Proposal for a COUNCIL IMPLEMENTING DECISION authorising France to apply a reduced rate of taxation to unleaded petrol used as motor fuel and consumed in Corsican departments in accordance with Article 19 of Directive 2003/96/EC
Date: 2019-01-17
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Corsica, France, derogation from EU law, fuel tax, lead-free petrol, tax relief

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   EUROPEAN COMMISSION  Brussels, 17.1.2019  COM(2019) 6 final 2019/0004 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising France to apply a reduced rate of taxation to unleaded petrol used as motor fuel and consumed in Corsican departments in accordance with Article 19 of Directive 2003/96/EC  
 
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The  taxation  of  energy  products  and  electricity  in  the  EU  is  governed  by  Council  Directive 
2003/96/EC (hereafter 'the Directive'). The Directive specifies which products are taxable, the 
uses that make them taxable and the minimum rates at which they must be taxed depending 
on whether they are used as motor fuel, for certain industrial or commercial purposes or for 
heating. 

Pursuant  to  Article  19(1)  of  the  Directive,  the  Council,  acting  unanimously  on  a  proposal 
from the Commission, may authorise any Member State to introduce further exemptions from 
or reductions in the rate of excise duties for specific policy considerations. 

The objective of this proposal is to permit France to continue to apply a reduction in the rate 
of taxation on unleaded petrol used as motor fuel and consumed in the Corsican departments 
with  a  view  to  partially  offsetting  the  additional  costs  induced  by  geographical  remoteness 
and difficulties of supply. 

• 

The request and its general context 

Council  Decision  2007/880/EC  of  20  December  2007  authorised  France  to  apply  a  reduced 
rate  of  excise  duty  to  unleaded  petrol  used  as  motor  fuel  and  consumed  in  the  Corsican 
departments  on  the  condition  that  the  reduction  does  not  go  beyond  the  additional  cost  of 
transport,  storage  and  distribution  compared  with  mainland  France.  Council  Implementing 
Decision 2013/192/EU of 22 April 2013 authorised the France to continue to apply a reduced 
rate  of  taxation  to  unleaded  petrol  used  as  motor  fuel  and  consumed  in  the  Corsican 
departments  in  accordance  with  Article  19  of  Directive  2003/96/EC.  The  objective  of  these 
Decisions is to permit France to partially offset the additional costs induced by geographical 
remoteness  and  difficulties  of  supply.  In  application  of  this  Decision,  France  applied  a 
reduction of EUR 1 per hectolitre of unleaded petrol 

By  letter  dated  26  September  2018,  the  French  authorities  requested  an  authorisation  to 
continue to apply a reduction of EUR 1 per hectolitre for a period of six years, from 1 January 
2019 to 31December 2024. By letters dated 25 October 2018 and 7 November 2018 France 
has  submitted  additional  information  concerning  the  justification  of  the  request  for 
derogation.  

As  in  the  previous  requests,  the  French  authorities  argued  that  the  reduction  in  the  rate  of 
excise duty is required to offset part of the higher price of unleaded petrol. The pump price of 
unleaded petrol (SSP95) in Corsica on September 2018 was EUR 1.67 per litre compared to 
an average price of EUR 1.63 per litre on the French territory (on the perimeter of the French 
main suppliers, excluding retail) resulting from the insular nature of Corsica.  

According to the French authorities, several reasons explain this additional cost. 

(1) 

Given that there is  no refinery in  Corsica, transport  and distribution costs are higher 
for delivery of fuel there because of the additional costs associated with maritime and 
road freight (longer distance and journey time). The distance from the nearest refinery 
in  Fos-sur-Mer  to  the  two  storage  warehouses  on  Corsica  in  Luciano  and  Ajaccio  is 
respectively 358 km (of which 182 km by sea) and 315 km (of which 170 km by sea). 
Transport to these warehouses exclusively takes place by boat, whereas all warehouses 
situated on mainland France are all directly linked to a refinery through a network of 
pipelines,  which  considerably  reduces  transport  costs.  As  an  example,  costs  of 

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(2) 

(3) 

transport to Corsica are four to five times higher than costs for a transport by pipeline 
between Le Havre and the region of Paris. 
The much smaller capacity of the two warehouses in Corsica (respectively 16 000 m3 
and  19 000  m3)  requires  more  frequent  supplies  to  them.  Investment  in  the 
maintenance, compliance of facilities and staff costs are not related to business volume 
of the depots. The total volume of fuel entered in these depots is less than 400 000 m3 
per year, which is half of the average volume for a depot on the mainland. Hence, the 
storage cost per m3 is higher in Corsica. 

The  fixed  costs  borne  by  distributors  must  be  absorbed  by  a  lower  sales  volume 
because  of  the  low  population.  The  number  of  inhabitants  is  37,7/km2  in  Corsica 
compared to 118/km2 (Insee 2018) in mainland France, the very mountainous terrain 
(90% mountains) and the small volumes of fuel sold by each service station. The areas 
of  distribution  are  therefore  isolated  and  far  apart  from  each  other.  The  number  of 
inhabitants per service station (is 2 485 compared to an average of 5 768 on the French 
territory and the sales volume per service station amounts to 2 278 m3 for Corsica as 
compared to 4 149 m3 in mainland France). 

As illustrated in the table below, the international petrol price quotations for Corsica and for 
mainland France are the same amounting to EUR 46.62 per 100 litres. The difference in the 
gross  transport  costs  is  very  high  between  mainland  France  and  Corsica,  respectively  EUR 
13.87 per 100 litres and EUR 35.05 per 100 litres. In spite of the lower tax rates (both energy 
tax and VAT) the final price for unleaded petrol is higher in Corsica than in mainland France. 

The table below shows the price structure of petrol and diesel on October 2018. 

Price of fuel (EUR per hl) 

Average price of a petrol in EUR 
per 100 litres  

Mainland 
France 

Corsica 

South 
Corsica 

Price including taxes 

155.55 

168.33 

167.78 

VAT 

Energy tax  

Gross  transport  and  distribution 
margin 

25.93 

69.14 

13.87 

19.37 

67.29 

35.05 

19.30 

67.29 

34.57 

International quotations 

46.62 

46.62 

46.62 

Source: www.prix- carburants.gouv.fr 

France  also  pointed  out  that  the  measure  comes  under  the  specific  government  policy  in 
favour of development in Corsica, justified by the handicap of insularity.  

• 

Provisions in the field covered by the proposal 

Council Directive 2003/96/EC of 27 October  2003 restructuring the Community framework 
for the taxation of energy products and electricity.  

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• 

Assessment of the measure under Article 19 of Directive 2003/96/EC 

Specific policy considerations 

Article 19(1), first subparagraph, of the Directive reads as follows:  

'In addition to the provisions set out in the previous Articles, in particular in Articles 5, 15 and 
17, the Council, acting unanimously on a proposal from the Commission, may authorise any 
Member  State 
introduce  further  exemptions  or  reductions  for  specific  policy 
considerations.' 

to 

The tax differentiation places unleaded petrol consumers in Corsica on a more equal footing 
with  similar  consumers  on  the  mainland  by  partially  offsetting  the  additional  cost  borne  by 
consumers  in  Corsica.  The  proposed  measure  therefore  meets  certain  regional  and  cohesion 
policy objectives.  

The tax reduction does not go beyond the additional costs of transport and distribution borne 
by consumers in Corsica. The EUR 10 per1 000 l reduction in the cost of unleaded petrol is 
much smaller than the difference between the respective final prices.  

The  reduced  rate  of  taxation  on  the  consumption  of  unleaded  petrol  currently  applied  in 
Corsica  (EUR  672.9/1 000 l)   is  still  appreciably  higher  than  the  minimum  EU  level  set  by 
Directive 2003/96/EC (EUR 359/1 000 l).  

Consistency with the other policies and objectives of the Union 

When the Commission examines a request, it takes into account the proper functioning of the 
internal  market,  the  need  to  ensure  fair  competition  and  the  implementation  of  the  EU’s 
health, environment, energy and transport policies.  

The  measure  is  acceptable  from  the  point  of  view  of  the  proper  functioning  of  the  internal 
market  and  of  the  need  to  ensure  fair  competition.  It  merely  seeks  to  partially  offset  the 
additional  costs  associated  with  Corsica’s  island  status.  In  view  of  the  remote  and  insular 
nature of the departments to which it applies and the moderateness of the reduction in the rate 
-  which  is,  moreover,  very  high  compared  with  the  EU  minimum  -  the  measure  is  not 
expected  to  lead  to  changes  in  fuel  consumption,  through  the  attraction  of  consumers  from 
outside these areas. 

As the effect of the tax relief on transport is expected to be  insignificant, and compensatory 
policies  could  be  found  for  any  marginal  effects  which  might  occur,  the  measure  is  not 
incompatible with the health, environment, energy and transport policies of the union. 

Period  of  application  of  the  measure  and  development  of  the  EU  framework  on  Energy 
Taxation 

Article 19(2) of Directive 2003/96/EC lays down, for this type of measure, a maximum period 
of six years, with the possibility of renewal. Taking into account the absence of any negative 
impact  of the current  arrangement on intra-EU trade and on the  general  level  of taxation of 
fuels in France, in order to ensure legal certainty for the region, the Commission suggests at 
this stage to grant the authorisation for six years, i.e. from 1 January 2019 until 31 December 
2024. 

However,  in  order  not  to  undermine  future  general  developments  of  the  existing  legal 
framework, it is appropriate to provide that, should the Council, acting on the basis of Article 
113 of the Treaty, introduce a modified general system for the taxation of energy products to 
which the present authorisation would not be adapted, this Decision shall expire on the day on 
which those modified rules become applicable. 

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Should  the  Council  adopt  such  a  new  system  and  should  the  Commission  consider  that  the 
authorisation  proposed  herewith  is  still  warranted,  it  would  examine,  positively  and  in  a 
timely  manner,  any  request  from  France  for  a  similar  authorisation  adapted  to  that  new 
system, so as to provide for the continuity of the present proposal. 

• 

State aid rules 

The measure may constitute State aid in accordance with Article 107(1) of the TFEU. Since 
the reduced rates are above the EU minima, the measure would be covered by Article 44 of 
Regulation  651/2014/EU  (the  General  Block  Exemption  Regulation)  and  would  thus  be 
considered compatible with the internal market. Upon expiry of the period of validity of the 
General Block Exemption Regulation on 31 December 2020 the aid remains exempted during 
an  adjustment  period  of  six  months  (see  Article  58(4)  of  the  General  Block  Exemption 
Regulation).  The  decision  is  without  prejudice  to  the  applicable  State  aid  rules  during  the 
period covered by the derogation. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 19 of Council Directive 2003/96/EC. 

• 

Principle of subsidiarity 

The field of indirect taxation covered by Article 113 of the TFEU is not in itself within the 
exclusive competence of the EU within the meaning of Article 3 of the Treaty. 

However,  pursuant  to  Article  19  of  Directive  2003/96/EC,  the  Council  has  been  granted  an 
exclusive competence, as a matter of secondary law, to authorise a Member State to introduce 
further exemptions or reductions within the meaning of that provision. Member States cannot 
therefore substitute themselves for the Council. As a result, the principle of subsidiarity is not 
applicable  to  the  present  implementing  decision.  In  any  event,  since  this  act  is  not  a  draft 
legislative act, it should not be transmitted to national Parliaments pursuant to Protocol No 2 
to the Treaties for review of compliance with the subsidiarity principle. 

• 

Principle of proportionality 

The proposal respects the principle of proportionality. The tax reduction does not exceed what 
is necessary to attain the objective in question. 

• 

Choice of instrument 

Instrument proposed: Council implementing decision. 

Article 19 of Directive 2003/96 makes provision for this type of measure only. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

The measure does not require the evaluation of existing legislation. 

• 

Consultation of interested parties 

The proposal consists of a tax reduction which concerns only France. 

• 

Obtaining and using expertise 

No external expertise has been used. 

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• 

Impact assessment 

No impact assessment has been carried out. 

• 

Fundamental rights  

The measure has no bearing on fundamental rights. 

4. 

BUDGETARY IMPLICATIONS 

The  measure  does  not  impose  any  financial  and  administrative  burden  on  the  Union,  The 
proposal therefore has no impact on the Union budget. 

5. 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements  

An  implementation  plan  is  not  necessary.  This  proposal  concerns  an  authorisation  for  a  tax 
reduction  for  an  individual  Member  State  upon  its  own  request.  It  is  provided  for  a  limited 
period  of  six  years.  The  tax  rate  that  will  apply  will  be  higher  than  the  minimum  level  of 
taxation  set  by  the  Energy  Taxation  Directive.  The  measure  can  be  evaluated  in  case  of  a 
request for a renewal after the six-year period has expired. 

• 

Summary of the measure proposed 

The  Commission  proposes  to  authorise  the  tax  reduction  of  EUR  10  per  1 000 l  until  31 
December  2024,  thereby  permitting  France  to  apply  a  reduced  rate  of  taxation  to  unleaded 
petrol used as motor fuel and consumed in the Corsican departments. 

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2019/0004 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising France to apply a reduced rate of taxation to unleaded petrol used as motor 
fuel and consumed in Corsican departments in accordance with Article 19 of Directive 
2003/96/EC 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, 

Having  regard  to  Council  Directive  2003/96/EC  of  27  October  2003  restructuring  the 
Community framework for the taxation of energy products and electricity 1, and in particular 
Article 19(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

1 
2 

3 

By  Council  Decision  2007/880/EC 2  and  Council 
Implementing  Decision 
2013/192/EU  3 France was authorised to apply a reduced rate of taxation to unleaded 
petrol used as motor fuel and consumed in Corsican departments in accordance with 
Article 19 of Directive 2003/96/EC. 

followed  under  Decision  2007/880/EC  and 

By letter dated 26 September 2018, France requested authorisation to apply a reduced 
rate  of  energy  tax  to  unleaded  petrol  used  as  motor  fuel  by  way  of  extension  of  a 
practice 
Implementing  Decision 
2013/192/EU.  The  reduction  amounts  to  EUR  1  per  hectolitre.  The  authorisation  is 
requested  for  the  period  from  1  January  2019  to  31  December  2024.  In  Corsica  the 
cost  of  supplying  unleaded  petrol  to  the  forecourt  is  appreciably  higher  than  in 
mainland  France,  final  prices  being  over  EUR  0.10  per  litre  higher  than  on  the 
mainland. 

By reducing the tax on unleaded petrol borne by consumers in Corsica, the consumers 
concerned will be placed on a more equal footing with those on the mainland France. 
The measure therefore meets regional and cohesion policy objectives. 

The  tax  reduction  is  no  larger  than  what  is  necessary  to  allow  for  the  additional 
transport and distribution costs borne by consumers in Corsica. 

The  final  level  of  taxation  complies  with  the  minimum  rates  laid  down  in  Directive 
2003/96/EC - currently EUR 359 per 1000 litres (or EUR 35.90 per hectolitre). 

OJ L 283, 31.10.2003, p. 51. 
Council  Decision  2007/880/EC  of  20  December  2007  authorising  France  to  apply  a  reduced  rate  of 
taxation to unleaded petrol used as motor fuel and consumed in the Corsican departments in accordance 
with Article 19 of Directive 2003/96/EC (OJ L 346, 29.12.2007, p. 15). 
Council  Implementing  Decision  2013/192/EU  of  22 April  2013  authorising  the  French  Republic  to 
apply a reduced rate  of taxation to  unleaded petrol  used as  motor  fuel and consumed in the Corsican 
departments in accordance with Article 19 of Directive 2003/96/EC (OJ L 113 25.4.2013, p. 13). 

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(6) 

(7) 

(8) 

(9) 

(10) 

In view of the remote and insular nature of the departments to which it applies and the 
moderateness  of  the  reduction  in  the  rate  -  which  is,  moreover,  very  high  compared 
with the minimum level prescribed by Directive 2003/96/EC  - the measure requested 
will not give rise to any movement specifically linked to the supplying of fuel. 

Consequently,  the  measure  is  acceptable  from  the  point  of  view  of  the  proper 
functioning of the internal market and of the need to ensure fair competition and it is 
not  incompatible  with  the  health,  environment,  energy  and  transport  policies  of  the 
Union. 

France  should  therefore  be  authorised,  pursuant  to  Article  19(2)  of  Directive 
2003/96/EC, to apply a reduced rate of taxation to unleaded petrol used as motor fuel 
and consumed in Corsica until 31 December 2024. 

It follows from Article 19(2) of Directive 2003/96/EC that each authorisation granted 
under that Article must be strictly limited in time. 

In  order  to  provide  the  regions  concerned  with  a  sufficient  degree  of  certainty,  the 
authorisation  should  be  granted  for  a  period  of  six  years.  However,  in  order  not  to 
undermine  future  general  developments  of  the  existing  legal  framework,  it  is 
appropriate to provide that, should the Council, acting on the basis of Article 113 of 
the Treaty, introduce a modified general system for the taxation of energy products to 
which  this  authorisation  would  not  be  adapted,  this  Decision  expires  on  the  day  on 
which the rules on that modified system become applicable. 

(11) 

It  should  be  ensured  that  France  can  apply  the  specific  reduction  to  which  this 
Decision relates seamlessly following on from the situation existing before 1 January 
2019, under Implementing Decision 2013/192/EU. The authorisation requested should 
therefore be granted with effect from 1 January 2019. 

(12)  This Decision is without prejudice to the application of the Union rules regarding State 

aid, 

HAS ADOPTED THIS DECISION:  

Article 1 

France  is  authorised  to  apply  a  reduction  in  the  rate  of  taxation  not  exceeding  EUR  1  per 
hectolitre to unleaded petrol used as motor fuel and consumed in the Corsican departments. 

In  order  to  avoid  any  over-compensation,  the  reduction  shall  not  go  beyond  the  additional 
costs of transport, storage and distribution compared with mainland France. 

The reduced rate shall comply with the obligations in Directive 2003/96/EC, in particular the 
minimum rates referred to in Article 7 thereof. 

Article 2 

This Decision shall apply from 1 January 2019 and shall expire on 31 December 2024. 

However,  should  the  Council,  acting  on  the  basis  of  Article  113  of  the  Treaty,  introduce  a 
modified  general  system  for  the  taxation  of  energy  products  to  which  the  authorisation 
granted in Article 1 of this Decision would not be adapted, this Decision shall expire on the 
day on which the rules on that modified system become applicable.  

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This Decision is addressed to France. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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