COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Council Directive amending Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages
Date: 2018-05-25
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: alcohol, approximation of laws, beer, beverage industry, chemical alcohol, cider, ethanol, excise duty, tax harmonisation, tax relief

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   EUROPEAN COMMISSION  Brussels, 25.5.2018  SWD(2018) 258 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a Council Directive amending Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages {COM(2018) 334 final} - {SEC(2018) 254 final} - {SWD(2018) 259 final}  
 
 
Executive Summary Sheet 

Impact assessment on a proposal for the revision of Council Directive 1992/83/EEC on the harmonisation of the 
structures of excise duties on alcohol and alcoholic beverages 

A. Need for action 

Why? What is the problem being addressed?  
According to the Commission Report submitted to Council in October 2016, which was based on an independent 
study carried out in 2014/2016, Directive 1992/83/EEC has proven to be effective and generally appropriate for 
the collection of excise duties on alcohol and alcoholic beverages.   
Nevertheless some problems have been identified and inefficiencies persist causing possible distortions of the 
internal market: 
 Dysfunctions in the application of exemptions for denatured alcohol 
 Dysfunctions in the classification of certain alcoholic beverages 
 Dysfunctional application of reduced excise duty rates  
 Unclear provisions to measure the Plato degree of sweetened / flavoured beer 

What is this initiative expected to achieve?  
The initiative seeks to achieve: 
 the  equal  fiscal  treatment  of  economic  operators  across  all  alcohol  sectors,  including  small  producers  of  all 

types of alcohol 

 the prevention and correction of any distortions of competition in the application of exemptions for denatured 

alcohol and reduced excise duty rates 

 the provision of clear and efficient rules for all types of denatured alcohol and its uses 
 the reduction of administrative burdens and compliance costs for economic operators and tax authorities 
 legal  certainty  in  the  area  of  classification,  the  exemption  for  denatured  alcohol  and  the  Plato  degree  of 

sweetened / flavoured beer 

 the reduction of fraud and tax evasion, specifically in the area of denatured alcohol. 

What is the value added of action at the EU level?  
It is apparent that the functioning of the current EU legislation for the structure of excise duties on alcohol and 
alcoholic  beverages  is  causing  disturbance  to  both  Member  States  and  economic  operators.  No  action  at  EU 
level coincides with the business-as-usual situation, where: 
 divergent interpretations and legal uncertainty will persist 
 adverse impacts on the internal market functioning will continue 
 competitive distortions will persist 
 implementation  problems  will  remain  resulting  in  administrative  burdens  and  compliance  costs  for  economic 

operators and Member States  

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
Dysfunctions in the application of exemptions for denatured alcohol 
 Both  legislative  and  non-legislative  options  were  considered  in  addressing  this  problem.  The  capacity  / 
confidence  building  measures  as  a  standalone  option  was  considered,  however  as  a  standalone  option  its 
success would be minimal. Therefore the preferred option is to clarify the wording of the Directive to increase 
the legal certainty within this area. 

Dysfunctions in the classification of certain alcoholic beverages 
 The  preferred  option  is  an  amendment  of  the  Directive  to  create  a  new  category  for  traditional  fermented 
beverages  such  as  cider  and  perry.  This  would  ensure  consistency  of  implementation  across  all  Member 
States. Adopting guidelines and other non-binding instruments are complimentary options which will form part 
of the preferred option going forward. 
Dysfunctional application of reduced rates  
 The  options  considered  to  ensure  legal  certainty  in  the  operation  of  the  reduced  rates  for  small  producers 
included a regulatory and non-regulatory option. Due to the success of previous non-binding interventions and 
the speed of developments in this area, the non-regulatory option is the preferred. 

 Improving the cross-border functioning of reduced rate scheme could be addressed by non-binding instrument 

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or an amendment to the Directive.  In the absence of a harmonised approach, the legislative option is preferred 
as this would ensure consistency throughout Europe.   

 To ensure the equal fiscal treatment of economic operators, the preferred option is a legislative amendment to 
extend  the  reduced  rates  to  small  cider  makers  and  to  increase  the  alcoholic  strength  threshold  to  which 
reduced rates may be applied.    

Unclear provisions to measure the Plato degree of sweetened / flavoured beer 
 Different policy options were considered to address this issue. An amendment to the Directive is preferred, as 
economic  operators  would  only  reluctantly  switch  away  from  their  current  approach.  Therefore  non-binding 
guidelines would not achieve the objective of legal certainty. 

Who supports which option?  

  Dysfunctions in the application of exemptions for denatured alcohol 

Member  States  support  a  stronger  common  approach  in  this  area  due  to  the  high  risk  of  fiscal  fraud  and 
enforcement  costs  in  this  area.  Economic  operators  prefer  the  capacity  and  confidence  building  measures  in 
order to improve the application of this exemption. 

  Dysfunctions in the classification of certain alcoholic beverages 

Respondents to the Open Public Consultation conceded that there can be added value in a clarification of the 
current  situation.  However  they  believe  that  the  perceived  risks  of  a  legislative  change  tend  to  outweigh  the 
perceived  benefits,  with  the  exception  of  private  individuals.  The  creation  of  a  new  category  for  traditional 
fermented beverages is supported by the cider and beer industries. Feedback from Member States included that 
the  current  provisions  do  not  fully  protect  their  financial  interests  in  relation  to  the  collection  of  excise  duty 
revenue and that the classification provided by the Directive is ambiguous. 

  Dysfunctional application of reduced rates  

Both economic operators and Member States support the options to improve the functioning of the reduced rates 
scheme  for  small  producers.  Both  supported  the  extension  of  the  relief  to  small  cider  makers.  Increasing  the 
threshold for low strength alcohol was supported by beer industry but opposed by the spirits industry.   

  Unclear provisions to measure the Plato degree of sweetened / flavoured beer 

A small majority of respondents to the Open Public Consultation support a regulatory amendment to clarify these 
provisions.  Both  Member  States  and  economic  operators  support  an  amendment  which  is  in  line  with  their 
current approach.   

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
The benefits of the preferred options include: 

Increased legal certainty 

 
  Reduced distortions of competition 
  Reduced administration burdens and compliance costs 
  Strengthen the fight against fraud and tax evasion 

What are the costs of the preferred option (if any, otherwise main ones)?  
Adjustment  costs  for  each  of  the  preferred  options  would  result  due  to  the  adaptation  of  some  control  and 
monitoring  processes.  These  costs  are  mainly  negligible.  For  a  detailed  breakdown  of  costs  for  each  problem 
area, please see the Impact Assessment, Annex III.  

How will businesses, SMEs and micro-enterprises be affected?  
The  increased  legal  certainty  would  ensure  a  consistent  treatment  of  economic  operators  throughout  the  EU, 
which will reduce cross-border disparities and distortion of competition. 

Will there be significant impacts on national budgets and administrations?  
No significant negative impact is expected on national budgets and administrations. 

Will there be other significant impacts?  
Excise  and  custom  national  authorities,  economic  operators  and  consumers  are  the  main  stakeholders  in 
relation to the problems and options of this initiative. A reduction in denatured alcohol fraud will have a positive 
impact on public health. No impact is expected on other policy areas. 

D. Follow up 

When will the policy be reviewed?  
The  Commission  will  prepare  a  retrospective  evaluation  of  the  functioning  of  the  new  legislation  at  least  five 
years after its entry into force, allowing the markets to adjust and the results and impacts to materialise. 

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