Proposal for a COUNCIL IMPLEMENTING DECISION authorising Germany to apply a reduced rate of taxation to electricity directly provided to vessels at berth in a port in accordance with Article 19 of Directive 2003/96/EC
Date: 2020-08-28
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Germany, electrical energy, electricity supply, excise duty, harbour installation, tax relief, vessel

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   EUROPEAN COMMISSION  Brussels, 28.8.2020  COM(2020) 435 final 2020/0207 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising Germany to apply a reduced rate of taxation to electricity directly provided to vessels at berth in a port in accordance with Article 19 of Directive 2003/96/EC  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Taxation  of  energy  products  and  electricity  in  the  Union  is  governed  by  Council  Directive 
2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of 
energy products and electricity1 (the ‘Energy Taxation Directive’ or the ‘Directive’). 

Pursuant to Article 19(1) of the Directive, in addition to the provisions laid down in particular 
in  its  Articles  5,  15  and  17,  the  Council,  acting  unanimously  on  a  proposal  from  the 
Commission, may authorise any Member State to introduce further exemptions or reductions 
in the level of taxation for specific policy considerations. 

By virtue of Council Implementing Decision 2014/722/EU of 14 October 20142 (preceded by 
Council Implementing Decision 2011/445/EU of 12 July 20113), Germany has already been 
authorised  to  apply  a  reduced  rate  of  electricity  taxation  to  electricity  directly  supplied  to 
vessels, other than private pleasure craft4, berthed in ports (‘shore-side electricity’). 

The objective of this proposal is to extend that authorisation as requested by Germany, given 
that the current derogation expires on 16 July 2020.  

By  letter  dated  29  January  2020,  the  German  authorities  informed  the  Commission  of  their 
intention to prolong the current measure until 31 December 2025. Additional information was 
provided by letter dated 30 April 2020. 

Germany  is  seeking  for  a  renewal  of  the  authorisation  to  apply  a  reduced  tax  rate  of  EUR 
0.50/MWh, equal to the minimum rate of taxation for electricity for business use as laid down 
in  the  Directive,  to  shore-side  supply  of  electricity  to  vessels5  operating  exclusively  for 
commercial purposes in Union sea and inland waters (including fishing)6. 

The requested period of  validity is  from  17 July  2020 until  31 December 2025, which is  in 
continuity with the current derogation and within the maximum period allowed by Article 19 
of the Energy Taxation Directive. 

This reduction aims to continue to provide an economic incentive for the deployment and use 
of shore-side electricity in order to reduce air pollution in port cities, improve local air quality 
and reduce noise for the health benefit of inhabitants. 

The objective of the measure to be applied by Germany is also to reduce the environmental 
impact of water-borne transport. 

1 
2 
3 
4 

5 

6 

OJ L 283, 31.10.2003, p. 51–70. 
OJ L 300, 18.10.2014, p. 55–56. 
OJ L 191, 22.07.2011, p. 22. 
The  term  ‘private  pleasure  craft’  is  defined  in  Article  14(1)(c),  second  subparagraph  of  Directive 
2003/96/EC. 
Identified in the request as all motor-powered ships, boats and floating structures covered by Chapter 89 
of the Combined Nomenclature. 
As specified in the national law, the measure shall not apply to shore-side electricity supplied to water-
borne vessels during their stay in a shipyard. 

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With  the  requested  measure  Germany  wants  to  keep  an  incentive  for  the  use  of  shore-side 
electricity which is  considered a less polluting alternative to  the  generation of electricity on 
board vessels lying at berth in a port. As indicated in the request, in Germany the standard rate 
of  electricity  tax  is  EUR  20.50/MWh.  The  tax  concession  currently  stands  at  EUR 
20.00/MWh. This means that beneficiaries are charged at the applicable EU minimum tax rate 
for electricity under the Energy Taxation Directive of EUR 0.50/MWh (as specified in Article 
10(1)  and  Table  C  of  Annex  I  to  the  Directive,  for  business  use).  Germany  allows  the  tax 
advantage  to  be  provided  both  as  a  reduced  tax  rate  charged  at  supply  (a  permission  is 
needed) or as a tax refund. 

On  the  other  hand,  according  to  Article  14(1)(c)  of  the  Energy  Taxation  Directive  Member 
States have to exempt energy products used to produce electricity on board ships at berth in 
ports. They may also do so in the case of electricity produced on board ships for navigation on 
inland  waterways  according  to  Article  15(1)(f)  of  the  Directive.  Germany  confirmed  the 
transposition of this latter optional exemption. 

The  German  authorities  have  indicated  that  the  tax  reduction  applies  to  all  ships  other  than 
private pleasure craft, meaning that all ships involved in commercial navigation, regardless of 
size or flag, can benefit from the tax reduction. There is however no obligation for vessels to 
use shore-side electricity. 

As indicated in the request,  since the entry into force of the scheme in 2011, the number of 
beneficiaries has substantially increased; in the inland waterway sector, almost all vessels are 
able  to  purchase  shore-side  electricity;  there  are  currently  very  few  installations  in  the 
maritime  sector,  which  are  not  intended  for  island  ferries.  Furthermore,  according  to  the 
available data, in inland waters, there are 454 operational facilities, 385 planned facilities and 
the potential for a further 115 facilities. In maritime ports, there are 240 operational facilities 
(of which 237 are for island ferry services), 30 planned facilities (mainly for cruise ships and 
container ships) and the potential for a further 32 facilities. 

As an estimation of the tax expenditures from the measure, the German authorities calculated 
the loss of tax revenue  based on the amount of  electricity consumed  for the benefit and the 
amount of the advantage. The tax relief currently amounts to EUR 20.00/MWh (the standard 
tax rate, as mentioned before, is EUR 20.50/MWh). In 2019, 79 302 MWh of electricity were 
taken from shore-side electricity in ports. Taking into account the tax relief, this results in a 
loss of tax revenue for 2019 amounting to EUR 1.586 million. Assuming that increased use of 
shore-side electricity will occur in the future because of the support measures, a loss of EUR 2 
million per year is estimated for the coming years. 

Germany requested the authorisation to be granted until 31 December 2025, starting from 17 
July 2020, without interruption with  the current  derogation and within the maximum period 
indicated in Article 19(2) of the Directive. 

With  the  tax  reduction,  Germany  wants  to  provide  an  incentive  for  vessel  operators  to  use 
shore-side electricity in order to reduce airborne emissions and noise from the combustion of 
fuels  by  vessels  at  berth  as  well  as  CO2  emissions.  The  application  of  a  reduced  tax  rate 
would  strengthen  the  competitiveness  of  shore-side  electricity  relative  to  the  burning  of 
bunker fuels on board, which is tax exempt.  

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• 

Consistency with existing policy provisions in the policy area 

Taxation of electricity is governed by Directive 2003/96/EC, in particular Article 10.  Article 
14(1)(c)  provides  for  an  obligatory  tax  exemption  for  electricity  produced  on  board  a  craft. 
Articles  5,  15  and  17  provide  for  the  possibility  for  Member  States  to  apply  tax 
differentiations, including exemptions and reductions, to certain uses of electricity. However, 
as such, these provisions do not provide for reduced taxation of shore-side electricity. 

According  to  the  German  authorities,  the  measure  constitutes  State  aid  and  falls  within  the 
ambit  of  the  EU  legislation  on  this  subject  matter;  in  particular,  the  scheme  was  deemed 
appropriate and notified under Article 25 of Commission Regulation (EC) 800/20087, which 
is currently replaced by the Commission Regulation 651/2014/EU8, as better specified below. 

Provisions under the Energy Taxation Directive 

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 
for  specific  policy 
considerations. 

further  exemptions  or  reductions 

introduce 

to 

By  means  of  the  tax  reduction  in  question,  the  German  authorities  pursue  the  objective  to 
continue to promote an environmentally less harmful way for ships to satisfy their electricity 
needs while lying at berth in ports and thereby to improve local air quality and reduce noise. 
The Commission has already recommended the use of shore-side electricity as an alternative 
to  the  generation  of  electricity  on  board  the  vessels  at  berth  and  thereby  recognised  its 
environmental advantages9. Currently the standard rate for electricity is EUR 20.50/MWh; the 
tax concession currently stands at EUR 20.00/MWh. Beneficiaries are then charged at the EU 
minimum tax rate for electricity under the Energy Tax Directive of EUR 0.50/MWh and this 
can therefore continue to contribute to the stated policy objective. 

The  possibility  to  introduce  a  favourable  tax  treatment  to  shore-side  electricity  can  be 
envisaged  under  Article  19  of  the  Directive  since  its  purpose  is  to  allow  Member  States  to 
introduce further exemption or reductions for specific policy considerations.  

Germany has requested that the measure applies for almost the maximum period allowed by 
Article 19(2), i.e. 6 years.  In principle, the period of application of the derogation should be 
long  enough  in  order  not  to  discourage  port  operators  and  electricity  suppliers  from 
continuing  or  starting  to  make  the  necessary  investments  in  shore-side  electricity  facilities. 
This period will provide the maximum possible legal certainty also to ship operators, which 
have to plan their investments in on-board equipment.  

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9 

Commission  Regulation  (EC)  No  800/2008  of  6  August  2008  declaring  certain  categories  of  aid 
compatible with the common market in application of Articles 87 and 88 of the Treaty (General block 
exemption Regulation), OJ L 214, 9.8.2008, p. 3–47. 
Commission  Regulation  (EU)  No  651/2014  of  17  June  2014  declaring  certain  categories  of  aid 
compatible  with  the  internal  market  in  application  of  Articles  107  and  108  of  the  Treaty  (OJ  L  187, 
26.6.2014, p. 1–78). 
Commission Recommendation 2006/339/EC of 8 May 2006 on the promotion of shore-side electricity 
for use by ships at berth in Community ports (OJ L 125, 12.5.2006). 

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However,  the  derogation  should  not  undermine  future  developments  of  the  existing  legal 
framework  and  should  take  into  account  the  upcoming  revision  of  the  Energy  Taxation 
Directive  and  a  possible  adoption  by  the  Council  of  a  legal  act  based  on  a  Commission 
proposal for amendment of the Energy Taxation Directive. This review follows the evaluation 
of  the  Energy  Taxation  Directive10  and  the  Council  Conclusions  on  the  EU  energy  taxation 
framework  from  28  November  201911.  In  its  Conclusions,  the  Council  invited  the 
Commission to analyse and evaluate possible options with a view to publishing in due course 
a proposal for the revision of the Energy Taxation Directive; and called on the Commission to 
give  particular  consideration  to  the  scope  of  the  Directive,  minimum  rates  and  specific  tax 
reductions and exemptions.  

Under  these  circumstances,  while  it  appears  appropriate  to  grant  the  authorisation  for  the 
requested  period,  the  validity  of  the  derogation  should  be  made  subject  to  the  entry  into 
application of general provisions in the matter at a point in time earlier than the end of 2025.  

Moreover, the German authorities highlighted that additional measures (such as cut of other 
electricity components, daily service price, investments in shore-side electricity facilities and 
regulatory measures) are needed in order to improve the framework conditions for the use of 
shore-side electricity in ports. 

State aid rules 

The reduced tax rate of EUR 0.50 per MWh envisaged by the German authorities is equal to 
the  EU  minimum  level  of  taxation  for  electricity  for  business  use  pursuant  to  Article  10  of 
Directive 2003/96/EC. The German authorities argue that the scheme was deemed appropriate 
under  Article  25  of  Commission  Regulation  (EC)  800/200812  (old  version  of  the  General 
Block Exemption Regulation, or GBER). As indicated in the request, the existing scheme was 
notified to the Commission on 11 November 2014 under the mentioned Article 25 GBER (old 
version).  That  provision  is  currently  replaced  by  Article  44  of  Commission  Regulation 
651/2014/EU13,  stipulating  the  conditions  under  which  aid  in  the  form  of  reductions  in 
environmental  taxes  under  Directive  2003/96/EC  can  be  exempted  from  the  State  aid 
notification requirements. This proposal is without prejudice to any assessment of the measure 
by the Commission under State aid rules. Moreover, the proposal for a Council implementing 
decision does not prejudge the Member State’s obligation to ensure compliance with State aid 
rules, including Commission Regulation 651/2014/EU. 

• 

Consistency with other Union policies 

Environment and climate change policy 

The requested measure concerns mainly the EU's environment and climate change policy. To 
the extent that it will help to reduce the burning of bunker fuels on board the vessels in ports, 
the measure will in fact contribute to the objective of improving local air quality and reducing 

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SWD(2019) 329 final. 
Council conclusions of 28 November 2019, 14608/19, FISC 458.  
Commission  Regulation  (EC)  No  800/2008  of  6  August  2008  declaring  certain  categories  of  aid 
compatible with the common market in application of Articles 87 and 88 of the Treaty (General block 
exemption Regulation), OJ L 214, 9.8.2008, p. 3–47. 
Commission  Regulation  (EU)  No  651/2014  of  17  June  2014  declaring  certain  categories  of  aid 
compatible  with  the  internal  market  in  application  of  Articles  107  and  108  of  the  Treaty  (OJ  L  187, 
26.6.2014, p. 1–78). 

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noise. Directive 2008/50/EC on Ambient Air Quality14 requires Member States to ensure that 
the levels of several air pollutants are kept below the limit values, target values and other air 
quality standards established in the Directive. This obligation requires Member States to find 
solutions to problems such as ship emissions at berth in ports where this is relevant and it is 
conceivable that in ports where these problems exist the use of shore-side electricity will be 
further  encouraged  as  one  element  of  the  overall  air  quality  strategy.  The  use  of  shore-side 
electricity is also encouraged under Directive (EU) 2016/80215 regulating the sulphur content 
in marine fuels. 

The  measure  is  also  likely  to  lead  to  a  reduction  of  CO2  emissions  to  the  extent  that  the 
electricity  mix  from  the onshore  grid,  due  to  higher  system  efficiency  and  the  difference  in 
input  fuels  used,  is  less  carbon  intensive  than  the  electricity  produced  on  board  by  burning 
bunker fuels. In this regard, the German authorities underlined that, while the actual saving of 
CO2 emissions depends on the quality of the electricity used, in the German electricity mix, 
the  estimated  savings  would  be  about  30%,  with  this  proportion  set  to  rise  in  future. 
Moreover, German authorities expect that local emissions of air pollutants (NOx, SOx, PM10, 
PM2.5) from on-board electricity generation could be fully reduced by the use of shore-side 
electricity; noise emissions could also be significantly reduced. 

According  to  the  German  authorities,  ship  engines  generate  approximately  the  following 
emissions  for  electricity  generation  per  kWh,  which  could  therefore  be  reduced  with  each 
kWh of shore-side electricity: 

g 
CO2/kWh 

g 
NOx/kWh 

g 
SOx/kWh 

g 
PM/kWh 

640 
704 
699 

692 
679 

737 
721 
726 

12,0 
12,5 
13,0 

14,1 
12,0 
— 
8,1 
— 

0,39 
0,43 
0,43 

0,42 
0,41 

0,45 
0,04 
0,04 

0,19 

0,18 
0,18 

0,18 
0,18 
0,18 
0,15 
0,15 

Type of vessel 
Container vessel 
Gas/oil/chemical tanker 
Dry bulk cargo vessel 

Conventional 
multipurpose vessel 
Cruise ship 

Other maritime vessel 
Inland waterway vessel 
Port-internal vehicle 

Energy policy 

The  measure  is  in  line  with  Directive  2014/94/EU  on  the  deployment  of  alternative  fuels 
infrastructure16, which addresses the issue of installing shore-side electricity supply facilities 
in ports where there is demand for such facilities and the costs are not disproportionate to the 

14 

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16 

Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air 
quality and cleaner air for Europe (OJ L 152, 11.6.2008, p 1). 
Directive (EU) 2016/802 of the European Parliament and of the Council of 11 May 2016 relating to a 
reduction in the sulphur content of certain liquid fuels (OJ L 132, 21.5.2016, p. 58–78). 
Directive  2014/94/EU  of  the  European  Parliament  and  of  the  Council  of  22  October  2014  on  the 
deployment of alternative fuels infrastructure (OJ L 307, 28.10.2014, pp. 1–20). 

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benefits,  including  environmental  benefits.  It  has  also  been  recognised  as  an  objective  of 
common interest for the granting of State aid under Article 107(1) of TFEU17. 

It has to be recalled at this point that one important reason for the unfavourable competitive 
position of shore-side electricity lies in the fact that the alternative, i.e. electricity produced on 
board the vessels while in maritime ports, currently enjoys a full net tax exemption: not only 
is  the  bunker  fuel  burnt  for  generating  the  electricity  exempt  from  taxation,  which 
corresponds to the normal situation under Article 14(1)(a) of Directive 2003/96/EC, but also 
the electricity produced on board the vessels is itself exempt (cf. Article 14(1)(c) of Directive 
2003/96/EC). Although the latter exemption could as such be considered difficult to reconcile 
with the environmental objectives of the Union, it mirrors considerations of practicability. In 
fact,  taxation  of  the  electricity  produced  on  board  would  require  a  declaration  by  the  ship 
owner  –  often  established  in  a  third  country  –  or  operator  of  the  amount  of  electricity 
consumed. The declaration would furthermore have to  determine the share of the electricity 
consumed in the territorial waters of the Member State where the tax is due. It would create a 
huge  administrative  burden  for  ship-owners  to  have  to  make  such  declarations  for  every 
Member  States  whose  territorial  waters  are  concerned.  Analogous  considerations  apply  to 
inland  navigation  and  the  optional  tax  treatment  in  accordance  with  Article  15(1)(f)  of  the 
Directive  (implemented  by  Germany).  Under  these  circumstances,  it  can  be  justified  not  to 
penalize  the  less-polluting  alternative  of  shore-side  electricity  by  allowing  Germany  to 
continue to apply a reduced rate of taxation. 

Transport policy 

The measure is in line with Commission recommendation 2006/339/EC on the promotion of 
shore-side  electricity  for  use  by  ships  at  berth  in  Union  ports18  and  with  the  Commission 
Communication  Strategic  goals  and  recommendations  for  the  EU's  maritime  transport 
policy19. 

Internal market and fair competition 

From the point of view of the internal market and fair competition the measure only reduces 
the existing tax distortion between two competing sources of electricity for boats at berth, i.e. 
on board generation and shore-side electricity, caused by the tax exemption for bunker fuels. 

As  regards  competition  between  vessel  operators,  it  first  has  to  be  mentioned  that  there  are 
currently  very  few  vessels  that  use  shore-side  electricity  on  a  commercial  basis.  Significant 
distortions  in  competition  could  therefore  only  arise  between  vessels  benefitting  from  the 
measure requested by changing to shore-side electricity and others that would continue to use 
on-board generation. Although precise cost projections depend crucially on the development 
of  the  oil  price  and  are  therefore  very  difficult,  the  latest  available  assessments  indicate  (in 
line with the data provided by Germany) that overall even a full tax exemption would in most 
cases  not  reduce  operational  costs  of  shore-side  electricity  below  the  costs  of  on-board 

17 

18 

19 

C(2014) 2231 final of 9 April 2014 (State aid SA.37322 (2013/N) – Germany Alternative power supply 
for cruise ships in the Hamburg City Port (Altona – HafenCity). 
Commission Recommendation 2006/339/EC of 8 May 2006 on the promotion  of shore-side electricity 
for use by ships at berth in Community ports (OJ L 125, 12.5.2006). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  –  Strategic  goals  and 
recommendations for the EU's maritime transport policy until 2018, COM(2009) 8 final of 21 January 
2009. 

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generation20 and would therefore not, in any event, represent a significant competitive benefit 
for  vessel  operators  using  shore-side  electricity  as  opposed  to  those  using  on-board 
generation. In the present case, a significant distortion of the above mentioned kind can all the 
less  be  expected  since  Germany  will  respect  the  minimum  level  of  taxation  prescribed  by 
Directive 2003/96/EC for electricity for business use.  

Moreover, as already mentioned, Germany allows the tax advantage to be provided both as a 
reduced  tax  rate  charged  at  supply  (a  permission  is  needed)  or  as  a  tax  refund.  In  case  of 
application  of  the  reduction  at  supply,  the  electricity  provider  might  not  pass  on  or  pass  on 
only part of the tax advantage to the final consumer, i.e. the ship operator. Still according to 
the German authorities, the tax advantage is normally passed on. But even in the cases where 
the tax reduction is fully passed on to the ship operators which receive shore-side electricity 
taxed at the minimum level provided for in Directive 2003/96/EC, they do not actually gain 
an economic advantage over operators generating their own electricity on board because this 
electricity  is  exempted  from  taxation.  According  to  the  German  authorities  substitution  of 
own  generation  on  board  by  shore-side  electricity  taxed  at  the  applicable  minimum  level 
would not lead to an overall cost advantage. 

Furthermore,  access  to  shore-side  electricity  will  be  available  for  the  ships  concerned 
regardless  of  their  flag  without  leading  to  a  more  advantageous  tax  treatment  of  national 
economic operators over their competitors from other EU Member States. 

Concerning competition between ports, it can be expected that any potential impact on trade 
between  Member  States,  which  could  result  if  vessels  alter  their  routes  because  of  the 
possibility  to  consume  shore-side  electricity  at  a  reduced  tax  rate,  will  be  negligible.  In  a 
situation where, as stated above, the use of shore-side electricity is, at least in the short term, 
unlikely to become more economic than on-board generation in spite of the tax reduction, this 
tax  reduction  for  shore-side  electricity  is  also  unlikely  to  significantly  distort  competition 
between ports by inducing vessels to change their itinerary according to the availability of this 
option. The German authorities argue that other factors (such as  destination of the goods or 
passengers or other  economic factors) play a role in  the selection of ports, so that the mere 
availability of shore-side electricity does not seem to be decisive.  

The  German  authorities  stress  additionally  that  the  use  of  shore-side  electricity  is  restricted 
also because of lack of internationally agreed technical standards for connecting vessels to the 
electricity grid and, in some cases, the lack of shore-side electricity supply capacity. 

The  timeframe  for  which  it  is  proposed  to  prolong  the  authorization  to  apply  a  reduced  tax 
rate, unless there will be significant changes in the current framework and situation, makes it 
unlikely that the analysis conducted in the preceding paragraphs will change before the date 
of expiry of the measure. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 19 of Council Directive 2003/96/EC. 

20 

Cf.  European  Commission  Directorate  General  Environment,  Service  Contract  Ship  Emissions: 
Assignment, Abatement and Market-based Instruments, Task 2a – Shore-Side Electricity, August 2005, 
http://ec.europa.eu/environment/air/pdf/task2_shoreside.pdf  .  The  cost  analysis  is  carried  out  for  the 
three ports of Gothenburg (Sweden), Juneau and Long Beach (USA). 

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• 

Subsidiarity (for non-exclusive competence)  

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

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. 

• 

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 the instrument 

The  instrument  proposed  is  a  Council  implementing  decision.  Article  19  of  Directive 
2003/96/EC 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. 

• 

Stakeholder consultations 

This proposal is based on a request made by Germany and concerns only this Member State. 

• 

Collection and use of expertise 

There was no need for external expertise. 

• 

Impact assessment 

This proposal concerns an authorisation for an individual Member State upon its own request 
and does not require an impact assessment. 

However,  as  mentioned  before,  the  information  provided  by  Germany  suggests  that  the 
measure will have a limited impact on tax revenues and the tax rate for shore-side electricity 
will  still  be  above  the  minimum  level  of  taxation  set  in  Directive  2003/96/EC.  Germany 
expects the measure to have a positive impact on the achievement of its environmental goals 
and in particular the improvement of local air quality and reduction of noise in port cities. 

In  more  detail,  as  an  estimation  of  the  tax  expenditures  from  the  measure,  according  to  the 
German authorities, a loss of EUR 2 million per year is expected for the coming years.  

At  the  same  time,  the  environmental  benefits  can  be  significant.  The  German  authorities 
underlined  that,  while  the  actual  saving  of  CO2  emissions  depends  on  the  quality  of  the 
electricity  used,  in  the  German  electricity  mix,  the  estimated  savings  would  be  about  30%,   
with  this  proportion  set  to  rise  in  future.  Moreover,  German  authorities  expect  that  local 

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emissions  of  air  pollutants  (NOx,  SOx, PM10,  PM2.5)  from  on-board  electricity  generation 
could  be  fully  reduced  by  the  use  of  shore-side  electricity;  noise  emissions  could  also  be 
significantly reduced. 

• 

Regulatory fitness and simplification 

The  measure  does  not  provide  for  a  simplification.  It  is  the  result  of  the  request  made  by 
Germany and concerns only this Member State. 

• 

Fundamental rights 

The measure has no bearing on fundamental rights. 

4. 

BUDGETARY IMPLICATIONS 

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

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  until  31  December  2025.  The  tax  rate  that  will  apply  will  be  equal  to  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 validity period has expired. 

• 

Explanatory documents (for directives) 

The proposal does not require explanatory documents on the transposition.  

• 

Detailed explanation of the specific provisions of the proposal 

Article  1  stipulates  that  Germany  will  be  allowed  to  apply  a  reduced  rate  of  electricity 
taxation to electricity directly supplied to vessels, other than private pleasure craft, berthed in 
German  ports  (‘shore-side  electricity’).  The  tax  rate  must  not  be  less  than  EUR  0.50  per 
MWh, i.e. the minimum level of taxation for electricity for business use set by the Directive. 
It will not be possible to supply electricity at a reduced rate to private pleasure craft as defined 
in Article 14(1)(c), second subparagraph of Directive 2003/96/EC. 

Article 2 stipulates that the authorisation requested is granted with effect from 17 July 2020, 
in  continuity  with  the  current  Council  Implementing  Decision  2014/722/EU,  until  31 
December 2025, within the maximum period of 6 years allowed by the Directive, as requested 
by Germany. 

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2020/0207 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising Germany to apply a reduced rate of taxation to electricity directly provided 
to vessels at berth in a port 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 electricity1, and in particular 
Article 19 thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

By Council Implementing Decision 2014/722/EU2 Germany was authorised to apply a 
reduced  rate  of  taxation  to  electricity  directly  provided  to  vessels  at  berth  in  a  port 
(‘shore-side electricity’) in accordance with Article 19 of Directive 2003/96/EC  until 
16 July 2020. 

By  letter  of  29  January  2020,  Germany  sought  authorisation  to  continue  to  apply  a 
reduced  rate  of  taxation  to  shore-side  electricity  pursuant  to  Article  19  of  Directive 
2003/96/EC. 

(3)  With  the  reduced  tax  rate  that  it  intends  to  apply,  Germany  aims  at  continuing  the 
promotion of the use of shore-side electricity. The use of such electricity is considered 
to  be  an  environmentally  less  harmful  way  to  satisfy  the  electricity  needs  of  vessels 
lying at berth in ports than the burning of bunker fuels by those vessels. 

(4) 

(5) 

1 
2 

Insofar  as  the  use  of  shore-side  electricity  avoids  emissions  of  air  pollutants 
originating from the burning of bunker fuels, it contributes to an improvement to the 
local air quality in port cities and to noise reduction. Under the specific conditions of 
the electricity generation structure in Germany, the use of shore-side electricity instead 
of  electricity  generated  by  burning  bunker  fuels  is  in  particular  expected  to  reduce 
CO2  emissions,  other  air  pollutants  and  noise.  The  measure  is  therefore  expected  to 
contribute to the environmental, health and climate policy objectives of the Union. 

Allowing  Germany  to  apply  a  reduced  rate  of  taxation  to  shore-side  electricity  does 
not go beyond what is necessary to increase the use of such electricity, since on-board 
generation  of  electricity  will  remain  the  more  competitive  alternative  in  most  cases. 
For  the  same  reason,  and  because  of  the  current  relatively  low  degree  of  market 
penetration of the technology, the measure is unlikely to lead to significant distortions 

OJ L 283, 31.10.2003, p. 51. 
Council  Implementing  Decision  2014/722/EU  of  14  October  2014  authorising  Germany  to  apply  a 
reduced rate of taxation on electricity directly provided to vessels at berth in a port in accordance with 
Article 19 of Directive 2003/96/EC (OJ L 300, 18.10.2014, p. 55). 

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(6) 

(7) 

in  competition  during  its  lifetime  and  will  thus  not  negatively  affect  the  proper 
functioning of the internal market. 

In accordance with Article 19(2) of Directive 2003/96/EC, each authorisation granted 
under  that  provision  is  to  be  strictly  limited  in  time.  In  order  to  ensure  that  the 
authorisation  period  is  sufficiently  long  so  as  not  to  discourage  relevant  economic 
operators  from  making  the  necessary  investments,  it  is  appropriate  to  grant  the 
authorisation  until  31  December  2025.  However,  the  authorisation  should  cease  to 
apply  from  the  date  of  application  of  any  general  provisions  on  tax  advantages  for 
shore-side electricity adopted by the Council under Article 113 or any other relevant 
provision  of  the  Treaty  on  the  Functioning  of  the  European  Union,  should  such 
provisions become applicable prior to 31 December 2025. 

In order to provide legal certainty to port and ship operators and to avoid a potential 
increase  in  the  administrative  burden  for  the  distributors  and  redistributors  of 
electricity,  which  could  result  from  changes  to  the  tax  rate  levied  on  shore-side 
electricity, it should be ensured that Germany may apply the reduced rate of taxation 
to  shore-side  electricity  without  interruption.  The  authorisation  requested  should 
therefore be granted with effect from 17 July 2020, in order to follow seamlessly on 
from the prior arrangements under Council Implementing Decision 2014/722/EU. 

(8) 

This  Decision  is  without  prejudice  to  the  application  of  Union  rules  regarding  State 
aid, 

HAS ADOPTED THIS DECISION:  

Article 1 

Germany  is  authorised  to  apply  a  reduced  rate  of  taxation  to  electricity  directly  supplied  to 
vessels, other than private pleasure craft, berthed in ports (‘shore-side electricity’), provided 
that  the  minimum  levels  of  taxation  referred  to  in  Article  10  of  Directive  2003/96/EC  are 
respected. 

Article 2 

This Decision shall apply from 17 July 2020 until 31 December 2025. 

However,  should  the  Council,  acting  on  the  basis  of  Article  113  or  any  other  relevant 
provision of the Treaty on the Functioning of the European Union, provide for general rules 
on tax advantages for shore-side electricity, this Decision shall cease to apply on the day on 
which those general rules become applicable. 

This Decision is addressed to the Federal Republic of Germany. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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