of fictitious movements according 
to  respondents  in  SK, BE, IE  and  HR (such  as  making  multiple use  of a single e-AD), 

27 

 
plus  the  fact  that  the  system  allows  incorrectly  identified  transport  units  to  be  entered 
(SI). 

Four Member States (SI, NL, LV and EL) pointed to the lack of risk analysis at 

 
the EU level, or the lack of common risk parameters. 

Opportunities  for  excise  fraud  still  exist  and  mainly  relate  to  the  type  of  data  being 
recorded  in  the  system  and  the  inconsistencies  in  the  reporting  system.  Some  Member 
States  pointed  to  the  lack  of  common  risk  analysis  at  the  EU  level,  or  to  the  lack  of 
common  risk  parameters.  Evidently,  the  majority  of  excise  fraud  takes  place  outside 
EMCS;  however,  evidence  suggests  that  EMCS  is  still  very  relevant  in  terms  of 
responding to the type of fraud it set out to combat. 

5.1.3. 
States and the economic operators 

Continued  relevance  of  arrangements  to  the  needs  of  the  Member 

19 Member  States  believed (agreeing or  strongly agreeing)  that  there is still a need for 
the  EMCS  in  their  country,  despite  the  evolution  in  certain  types  of  fraud.  Only  one 
Member  State  disagreed,  while  the  rest  of  the  respondents  did  not  know,  or  neither 
agreed nor disagreed. 

The need for the EMCS is confirmed by opinions that call for widening the scope of the 
EMCS  to  include  preventing  fraud  in  “lubricating  oils”,  “raw  tobacco”,  the  need  for 
“analysing  the  functional  specifications  of  EMCS  and  to  continue  the  development”, 
developing a system to include “duty-paid movements”, and noting that the evolution in 
the types of fraud does “not reduce the need for the EMCS” and that “EMCS needs to be 
strengthened”. It was recognised that whatever EMCS changes are proposed, they need 
to strike a balance between “fraud prevention and trade facilitation”, so as to maximise 
the benefits of the EMCS. 

16 Member States disagreed or strongly disagreed that similar results relating to the fight 
against  fraud  could  have  been  achieved  without  EU  action  (i.e.  through  a  national  / 
bilateral or international initiative). This is because “only a consistent, binding regulation 
would  be  a  useful  and  efficient  basis”,  “a  consistent  implementation  could  not  be 
guaranteed” across the EU, there is “lack of interest for international cooperation in some 
MSs”,  and  multitude  bilateral  agreements  would  be  needed  which  are  difficult  to 
“negotiate because of divergent national interests”. As a result, bilateral or international 
initiatives  “cannot  replace  the  EU  action”  and  “EU  action  is  needed  in  this  area”. 
However,  12  Member  States  neither  agreed  nor  disagreed  with  the  proposition  or 
responded  “don’t  know”.  One  (SK)  stated  that  cooperation  through  multilateral  control 
could be achieved, but acknowledged that generally speaking, cooperation across the EU 
was better achieved  on the basis of a  “clearly defined legislative framework”.  Some of 
these responses did clarify that it was “more effective to have an EU system instead of 
bilateral  /  national  [cooperation  agreements]”,  and  that  fight  against  fraud  was  better 
achieved at EU level, as this ensured consistency (because at the national level, there are 
“different  aspects  and  problems”).  One  Member  State  believed  that  the  EMCS  works 
well as an extra tool but can be an “additional tool to working on a bilateral level”, while 
another stated  that  bilateral initiatives  are  currently  useful to  help  fight  fraud  involving 
mineral oils, but at the same time EMCS is helpful for determining new contacts between 
warehouses that store alcohol. 

28 

 
Only 2 Member States (EL, SK) believed that similar results connected with combating 
fraud could have  been  achieved  through a national  /  bilateral or  international initiative, 
but they did not provide any explanations about how this would have been achieved. 

5.1.4. 

Scope for simplification and administrative burden reduction 

The  objective  of  this  question  was  (i)  to  identify  administrative  and  compliance  costs 
resulting  from the implementation  of the Directive and (ii) seek  out measures that may 
alleviate  such  costs,  while  ensuring  the  same  level  (or  higher)  of  security  for  the 
movement of excise duty goods. A first part of the investigation looked at the efficiency 
(cost-effectiveness) of the implementation of the provisions and analysed the costs borne 
by  tax  administration  in  ensuring  compliance  with  the  Directive.  The  second  part 
investigated the compliance costs borne by economic operators broken down at the level 
of activities and, where possible, quantified through interviews and case studies. 

establishes 

Authorisations:  Directive  2008/118/EC 

 
common  EU-level 
definitions  of  the  different  types  of  economic  operator  authorised  to  hold  and  move 
excise goods under duty suspension.  The implementation of authorisation requirements, 
as  well  as  any  simplification  provisions,  varies  across  the  Member  States,  as 
authorisations remain a national matter. The requirements that must be satisfied in order 
to receive an authorisation are complex. This can create obstacles for economic operators 
in the application process and thus make it more time-consuming than would otherwise 
be  necessary.  When  they  were  asked  about  the  rules  for  calculating  the  guarantees 
applicable to them, many operators indicated that they did not know them (24%). When 
analysed by Member State, the data also showed that operators from the same countries, 
operating  in  the  same  sector  have  provided  contradictory  information.  For  example, 
operators  active  in  Germany  (the  Member  State  with  the  highest  participation  in  the 
survey)  stated  that  their  warehouse  guarantees  were  calculated  on  the  basis  of  annual 
turnover (34%), monthly turnover (3%), annual excise liability (16%) and monthly excise 
liability  (21%).  This  suggests  that  some  of  the  requirements  and  provisions  are  highly 
complex. 

The complexity of accessing and understanding the provisions was also underlined in the 
case studies. Four Member States reported that economic operators often did not submit 
complete  applications,  which  required  additional  working  hours  to  be  spent  by  the 
authorities. 

In  most  Member  States,  operators  have  to  lodge  both  a  movement  guarantee  and  an 
authorisation guarantee. Economic operators considered these to be significant burdens, 
despite  the  fact  that  reductions  and  waivers  of  guarantees  are  widely  implemented  in 
order to support smaller operators, particular products and tax-compliant operators.   

While in general established economic operators did not report major problems resulting 
from  authorisation  requirements,  some  scope  for  measures  to  simplify  authorisation 
procedures  and  alleviate  administrative  burdens  has  been  identified.  Possible  measures 
concern  both  established  and  potential  entrants  (e.g.  the  provision  of  information  on 
requirements  and  their  clarification,  the  reduction  and  waivers  of  guarantees  based  on 
reliability),  or  they  take  the  form  of  the  specific  support  of  small  operators  through 
limited requirements and reduced guarantees. 

29 

 
Variations  between  Member  States  in  how  shortages,  losses  and  excesses32 
 
are  dealt  with,  leading  to  uncertainty  both  for  Member  States  and  for  economic 
operators:    Member  States  and  traders  both  clearly  signalled  that  the  arrangements 
around shortages and losses (particularly Article 10 of the Directive) need to be clarified, 
in order to ensure certainty regarding which Member State is competent to levy the tax 
on  any  shortages  and  on  how  allowable  losses  should  be  calculated.  The  treatment  of 
excesses is not covered by the Directive at all and gives rise to administrative burden and 
legal uncertainty33  

Since  the  study  was  completed  the  European  Court  of  Justice  has  made  a  ruling  on 
Article 10 of the Directive which clarifies which Member State is entitled to any excise 
duty liability arising from an actual or assumed release for consumption.34 Nevertheless 
the  procedure  for  making  claims  for  shortages  is  unclear.  Claims  against  economic 
operators are covered by the Recovery Directive, Directive 2010/24/EU35, but the use of 
the  Recovery  Directive  for  recovering  excise  debt  varies  between  Member  States, 
creating additional administrative burden. There is no basis in the Horizontal Directive to 
link recovery instruments with the establishment of an excise duty  liability. The EMCS 
specifications  36provide a means of communication between Member States and traders 
to  establish  what  liabilities  there  might  be  but  this  facility  is  little  used.    EMCS  also 
provides a message for claiming duty that should be sent from claiming Member States 
to the Member State of Dispatch that is responsible for guarantee management, but this 
message is as well rarely if ever used. 

The  treatment  of  excesses  is  not  explicitly  dealt  with  by  the  Horizontal  Directive  and 
national practice varies. 12 Member States reported that they had no issues with excesses, 
compared with 8 who reported that they did. The major difference in practice is between 
Member States which treat an excess as having been irregularly released for consumption 
and  therefore  require  immediate  payment  of  the  corresponding  excise  duty  and  those 
Member States who allow the excess received goods as being under duty suspension and 
eligible  to  be  held  under  duty  suspension  by  the  consignee  if  the  consignee  has  an 
authorisation  as  an  authorised  warehouse  keeper.  Since  decisions  on  the  treatment  of 
excesses  have  no  cross-border  impact  there  is  not  much  interest in  trying  to  harmonise 
these arrangements. 

32    A  shortage  occurs  where  fewer  goods  are  being  carried  in  a  consignment  than  declared  in  the 
corresponding e-AD. An excess occurs where more goods are being carried than were declared in the 
corresponding e-AD. A loss occurs where some or all goods in a consignment are irretrievably lost, 
e.g. lost at sea, or are totally destroyed, 

33  For  more  details please see:  Evaluation  of  current  arrangements  for  the  holding  and moving  of  excise 

goods under excise duty suspension, p. 75 – 87. 

34 Judgment of the Court (Sixth Chamber) of 28 January 2016 (request for a preliminary ruling from the 
Bundesfinanzhof — Germany) — BP Europa SE v Hauptzollamt Hamburg-Stadt (Case C-64/15) OJ 
2016/C 106/11 

35 Council Directive 2010/24/EU of 16 march 2010 concerning mutual assistance for the recovery of claims 
relating to taxes, duties and other measures, Official Journal of the European Union L 84/1,  31.3.2010 

36 EMCS specifications are documents which describe the requirements for the EMCS system centrally and 
nationally and how those requirements are met at a high level (the so called Functional Excise Systems 
Specifications or FESS and more detailed description contained in a number of different documents. 

30 

 
                                                 
Concerning losses economic operators report inconsistency in treatment of measurement 
tolerances37  and  in  allowable  losses  between  Member  States.  One  particular  issue  is  a 
lack of clarity about which measurement tolerance and allowable loss38 should be applied 
where  a  claiming  country  makes  a  claim  against  an  economic  operator  in  another 
Member  State.  Some  Member  States  do  not  publish  allowable  losses,  arguing  that  this 
can  create  an  incentive  to  take  advantage  of  the  arrangement  to  deliberately  dispatch 
larger quantities than specified in the corresponding e-AD. 

 
Errors in the e-AD: amending data in the e-AD is not possible once it has been 
validated and assigned an ARC39 number. This is intended as a fraud prevention feature. 
Human  data-entry  errors  (e.g.  quantity,  type  of  good)  are  primarily  resolved  through 
communication between the relevant administration and traders. Some stakeholders have 
pointed to a need for flexibility regarding the modification of non-critical data, so as to 
increase the efficiency of procedures. 

There  are  currently  two  ways  of  dealing  with  errors.  If  the  goods  have  not  yet  left  the 
place of dispatch the e-AD can be cancelled and a new e-AD issued for the same goods. 
This is in fact the most common reason given for the use of the cancellation message. If 
the goods have left the place of dispatch cancellation is prohibited because it would result 
in an irregular release for consumption. The consignor can send an EMCS event report to 
the Member State of Dispatch indicating the mistake. The primary purpose of the event 
report,  however,  is  to  allow  traders  to  report  major  incidents  that  occur  during  a 
movement and little use is made of this possibility. In 2014 only 1,160 event reports were 
sent  between  Member  States,  or  in  approximately  0.04%  of  the  2.95  million  EMCS 
movements  made  in  that  year.  This  may  be  due  to  the  lack  of  a  legal  base  to  compel 
traders to report errors.  

Member States are generally unwilling to consider the modification of e-AD data during 
a movement, due to fear of fraud. Therefore a common approach allowing for the update 
of movement data is not  possible. So a legal provision to oblige the reporting of errors 
and possibly the obligation to use event reports to report them might be considered. 

Change of destination following the rejection or refusal40 of a consignment: Member 
States  have  agreed  in  an  expert  group  that,  when  goods  are  rejected  or  refused,  the 
consignor should issue a change of destination to have the consignment returned to the 
place of dispatch or to a new consignee. This should become a legal obligation. A further 
improvement would be if the consignor was obliged to take follow up action in the event 

37  In  principle  the  calculation  of  the  taxable  basis  for  raising  excise  duty  on  a  shortage  should  take  into 
account allowable measurement tolerances derived from the metrology acquis. These include Directive 
2009/34/EC  of  the  European  Parliament  and  of  the  Council  of  23  April  2009  relating  to  common 
provisions for both measuring instruments and methods of metrological control (Recast) and Directive 
2004/22/EC  of  the  European  Parliament  and  of  the  Council  of  31  March  2004  on  measuring 
instruments 

38 Allowable loss is covered by Article 7(4) of the Horizontal Directive 

39  ARC:  Administrative  Reference  Code,  a  unique  number  identifying  the  electronic  administrative 
document  notified  by  the  excise  authorities  to  the  consignor,  also  showing  that  the  electronic 
administrative document has been validated. 

40  In  this  context  ‘rejection’  of  a  consignment  refers  to  a  decision  by  the  consignee  to  not  accept  a 
consignment  of  goods  that  are  at  the  place  of  dispatch,  or  are  moving  from  the  place  of  dispatch. 
‘Refusal’ refers to a decision not to accept goods that have arrived at a place of destination. 

31 

 
                                                 
that a rejection or refusal message is sent.  Two suggestions were submitted for reducing 
these  problems:  firstly  the  specifications  should  be  supported  by  a  legal  obligation  to 
send rejection and refusal messages and secondly a legal base should be created so that a 
refusal or rejection message is automatically followed by a change of destination back to 
the consignor. 

5.1.5. 
manner with the custom applications 

The  extent  to  which  the  current  arrangements  work  in  a  coherent 

The evaluation assessed the coherence of the current arrangements for the movement of 
excise duty goods under suspension with the customs arrangements. The clear conclusion 
can  be  drawn  that  there  is  scope  to  further  optimise  the  harmonisation  of  procedures. 
Overall,  the  Member  State  authorities  and  economic  operators  consulted  agreed  that 
problems exist with the exportation of excise goods. The procedures for importing excise 
goods  were  also  a  concern  to  Member  States,  but  were  shown  to  create  less  practical 
issues  for  economic  operators.  Despite  the  significant  number  of  problems  both 
economic  operators  and  the  Member  State  authorities  stressed  that  the  introduction  of 
EMCS  had  facilitated  coordination  between  excise  and  customs  procedures.  Compared 
with the previous paper based systems, EMCS had improved coordination. 

The  analysis  confirmed  the  findings  of  the  Customs  and  Fiscalis  Project  Group  for 
Coordination  of  Excise  and  Customs  procedures  in  relation  to  movements  of  excise 
goods  under  EMCS  which  identified  the  insufficiency  of  comparison  between  the  data 
used in the EMCS and the ECS. Document references to EMCS movements in the ECS 
are  not  consistently  applied.  These  issues  have  an  impact  on  the  effectiveness  and 
efficiency of the procedures in question. Considerable administrative costs are created, as 
are  opportunities  for  fraud.  The  Fiscalis  and  Customs  Project  Group  has  worked  on 
identifying the issues connected with the lack of coordination, their drivers, and proposed 
preliminary  solutions,  which  include  suggestions  for  the  revision  of  Directive 
2008/118/EC. 

Export:41  Member  State  authorities  and  economic  operators  recognise  the 
 
absence of coherence between the excise and export procedures as being problematic. 22 
of  the  27  Member  States  (80%)  were  of  the  opinion  that  the  current  arrangements, 
obligations  and  procedures  related  to  the  movement  of  excise  duty  goods  under 
suspension  were  not  coherent  with  the  arrangements,  obligations  and  procedures 
applicable to customs operations and export. This translates into increased administrative 
costs,  due  to  the  need  to  close  movements  manually.  For  example  in  2014  France 
reported  that  they  had  to  close  12  000  export  movements  manually.  41%  of  economic 
operators recognise the absence of coherence between the excise and export procedures 
as being a problem. The respondents stated they were not satisfied with the coordination 
between excise and customs procedures.  

41 For more details on how EMCS and the Export Control System are supposed to coordinate please see: 
Evaluation  of  current  arrangements  for  the  holding  and  moving  of  excise  goods  under  excise  duty 
suspension pp 116-117 

32 

 
                                                 
Figure  10:  Main  issues  with  coordination  between  excise  and  customs 
export procedures (Source: Survey of economic operators 2015) 

64 economic operators reported on the main issues they had with coordination between 
0%

100%

20%

40%

60%

80%

92% 

70% 

41% 

Non-closure of the excise movement increases
risk of tax liability (N= 59 )

Non acceptance of alternative proofs of exit
increases compliance costs (N= 45 )

Variation in national “workarounds” increases 
compliance costs (N= 26 ) 

Uncertainty in the case of fall-back arrangements
increases compliance costs (N= 11 )

17% 

The variation between national procedures
increases the risk of fraud (N= 5 )

8% 

Other  (N= 8 )

13% 

Don’t know / not applicable (N= 1 ) 

2% 

excise  and  customs  export  procedures.  (Economic  operators  could  give  more  than  one 
answer.) Overwhelmingly the major issue for operators was the risk of non-closure of the 
excise movement. Economic operators consulted reported that they had to invest between 
two and four hours of staff time to provide documentation in the event of manual closure 
and that such manual closures could take place up to 100 times a year. 

The  underlying  drivers  of  these  problems  are  associated  with  the  lack  of  coordination 
between export and excise procedures, meaning that information is not transferred from 
one set of procedures to the next. In some cases export declarations are lodged which do 
not contain a reference to the ARC of the e-AD that corresponds to the movement. This 
is particularly important when the Member State of dispatch is different to the Member 
State of export. The exit results from ECS will then not be passed on to the EMCS in the 
Member State of Export, meaning that no Report of Export will be generated. This means 
that  the  EMCS  movement  remains  open  and  often  has  to  be  closed  manually  by  the 
authorities, creating an administrative burden and even carrying a risk of liability for the 
consignor. In other case it may be that exit results are not received by Office of Export, 
thereby  making  it  impossible  to  transmit  the  necessary  information  into  EMCS.  The 
impact of the reported practical problems with regard to the coherence between customs 
and export procedures is significant. 

Other  issues  reported  relate  to  variations  in  national  procedures  which  increase 
compliance costs and increase the risk of desynchronisation between excise and customs 
procedures and applications, especially when more than one Member State is involved. 

 
Import: Importation for excise purposes occurs when goods which have entered 
the  European  Union  from  a  third  country  are  not  placed  under  a  customs  special 
procedure or external transit, or are released from customs supervision. This entails the 
payment of customs duty, but also the payment of excise duty and VAT, unless the goods 
are  immediately  put  under  an  excise  duty  suspension  arrangement  (holding  under  duty 
suspension in a tax warehouse or dispatched from the place of importation under excise 

33 

 
duty  suspension).  If  the  final  consignee  is  in  another  Member  State  a  movement  under 
excise duty suspension must take place under the supervision of EMCS.  

In comparison with export economic operators express fewer concerns, with 17% having 
some  concerns  (sample  size  125),  mainly  due  to  national  variations  in  reporting 
requirements  causing  increased  costs  (55%  of  those  who  expressed  concerns,)  On  the 
other hand 19 out of 27 member States expressed concerns about the lack of coherence 
between  import  procedures  and  the  handover  to  EMCS,  indicating  that  further 
harmonisation  of  procedures  might  help  to  alleviate  administrative  burden  and 
compliance costs. 

Customs  transit  after  export  42  Some  operators  prefer  to  avoid  having  excise 
 
and  customs  procedures  for  indirect  exports  running  in  parallel  by  using  transit 
procedures to replace them before the goods leave. In such a case, the export procedure is 
closed by the transit procedure, which starts at the Office of Exit 43, doubling as a transit 
Office of Departure, which is not located at or near the physical place where the goods 
leave  the  Union.  The  goods  are  then  moved  under  the  supervision  of  the  NCTS  transit 
system  to  the  place  of  exit.  The  transit  is  discharged  as  a  result  of  a  transit  results 
message set from the Office of Destination to the Office of Departure.  This is considered 
to  be  a  trade  facilitation  because  it  allows  for  the  transport  of  goods  to  a  central  hub 
under the export procedure, the closure of this procedure and subsequent regrouping and 
export under the transit procedure. 

Of 27 Member States, 11 reported that the combination of an export procedure followed 
by a transit procedure caused problems. Such a procedure either requires manual closure 
of the EMCS movement or in some Member States the closure of the export procedure, 
which triggers a closure of the movement in EMCS and a release of the guarantee, even 
though  the  goods  are  still  moving  within  the  EU  under  the  transit  procedure..  The 
information in the EMCS is no longer accurate, as the goods only actually leave the EU 
once the transit procedure is completed.  

40% of the traders who exported excise duty goods reported using this procedure (45% 
did not, and 15% did not know if this procedure was used). They listed advantages with 
regard to the time and costs saved, and to an improved ability to monitor movements. But 
they  also  noted  that  there  were  problems  in  terms  of  the  coordination  of  information 
across the excise and transit procedures. Procedures that combined an export procedure 
with  a  transit  procedure  for  the  export  of  excise  goods  caused  problems  for  26%  of 
respondents that used them. 

42 Transit is a customs special procedure which allows the computerised supervision of the movement of 
goods using NCTS from one place (departure) to another (destination) within the customs territory of 
the  union.  Transit  is  normally  used  to  move  non-union  goods  from  a  place  where  goods  enter  the 
European  Union  to  a  place  where  it  is  more  convenient  to  clear  the  goods  for  free  circulation.  This 
possibility is covered by excise legislation. Additionally, in practice the export of goods is sometimes 
ended before the goods leave the EU and supervision is handed over to transit. 

43 The customs office of exit is normally the location of a customs authority at or near a frontier, seaport, or 
airport,  which  certifies  that  goods  have  left  the  customs  territory  of  the  European  Union  and  that 
therefore  the  export  of  the  goods  has  been  completed.  Article  329  of  the  UCC  Implementing  Act 
allows  other  locations  within  the  territory  to  be  treated  as  an  office  of  exit,  thereby  completing  the 
export before the goods physically exit the territory. This may or may not close EMCS automatically, 
depending on the Member State. 

34 

 
                                                 
Figure  11:  Does  the  combination  of  an  export  procedure  followed  by  a 
transit  procedure  for  the  export  of  excise  goods  cause  any  difficulties? 
(N=61) 

8% 

66% 

26% 

Yes  (N= 16 )

No (N= 40 )

Don't know
(N= 5 )

Note:  The  “N”  in  the  title  refers  to  the  unique  number  of  respondents  answering  the 
question, whereas the “N” for each answer refers to the number of responses relating to 
the particular answer. These may differ when the respondents are operating in more than 
one country/industry. Only respondents who answered “Yes” to question 107 were asked 
this question. 

Source: Survey of economic operators 2015 

5.1.6. 
Observed 
attributable to the EU action 

impacts  of 

the  current  arrangements  reasonably 

The EMCS is one of a number of trans-European IT systems partly financed by the EU’s 
Fiscalis programmes. Clear efficiency gains accrue from having a common infrastructure 
that allows the secure and rapid exchange of electronic tax information between Member 
States.  From  both  a  cost  and  control  perspective,  the  evidence  indicates  that  only  a 
Europe-wide system can provide the uniformity and harmonised conditions necessary to 
ensure  the  proper  functioning  of  the  internal  market.  Furthermore,  the  central 
coordination role played by the Commission, plus the governance of the EMCS, which 
covers  all  28  Member  States,  produces  clear  gains  in  efficiency  compared  with  any 
possible  bilateral  or  international  initiatives.  Having  a  forum  for  the  agreement  and 
central coordination  of common rules  (i.e. the legal aspects)  and specifications (i.e. the 
technical aspects) for the functioning of the arrangements helps to prevent duplication of 
effort. 

A clear majority of the Member States indicated that the transition to EMCS has reduced 
their administrative costs compared to the previous system based on the paper AAD. 19 
out  of  27  Member  States  agree  or  strongly  agree  that  the  EMCS  has  contributed  to 
reducing the administrative costs in their administrations for the handling of movements 
of excise duty goods under suspension compared to the previous paper-based system. 

Advantages identified included: 

reducing  labour  costs  for  tasks  associated  with  communicating  with  economic 

• 
operators; 

35 

 
 
 
 
• 

• 

• 

freeing up human resources; 

eliminating the need to handle paper, and 

more time available for officials to control particularly risky movements. 

5.2. 

Chapter V (Duty paid arrangements) 

Use  of  Chapter  V  arrangements  (movement  of  goods  already  released  for 
consumption) 

In  the  sample  Member  States  which  reported  data,  the  indications  are  that  duty  paid 
arrangements  represent  between  1  -  10%  of  total  numbers  of  intra-EU  movements  of 
excise goods, depending on the Member State in the sample. By volume, the duty paid 
arrangements appear to account for between 1-3% by volume of intra-EU movement of 
excise goods.  

This  is  similar  to  a  2004  estimate  by  the  Commission,  which  estimated  that  the 
movement of products on which excise duty has already been paid represented no more 
than 3% of total volume of intra-EU trade in excisable products.  This suggests that usage 
of these arrangements has not changed greatly in volume with the introduction of EMCS. 

For movements of excise duty paid products between traders (B2B) only limited data was 
available  from  most  of  the  12  Member  States.  Depending  on  the  product  category, 
Member  States  were  able  to  provide  some  data  on  number,  volume,  value  and  tax 
revenue of duty paid movements.  

Overall  the  data  available  suggest  that  the  use  of  the  current  arrangements  is  marginal 
compared to total movements of excise goods within the EU. However, there are some 
variations by product sector (alcohol, tobacco and energy products and electricity). 

Alcohol 

The  alcohol  sector  represents  the  highest  volumes  of  duty  paid  movements  reported 
(measured  by  shares  of  total  intra-EU  movements).  This  is  supported  by  interviews 
conducted  with  economic  operators  in  the  12  sample  Member  States  which  found  that 
highest usage of these arrangements was by businesses in the alcohol sector (although the 
vast majority of movements occur under duty suspension).  

Data  from  the  survey  of  economic  operators  also  suggests  relatively  high  volumes  of 
alcohol  moved.  Micro-enterprises  (employing  between  1  -  9  persons)  represented  the 
majority of the survey population. Those who said they used the arrangements reported 
to  move  an  average  of  19  000  litres  in  2012.  This  is  despite  relatively  few  numbers  of 
movements.  Most  businesses  of  this  size  that  were  using  the  duty  paid  arrangements 
reported to be engaged in between 5 - 24 movements on average per year. 

Tobacco 

Data was only received from 2 Member States (ES, PL). In terms of volume the available 
data  suggests  that  usage  of  the  duty  paid  arrangements  for  movements  of  tobacco  is 
negligible  when  compared  to  the  Eurostat  data  on  total  intra-EU  movement  of  tobacco 
products. 

36 

 
Based on data from the 9 operators in the survey who reported to move cigarettes under 
the  duty  paid  arrangements,  an  average  of  approximately  15  million  pieces  was 
reportedly moved in 2012 , although there was a wide range reported depending on the 
respondent, from 3000 to approximately 90 million. 

Energy products 

Data on the volumes of energy products received in 2012 was provided by four Member 
States.  The  reported  received  volumes  in  these  4  Member  States  range  from  between 
18 288 hl  received  in  Latvia  to  approximately  44 522 hl  and  676 933 713 kg  in  Poland. 
As reported by Poland, duty  paid movements account  for approximately 0.4%  of intra-
EU movements of energy products and electricity. Overall, compared to Eurostat data for 
these Member States, the reported volumes correspond to approximately 0.37% of total 
received volumes of energy products.  

A  number  of  Member  States  did  report  numbers  of  receipts  and  dispatches  of  energy 
products  using  the  duty  paid  procedure.  Of  those  Member  States  in  the  sample  who 
provided  data  (AT,  BE,  CZ,  ES,  HU,  LV  and  PL),  the  Czech  Republic  reported  the 
highest  number  of  receipts  (5 004  receipts  in  2012  of  energy  products)  and  dispatches 
(8 179 dispatches in 2012). 

Only  4  respondents  to  the  survey  of  economic  operators  reported  to  be  moving  energy 
products using the duty paid procedure in 2012, with an average number of less than 5 
excise  duty  paid  movements  per  month.  While  this  does  not  necessarily  suggest  low 
usage, it does demonstrate a very low number of businesses using these arrangements in 
comparison to the alcohol sector (which accounted for the majority of responses). 

Types of Trader 

Businesses use the duty paid arrangements for reasons related to the size of the business 
or  frequency  of  transactions.  A  business  may  not  be  eligible  to  become  an  authorised 
warehouse keeper or may prefer to use the duty paid procedure for reasonably infrequent 
transactions within the EU. These arrangements are predominantly used for small scale 
B2B transactions. 

The  alcohol  sector  appeared  to  account  for  the  highest  levels  of  usage  of  the 
arrangements  relative  to  other  sectors.  The  evaluation  found  that  the  vast  majority  of 
operators  moving  energy  products  did  so  using  established  distribution  channels,  and 
therefore rarely needed the duty paid arrangements. 

Different models of use were identified, particularly in the alcohol sector. For example, 
one  common  model  was  service  providers  (e.g.  logistics  companies)  handling  the 
administrative  steps  necessary  for  duty  paid  movements  and  ensure  that  all  customs 
obligations are met. Service providers typically charged a fee per movement. 

Distance selling 

In  addition  to  B2B  transactions  the  Chapter  V  arrangements  are  also  used  for  distance 
selling,  although  extremely  rarely.  For  distance  selling,  Member  States  did  not 
consistently collect data and therefore available data on volume, value and tax revenue of 
distance sales within the EU was extremely scarce. According to Member States this was 
simply because statistics were not collected on such movements. 

37 

 
Consequently  seven  Member  States  indicated  that  they  did  not  have  data  available  in 
order  to  be  able  to  assess  the  trend  in  distance  sales  over  the  last  five  years.  Spain 
indicated that there were very few distance sales occurring and consequently assessed the 
trend as stable. Poland similarly assessed the trend to be stable over the last five years. 

Two  Member  States  (DE,  FR)  considered  that  the  number  of  distance  sales  had  been 
increasing over the last five years. Germany concluded this from data on revenues from 
excise  duty  on  spirits,  sparkling  wine,  and  intermediary  products  (excluding  beer  and 
non-sparkling wine). France indicated the importance of wine tourism in this respect as 
well as the increasing prevalence of online distance sales, although no data was available 
on the actual number of movements.  

Data from the survey of economic operators provides some more insight into the current 
usage  (see  Appendix  7).  Of  those  survey  respondents  who  reported  to  be  moving  duty 
paid goods, 91 respondents (approx. 40% of total survey population) indicated that they 
were currently involved or interested in distance sales.  

Of these, 13% indicated that they moved spirits, liqueurs etc. However, the vast majority 
(95%) indicated that they were distance selling wine). These figures indicate the strong 
interest  of  the  wine  sector  in  distance  selling  and  must  be  taken  into  account  when 
interpreting the survey results. 

The  extent  to  which  current  arrangements  protect  the  financial  interest  of  the 
Member States 

|For B2B the current paper-based procedure makes it challenging to collect information 
on duty paid movements for the purposes of risk-analysis; there is a need to reinforce the 
capacity for tax administrations to monitor and control duty paid B2B movements. 

There is a lack of clear information about national administrative procedures, which can 
present a real obstacle to trade for economic operators. The paper-based arrangements are 
not  currently  adequate in  terms  of  providing  a clear  and consistent  framework  for  duty 
paid movements. 

The lack of capacity to track and monitor movements between businesses also applies to 
the distance selling arrangements. Many of the administrations had even less information 
on  distance  sales  with  few  processes  in  place  to  consistently  collect  data  on  these 
movements. 

The  scarcity  of  available  data  on  distance  sales  also  means  that  Member  States  in  the 
sample had very limited audit information on distance sales. Furthermore this meant that 
consistent estimates could not be made on the amount of fraud that affects distance sales 
of alcohol. 

However, there were indications that fraud associated with the current arrangements was 
suspected.  Some  interviewed  businesses  (e.g.  from  ES,  FR,  HU)  reported  that  they 
simply pay the excise duty in the Member State of dispatch and send the goods directly 
to the consumers without informing the national tax authorities. It is thus clear that some 
operators sell their products to consumers in other Member States without following the 
procedures laid down in Directive 2008/118/EC.  

38 

 
 
Administrations  (e.g.  FR)  further  confirmed  that  they  suspected  this  was  happening 
regularly  although  there  was  no  data  to  support  this.  Economic  operators  clearly  also 
suspected that fraud was occurring:  in the survey 20% of the economic operators using 
the  distance  selling  arrangements  considered  that  there  was  a  risk  of  fiscal  fraud 
occurring under the current arrangements.  There a  number  of indications from the data 
collected as to why this might be. 

Firstly, there is evidence to suggest that some economic operators simply lack knowledge 
on  the  proper  procedure  to  follow.  In  the  survey  52%  of  the  respondents  involved  in 
distance  selling  have  indicated  that  they  find  it  difficult  to  familiarise  themselves  with 
which procedures to follow. 

Small  wine  producers  in  particular  reported  that  it  is  difficult  for  them  to  sell  their 
products abroad using the distance selling arrangements, as they first need to familiarize 
themselves with the rules in their home country as well as the rules in the Member State 
of the customer.  

Secondly, the costs associated with compliance may to  some extent be an incentive for 
fraud.  The  evidence  collected  clearly  demonstrated  that  the  current  arrangements  were 
considered  burdensome,  in  particular  the  difficulties  associated  with  finding  a  tax 
representative in the Member State of destination and the cost associated with appointing 
a tax representative.  

Especially the  small  wine  producers  from  France,  Spain  and  Italy  expressed  frustration 
with the requirement to appoint a tax representative in the Member State of destination.  

As a consequence, some economic operators said they feel forced to carry out distance 
sales illegally by not complying with the duty paid arrangements (e.g. in IT, DE). There 
were  a  number  of  identified  instances  where  economic  operators  sent  their  products  to 
other EU Member States without respecting the current rules in order to circumvent these 
administrative  burdens.  This  could  include  not  appointing  a  tax  representative  or  not 
paying the excise duty due in the Member State of destination 

Lastly,  there  are  reported  instances  of  situations  where  the  final  consumer  may  be 
unaware of the rules as to how and where the excise duty on alcohol products is levied. 
There were reported instances where distance selling providers were exploiting this lack 
of  knowledge  to  sell  their  products  in  other  Member  States.  For  example  some  online 
shops advertise to consumers abroad that they can buy alcohol products over the internet 
in their shop located abroad at local prices. However, the consumers may then be asked 
indirectly to arrange for the transportation themselves, or not made aware of all the costs 
associated with the transaction. 

Continued  relevance  of  arrangements  to  the  needs  of  the  Member  States  and  the 
economic operators 

For B2B transactions the paper-based procedure is burdensome and time-consuming for 
tax administrations and overall the time spent on the administration of such movements 
was  reported  to  be  reasonably  high.  Latvia  was  able  to  provide  some  estimates  for  the 
time taken to press a duty paid B2B movement: 

Handling B2B movements in Latvia 
For an outbound B2B movement, it usually takes the Latvian administration 30 minutes 
to  process  a  SAAD.  An  additional  8  hours  for  processing  of  the  application  for 

39 

 
reimbursement  in  case  of  goods  with  fiscal  stamps  and  4  hours  in  case  of  goods  not 
subject  to  tax  stamps.  One  officer  processes  the  SAAD,  another  one  processes 
reimbursement and a third officer is responsible for fiscal marks. If a physical check is 
needed then two extra officers are involved.  

For  an  inbound  B2B  movement,  they  further  indicated  spending  30  minutes  for 
processing  of  the  SAAD.  An  additional  30  minutes  was  needed  to  process  information 
submitted prior to dispatch of goods. If a guarantee is submitted then an additional hour 
is needed. Finally, the administration reported typically spending 30 minutes producing 
the statement of payment of excise duty. 

Striking  the  right  balance  between  revenue  collection  and  the  lightening  of 
administrative burden on economic operators. Possible discrimination and trading 
obstacles  

Evidence  suggests  that  the  current  arrangements  are  imposing  a  substantial  burden  on 
businesses and are not compatible with the objective of encouraging the free movement 
of goods within the single market.  

The practical problems reported suggested that variation between national requirements 
(e.g. documentary requirements for reimbursement) as well as a lack of clear information 
about the duty paid procedures can lead to discriminatory situations for businesses. 

The  majority  of  businesses  consider  the  B2B  duty  paid  arrangements  to  be  more 
burdensome than using EMCS. However, the needs of smaller businesses must be taken 
into account, particularly if they face barriers to using EMCS. 

Any  proposal  for  modification  of  the  current  arrangements  must  take  into  the  cost 
implied by these changes, as well as the overall usage of the duty paid arrangements. 

For distance selling the requirement to appoint a tax representative, which most Member 
States have applied, imposes a significant burden on vendors. Economic operators report 
that  the  cost  implied  by  this  requirement  is  a  significant  barrier  to  market  access.  The 
fees  charged  for  such  tax  representation  services  can  in  some  cases  exceed the  charges 
raised  by  postal  and  express  courier  services  for  customs  clearance  of  packages  from 
non-EU countries. A number of interviewed businesses reported that in some cases it was 
easier to sell products to non-EU countries than to distance sell to consumers in other EU 
Member States. 

In  some  countries,  it  was  reported  that  the  structure  of  the  market  meant  that  it  is 
currently virtually impossible to legally distance sell alcohol into some EU countries at a 
reasonable cost. This was the case particularly in those countries where the only potential 
tax  representatives  were  large  shipping  companies  who  were  ill-equipped  to  deal  with 
small consignments (typically 6 or 12 bottles), and would therefore either refuse to offer 
a service, or charge an unfeasibly high fee. 

40 

 
 
 
 
 
 
Figure 12: Reported example costs of tax representatives 

Country of dispatch – country of destination  

FR to NL 
FR to BE 

Reported average cost of tax representative (excluding duties and cost 
of wine, except where indicated) 
30-100 EUR per declaration, excluding transport 
20-40  EUR  per  consignment  (service  company  including  and  transport; 
minimum 12 bottles) 
40-70 EUR per consignment 
60 EUR per consignment (for an order of 12 bottles) 
100 GBP per declaration (excluding transport) 

FR to BE 
FR to UK 
BE to UK 
Source: Ramboll Management Consulting A/S, Final evaluation report, 2015 

Other issues related to tax representatives identified in the survey were language barriers 
and information on tax representatives not being available, making it difficult to find out 
which  steps  to  follow.  No  significant  differences  in  the  perceptions  of  burdensome 
activities  and  obstacles  to  distance  selling  were  evident  between  the  distance  sellers  in 
the different Member States (either in the survey or from the interviews carried out in the 
12 Member States). 

A number of interviewed businesses indicated that as a result of these issues they do not 
consider the distance selling arrangements  feasible based on a pure cost assessment, as 
any  revenue  from  a  sale  is  offset  by  elevated  costs  of  appointing  a  tax  representative, 
familiarisation  with  rules  etc.  There  was  also  evidence  that  this  led  to  non-compliance 
and goods being sent directly to the consumer. 

Practical  problems  experienced  include  a  lack  of  clear  information  about  which 
procedures to follow and a lack of clarity about the commercial aspect of the movement 
(i.e. the scope of Article 33 and Article 36). 

None  of  the  administrations  in  the  sample  was  able  to  provide  any  estimates  on  time 
spent  on  processing  a  distance  selling  movement.  To  illustrate,  the  French  authorities 
indicated  that  they  spent  a  lot  of  time  explaining  the  rules  to  interested  economic 
operators, but they do not know whether the operators execute the transaction in the end 
or give up due to the current legislation.  

The  Italian  administration  was  unable  to  answer  as  distance  selling  movements  are 
handled locally, with the result that the central administration has no knowledge on this. 
Other Member States were not able to provide any estimates or did not have experience 
with distance selling movements.  

In their responses to the questionnaire and the follow-up interviews, the majority of tax 
administrations  signalled  that  the  current  arrangements  for  distance  selling  were  not 
sufficient in some respect. Many of the concerns raised about the B2B procedure in terms 
of effort required to handle paper were also brought up for distance selling. 

Impact on consumers of current arrangements, particularly for the distance selling 
of excise goods, possible distortion of competition 

Based  on  qualitative  data  collected,  there  appears  to  be  a  strong  potential  market  for 
distance sales. Intra-EU online sales of alcohol are not in line with growth of e-commerce 
in Europe. 

41 

 
 
Consumers  are  willing  to  buy  products  from  abroad  if  it  is  not  available  in  their  own 
country and value quality and availability. However consumers expect quick delivery and 
are often not aware of how the product is taxed. 

There are reported instances of situations where the final consumer may be unaware of 
the rules as to how and where the excise duty on alcohol products is levied. There were 
reported  instances  where  distance  selling  providers  were  exploiting  this  lack  of 
knowledge to sell their products in other Member States. For example some online shops 
advertise  to  consumers  abroad  that  they  can  buy  alcohol  products  over  the  internet  in 
their  shop  located  abroad  at  local  prices.  However,  the  consumers  may  then  be  asked 
indirectly to arrange for the transportation themselves, or not made aware of all the costs 
associated with the transaction. 

Observed  impacts  of  the  current  arrangements  reasonably  attributable  to  the  EU 
action 

Evidence from the data collected suggests that the duty paid arrangements are relevant to 
businesses  who  mainly  use  them  for  reasons  of  volume  of  trade  (i.e.  infrequent 
movements)  and  scale  of  the  business  (i.e.  small  businesses  with  less  substantial 
commercial  and  IT  infrastructure).  Certain  product  categories  (e.g.  exempt  energy 
products,  denatured  alcohol)  are  also  required  to  be  moved  using  the  simplified 
administrative accompanying document (SAAD). 

Although current levels of distance selling of alcohol appeared to be relatively low, there 
were high levels of interest in distance-selling, particularly from small wine-producers in 
wine-growing countries such as France, Italy and Spain.  

Qualitative  evidence  from  the  interviews  and  survey  suggests  that  there  is  a  high 
potential  market  for  distance  sales  of  alcohol  to  consumers,  but  that  it  is  currently  not 
expanding in line with e-commerce growth in other sectors. 

The  analysis  indicates  that  consumers  either  do  not  buy  because  it  is  too  expensive,  or 
because the vendor does not offer this service to them; or consumers buy wine, but they 
ignore that vendors do not comply with the legal requirements when selling and moving 
the wine to them.  Vendors should make consumers aware of the tax rules when buying 
alcohol, and it can be argued that this a requirement implied by consumer legislation. 

42 

 
 
 
6.  CONCLUSIONS AND RECOMMENDATIONS 

6.1. 

Conclusions 

On the whole the arrangements for the authorisation of economic operators to hold, move 
and  receive  goods  under  excise  duty  supervision  are  working  well.  The  compulsory 
automation  of  movement  control  under  the  EMCS  is  judged  to  be  a  success  by  all 
stakeholders. In 2014 the EMCS reduced annual administrative burden by between EUR 
27.5 million and EUR 37 million (depending on the job profiles of the persons involved). 
For  economic  operators  the  results  were  mixed,  although  more  felt  that  EMCS  had 
reduced  compliance  costs  (41%)  than  those  who  felt  that  EMCS  had  increased  costs 
(30%)  whilst  18%  said  that  EMCS  made  no  difference.  EMCS  has  reduced  the 
probability of certain types of fraud, but more needs to be done to make use of the data 
produced  by  the  system,  and  certain  types  of  fraud  are  difficult  to  eliminate  within the 
single  market  due  to  the  (necessary)  absence  of  systematic  physical  control  of  goods 
being  moved  under  these  arrangements.  Nevertheless,  there  are  possibilities  for  further 
improvement,  particularly  in  the  coordination  of  excise  and  customs  procedures  and  in 
the handling of exceptional situations where movements do not complete normally. 

In  contrast,  the  arrangements  for  moving  goods  already  released  for  consumption  to 
another  Member  State  are  much  less  satisfactory:  current  arrangements  are  inefficient, 
insufficient to provide for the free movement of excise goods and potentially open to tax 
evasion and fraud. Traders who used the duty paid arrangements reported a mean time of 
221 minutes per movement taken up by compliance formalities. Member States reported 
times  of  between  4  and  8  hours  taken  up  with  administrative  tasks  associated  with  the 
processing of duty paid documentation.  Distance selling is effectively impossible under 
the current arrangements, due to the high costs involved relative to the small size of the 
consignments and the arrangements provided for in the legislation appear to be rarely if 
ever  used.  This  is  a  particular  issue  for  Small  and  Medium  Enterprises,  who  make  the 
most use of these arrangements. 

6.2. 

Recommendations 

The  following  table  summarises  the  recommendations  of  the  consultants  based  on  the 
two studies. 

43 

 
 
Table 3: Recommendations for Chapters I to IV44 

Number  Study Recommendation  
1 

2 

3 

4 

5 

6 

7 

8 

9 

Member  States  should  ensure  that  information  on  authorisation  requirements 
and  procedures  is  clear,  transparent  and  made  available  to  economic  operators 
(preferably by being published online). 
Member  States  should  ensure  that  guarantees  are  set  at  a  level  which  is 
adequate to cover the risk of holding and moving the goods, but not to the extent 
that they discourage entry into the market by legitimate economic operators. 
In order to ensure that EMCS is an effective tool for combating fraud, the European 
Commission and Member States should explore how the maximum journey time 
for a movement can be reduced, possibly by adapting it to the mode of transport 
and/or estimated journey distance.  
The  European  Commission  and  Member  States  should  explore  the  feasibility  of 
implementing  a  European  risk  analysis  system.  Such  a  system  could  include, 
inter  alia,  a  database  of  movements,  as  well  as  the  development  of  risk 
parameters  for  detecting  unusual  patterns  (e.g.  an  alcohol  producer  intending  to 
move cigarettes), with data being provided by all Member States in relation to how 
long  an  operator  has  been  in  operation,  where  else  it  trades,  and  whether  there 
are any current investigations involving the operator. 
The  European  Commission  should  take  steps  to  clarify  Article 10  of  the  Directive, 
so that the competence to collect the tax is clear in the case of  exceptions (e.g. 
irregularities, shortages). Such a clarification may require revision of the Directive. 
Administrations and traders should seek to make full use of the existing message 
options available in the EMCS to ensure effective communication between actors 
(e.g.  between  consignor  and  Member  State  of  destination;  or  between  consignor 
and  consignee  in  the  case  of  a  change  of  destination).  Based  on  careful  cost-
benefit  analysis,  additional  EMCS  functionality  to  aid  communication  should  be 
considered (e.g. a standardised form or template). 
The European  Commission  should clarify the application of Directive 2008/118/EC 
to  specific  energy  products,  particularly  those  not  mentioned  in  Article  20(1) 
Directive 2003/96/EC. 
In  addition,  in  order  to  improve  control,  the  European  Commission  and  Member 
States  should  consider  bringing  particular  products  into  the  scope  of  the  EMCS 
(e.g. lubricating oils). 
The  European  Commission  and  Member  States  should  continue  their  efforts  to 
clarify the categorisation of denatured alcohol. 
The on-going work of the Fiscalis and Customs 2020 Project Group for Coordination 
of Excise and Customs procedures in relation to movements of excise goods under 
EMCS  should  be  continued,  and  its  solutions  should  be  implemented  by  the 
European Commission and Member States. 

44 

 
 
 
 
 
                                                 
 
Table 4: Recommendations for Chapter V45 

Number 
10 

11 

12 

13 

14 

15 

Study Recommendation 
Member States should ensure that sufficient data is collected on 
duty  paid  movements  (B2B  and  distance  selling)  in  order  to 
improve surveillance and monitoring capacity. 
Further  clarification  should  be  provided  as  to  the  scope  of 
Article 33 and Article 36 of Directive 2008/118/EC. 
In  order  to  remove  inconsistencies  in  how  the  SAAD  is  used, 
further guidance should be provided on  the data to be entered 
into the form 
Further  specify  conditions  and  procedures 
to 
reimbursement  of  excise  duties  (B2B  arrangements)  in  the 
Member State of dispatch. 
Further analyse options to include B2B duty paid movements in 
EMCS  (Excise  Movement  and  Control  System),  taking  careful 
account  of  the  needs  of  all  business  types  and  the  costs  of 
computerization. 
Analyse  possible  ways  to  replace  the  requirement  of  Member 
States  to  use  a  tax  representative  in  the  Member  State  of 
destination for distance selling. 

related 

45 

 
 
                                                 
 
7.  TABLE OF ABBREVIATIONS 

Abbreviation  Meaning 

AAD 

ARC 

C&C 

Accompanying Administrative Document 

Administrative Reference Code 

Counterfeit and contraband 

CCCIP 

Community Customs Code Implementing Provisions 

CDA 

CED 

CoD 

Completely denatured alcohol 

Committee on Excise Duty 

Change of destination 

CS/MISE 

Central System Services for the Management Information System for 
Excise 

DDNXA 

Design Document for National Export Application (ECS) 

e-AD 

EC 

ECP 

ECS 

ECWP 

EMCS 

ETD 

EU 

FESS 

HMRC 

LNG 

MS 

REFIT 

RoR 

SAAD 

SAD 

SEED 

Electronic Administrative Document 

European Commission 

Excise Computerisation Project 

Export Control System 

EMCS Computerisation Working Party 

Excise Movement and Control System 

Energy Taxation Directive 

European Union 

Functional Excise System Specification 

Her Majesty's Revenue and Customs 

Liquefied natural gas 

Member State 

Regulatory Fitness and Performance 

Report of Receipt 

Simplified Administrative Accompanying Document 

Single Administrative Document  

The System for Exchange of Excise Data is an online database which 
permits the verification of excise authorisations 

UCC 

Union Customs Code 

46