Proposal for a COUNCIL DECISION amending the period of application of Decision No 940/2014/EU concerning the dock dues in the French outermost regions
Date: 2020-08-11
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: French overseas department and region, derogation from EU law, epidemic, import tax, infectious disease, local tax, originating product, peripheral region, tax exemption, tax relief

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   EUROPEAN COMMISSION  Brussels, 11.8.2020  COM(2020) 371 final 2020/0174 (CNS)  Proposal for a COUNCIL DECISION amending the period of application of Decision No 940/2014/EU concerning the dock dues in the French outermost regions    
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  Treaty  on  the  Functioning  of  the  European  Union  (TFEU)  applies  to  the  outermost 
regions  of  the  Union.  The  French  outermost  regions,  however,  are  excluded  from  the 
territorial scope of the VAT and excise duty directives. 

The  TFEU,  in  particular  Article 110,  does  not  in  principle  authorise  any  difference  in  the 
French outermost regions between the taxation of local products and the taxation of products 
from  metropolitan  France,  the  other  Member  States  or  non-member  countries.  However, 
Article  349  TFEU  provides  for  the  possibility  of  introducing  specific  measures  for  those 
regions because of permanent constraints affecting their economic and social situation. Such 
measures concern various policies, including taxation. 

The  dock  dues  tax  is  an  indirect  tax  in  force  only  in  the  French  outermost  regions  of 
Martinique, Guadeloupe, French Guiana, Réunion and Mayotte. This tax applies to imports of 
products,  irrespective  of  their  origin,  and  to  supplies  of  goods  for  consideration  by  persons 
engaged in production activities. In principle, it applies in the same way to locally produced 
products and to imported products. 
However,  Council  Decision  No 940/2014/EU  of  17 December 20141  authorises  France  to 
apply,  until  31 December 2020,  exemptions  or  reductions  to  dock  dues  in  respect  of  certain 
locally produced products. The Annex to the Decision contains the list of products to which 
the  tax  exemptions  or  reductions  may  be  applied.  The  difference between  the  taxation  of 
locally produced products and that of other products may not exceed 10, 20 or 30 percentage 
points, depending on the product. 

The purpose of these tax differentials is to offset the competitive disadvantages affecting the 
outermost  regions,  which  increase  production  costs  and  therefore  the  cost  price  of  products 
produced  locally.  Without  specific  measures,  local  products  would  be  less  competitive  than 
those produced elsewhere, even taking into account the cost of transporting such goods. This 
would make it harder to maintain local production with higher production costs. 

Following the expiry of the Council Decision, the Commission launched an external study to 
assess the current arrangements and the potential impact of various options for the period after 
2020. On the basis of that study, the Commission considers it justified to grant the requested 
extension, with some modifications to the existing arrangements. 

The Commission has therefore undertaken an analysis of the lists of the products to which the 
French authorities wish to apply differentiated taxation. This analysis is a lengthy process for 
both  the French authorities and the Commission, requiring verification, for each product,  of 
the  reasons  for  differentiated  taxation  and  its  proportionality,  so  as  to  ensure  that 
differentiated taxation does not undermine the integrity and the coherence of the Union legal 
order, including the internal market and common policies. 

The crisis caused by the COVID-19 pandemic has seriously delayed the work carried out by 
the  French  authorities  to  collect  all  the  necessary  information.  Consequently,  this  work  has 
not yet been completed. 

1 
French outermost regions, OJ L 367, 23.12.2014, p. 1. 

Council  Decision  No  940/2014/EU  of  17  December  2014  concerning  the  dock  dues  in  the 

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Failure to adopt any proposal before 1 January 2021 might create a legal vacuum as it would 
rule  out  application  of  any  differentiated  taxation  in  the  French  outermost  regions  after 
1 January 2021,  even  in  the  case  of  products  for  which  differentiated  taxation  would  prove 
justified in the end. 

An additional period of six months is therefore required to make it possible to complete the 
work under way and to give the French authorities the opportunity to collect all the necessary 
information  and  to  allow  the  Commission  time  to  present  a  balanced  proposal  that  takes 
account of the various interests at stake. 

• 

Consistency with existing provisions in the policy area 

The  2017  Communication  on  a  stronger  and  renewed  strategic  partnership  with  the 
EU’s outermost  regions2  stresses  that  the  outermost  regions  continue  to  face  serious 
difficulties,  many  of  which  are  permanent.  The  Communication  presents  the  Commission’s 
new approach to how to galvanise the development of the outermost regions by making the 
most of their assets and tapping into the opportunities provided by new vectors of growth and 
job creation. 

Against  that  background,  the  objective  of  this  proposal  is  to  promote  and  maintain  certain 
local production activities which are particularly at risk, thereby boosting employment in the 
French  outermost  regions.  The  proposal  deepens  the  single  market  and  makes  these  local 
outputs  competitive  again  by  compensating  for  the  disadvantages  resulting  from  their 
geographical and economic situation. It supplements the Programme of Options Specifically 
Relating  to  Remoteness  and  Insularity  (POSEI)3,  which  aims  to  support  the  primary  sector 
and the production of raw materials, the European Maritime and Fisheries Fund (EMFF)4 and 
the  European  Regional  Development  Fund  (ERDF)5,  which  includes  an  additional  special 
allocation  to  offset  the  additional  costs  of  the  outermost  regions  inherent  in  their  own 
constraints. 

Consistency with other Union policies 

• 
The proposal is consistent with the 2015 Single Market Strategy6, in which the Commission 
seeks to establish a deeper and fairer Single Market that will benefit all stakeholders. One of 
the objectives of the proposed measure is to mitigate the additional costs faced by companies 
in the outermost regions, which impede their full participation in the Single Market. In view 
of the limited volume of production concerned in the French outermost regions, no negative 
impact on the proper functioning of the Single Market is expected. 

COM(2017)623 final. 
Regulation (EU) No 228/2013 of the European Parliament and of the Council of 13 March 2013. 
Regulation (EU) No 508/2014 of the European Parliament and of the  Council of 15 May 2014 on the 

2 
3 
4 
European Maritime and Fisheries Fund. 
5 
Regulation  (EU)  No 1303/2013  of  the  European  Parliament  and  of  the  Council  of  17 December 2013 
laying down common provisions on the European Regional Development Fund, the European Social Fund, the 
Cohesion  Fund,  the  European  Agricultural  Fund  for  Rural  Development  and  the  European  Maritime  and 
Fisheries  Fund  and  laying  down  general  provisions  on  the  European  Regional  Development  Fund,  the 
European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund. 
6 
the 
the  European  Parliament, 
to 
the  Commission 
European Economic  and  Social  Committee  and  the  Committee  of  the  Regions  ‘Upgrading  the  Single  Market: 
more opportunities for people and business’ [COM(2015)550 final], p. 4. 

Communication 

the  Council, 

from 

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2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  legal  basis  for  this  proposal  is  Article  349  of  the  TFEU,  which  enables  the  Council  to 
adopt  specific  provisions  laying  down  the  conditions  of  application  of  the  Treaties  to  the 
EU outermost regions. 

• 

Subsidiarity (for non-exclusive competence) 

Only the Council is authorised, on the basis of Article 349 TFEU, to adopt specific measures 
to  adjust  the  application  of  the  Treaties  to  the  outermost  regions,  including  the  common 
policies,  because  of  the  permanent  constraints  which  affect  the  economic  and  social 
conditions of those regions. This also holds for authorising derogations to Article 110 TFEU. 
The proposal therefore complies with the principle of subsidiarity. 

• 

Proportionality 

This proposal complies with the principle of proportionality as set out in Article 5(4) of the 
Treaty  on  European  Union.  The  purpose  of  this  proposal  is  to  extend  the  existing 
arrangements  by  six  months  to  enable  a  comprehensive  product-by-product  analysis  to  be 
carried  out  of  the  request  to  authorise  the  application  of  differentiated  taxation to  offset  the 
competitive disadvantages suffered by local production activities. No other extension will be 
authorised  until  this  product-by-product  analysis  of  the  French  authorities'  request  has  been 
completed. 

• 

Choice of instrument 

A Council decision is proposed in order to amend Council Decision No 940/2014/EU. 

3. 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

The  relevant  directorates-general  of  the  European  Commission  have  been  consulted  on  the 
text of this proposal. 

A  derogation  from  the  Better  Regulation  Guidelines  has  been  granted  due  to  the  limited 
overall impact of the dock dues arrangements on the EU as a whole. 

4. 

BUDGETARY IMPLICATIONS 

The proposal has no impact on the budget of the Union.  

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

A comprehensive review of Decision No 940/2014/EU is under way with a view to renewing 
the arrangements. An analytical document, to which an evaluation of the arrangements will be 
attached, will be drawn up on the basis of the external study and the information provided by 
France. 

• 

Detailed explanation of certain provisions of the proposal 

This part is not applicable in so far as the provisions of the proposal speak for themselves. 

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2020/0174 (CNS) 

Proposal for a 

COUNCIL DECISION 

amending the period of application of Decision No 940/2014/EU concerning the dock 
dues in the French outermost regions  

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 349 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Parliament7,  

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

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Council Decision No 940/2014/EU of 17 December 20148 concerning the dock dues in 
the French outermost regions authorises the French authorities to apply exemptions or 
reductions to dock dues for products produced locally in the French outermost regions 
and listed in the Annex to the Decision. The maximum authorised tax differential is, 
depending  on  the  products  and  the  overseas  department  in  question,  10,  20  or 
30 percentage points. Decision No 940/2014/EU applies until 31 December 2020. 

is  of 

the  view 

France 
the 
French outermost regions persist, and has submitted a request to the Commission for a 
system of differentiated taxation similar to the current system to be maintained beyond 
1 January 2021, until 31 December 2027. 

the  competitive  disadvantages  suffered  by 

that 

However,  analysing  the  lists  of  the  products  to  which  France  wishes  to  apply 
differentiated taxation is a lengthy process requiring verification, for each product, of 
the  reasons  for  differentiated  taxation  and  its  proportionality,  so  as  to  ensure  that 
differentiated  taxation  does  not  undermine  the  integrity  and  the  coherence  of  the 
Union legal order, including the internal market and common policies. 

The crisis caused by the COVID-19 pandemic has seriously delayed the work carried 
out  by  the  French  authorities  to  collect  all  the  necessary  information.  Consequently, 
this work has not yet been completed. 

Failure  to  adopt  a  proposal  before  1 January 2021  might  create  a  legal  vacuum  as  it 
would  rule  out  application  of  any  differentiated  taxation  in  the  French  outermost 
regions after 1 January 2021. 

OJ C  of , p. . 
Council  Decision  No  940/2014/EU  of  17  December  2014  concerning  the  dock  dues  in  the 
French outermost regions, OJ L 367, 23.12.2014, p. 1. 

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(6) 

An  additional  period  of  six  months  is  required  to  make  it  possible  to  complete  the 
work under way and to give the Commission time to present a balanced proposal that 
takes account of the various interests at stake. 

(7) 

Decision No 940/2014/EU should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION: 

In  Article  1(1)  of  Decision  No 940/2014/EU  the  date  ‘31 December 2020’  is  replaced  by 

‘30 June 2021’.  

Article 1 

This Decision shall apply from 1 January 2021. 

Article 2 

This Decision is addressed to the French Republic. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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