Proposal for a COUNCIL IMPLEMENTING DECISION authorising France 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: 2020-09-14
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: France, electrical energy, electricity supply, excise duty, harbour installation, tax relief, vessel

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   EUROPEAN COMMISSION  Brussels, 14.9.2020  COM(2020) 498 final 2020/0255 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising France 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. 

France  asked  to  be  authorised  to  apply  a  reduced  rate  of  taxation  on  final  consumption  of 
electricity to electricity directly supplied to maritime and inland waterway vessels (including 
fishing vessels), other than private pleasure craft2, berthed in ports (‘shore-side electricity’)3. 
The objective of this proposal is to grant that authorisation by means of a derogation valid, as 
requested, until 31 December 2025.  

By  letter  dated  7  August  2019,  the  French  authorities  informed  the  Commission  of  their 
intention to apply the measure. Additional information and clarifications were provided on 4 
March 2020 and 30 April 2020. 

France is seeking for an 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  vessels  operating  exclusively  for  commercial  purposes  in 
Union sea and inland waters (including fishing).  

The  requested  period  of  validity  is  from  1  January  2020  until  31  December  2025,  which  is 
within the maximum period allowed by Article 19 of the Energy Taxation Directive. 

This reduction aims 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  France  is  also  to  reduce  the  overall 
environmental impact of water-borne transport. 

With  the  requested  measure  France  wants  to  give  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 France the standard rate 
of  electricity  tax  is  EUR  22.50/MWh.  The  requested  tax  concession  stands  at  EUR 
22.00/MWh. This means that as a result the beneficiaries would be charged at the applicable 

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OJ L 283, 31.10.2003, p. 51–70. 
The  term  ‘private  pleasure  craft’  is  defined  in  Article  14(1)(c),  second  subparagraph  of  Directive 
2003/96/EC. 
Moreover, as specified by the French authorities, the reduced rate of taxation on electricity consumption 
should  also  apply  to  electricity  supplied  by  power  production  groups  (mobile  shelters)  using  LNG 
(liquefied natural gas). 

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EU minimum tax rate for electricity for business use 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).  

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 -and electricity produced- 
on board ships at berth in ports. They may also do so in the case of energy products used to 
produce  electricity  -and  electricity  produced-  on  board  ships  for  navigation  on  inland 
waterways according to Article 15(1)(f) of the Directive. France confirmed the transposition 
of this latter optional exemption4.  

The  French  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. In certain cases, there can be an obligation for 
vessels to use shore-side electricity. 

As indicated in the request, the estimated number of beneficiaries is around 7000 (including 
maritime  and  inland  waterway  transport  companies,  as  well  as  the  fishery  sector).  This  is  a 
maximum potential number of beneficiaries in the long term linked to an estimated increase in 
the  deployment  of  shore-side  electricity  connection  systems.  The  number  of  shore-side 
electricity  terminals  currently  deployed  is  limited  (approximately  230)  mainly  in  the  public 
inland  waterway  area  and  is  intended  for  the  transport  of  goods  and  passengers.  There  are 
currently no terminals for fishing vessels5.  

As an estimation of the tax expenditures from the measure, the French authorities calculated 
the  loss  of  tax  revenue  based  on  the  amount  of  consumed  electricity,  the  amount  of  the 
requested fiscal advantage and the number of terminals. The consumption of electricity from 
these  terminals  is  around  12  000  MWh/year  and  the  tax  relief  would  amount  to  EUR 
22.00/MWh (the standard tax rate, as mentioned before, is EUR 22.50/MWh): this results in a 
loss of tax revenue amounting to around EUR 270 000. Considering the increasing number of 
terminals  (from  the  current  230  to  around  256  in  the  near  future),  an  actual  loss  of  around 
EUR 300 000 is estimated for the coming period. 

France  requested  the  authorisation  to  be  granted  until  31  December  2025,  starting  from  1 
January 2020, within the maximum period allowed by Article 19(2) of the Directive. 

With the tax reduction, France wants to provide an incentive for relevant operators to develop 
and  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.  

• 

Consistency with existing policy provisions in the policy area 

Taxation  of  electricity  is  governed  by  the  Energy  Taxation  Directive  2003/96/EC,  in 
particular  Article  10.  Article  14(1)(c)  provides  for  an  obligatory  tax  exemption  for  energy 
products for navigation as well as for electricity produced on board a craft. Articles 5, 15 and 
17  provide  for  the  possibility  for  Member  States  to  apply  tax  differentiations,  including 

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In addition, the French authorities underlined that a reduced rate of domestic tax on final consumption 
of  electricity  already  applies  to  transport  of  passengers  and  goods  by  train,  metro,  tramway,  cable, 
hybrid rechargeable or electric bus and trolleybus.   
The French authorities provided a list of ports interested by the use or future installation of shore-side 
electricity terminals: they are several and include both seaports and inland ports. 

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exemptions and reductions, to certain uses of electricity. However, as such, these provisions 
do not provide for reduced taxation of shore-side electricity. 

The  measure  constitutes  State  aid  and  falls  within  the  ambit  of  the  EU  legislation  on  this 
subject matter, in particular Commission Regulation 651/2014/EU6. 

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 
for  specific  policy 
Member  State 
considerations. 

further  exemptions  or  reductions 

introduce 

to 

By  means  of  the  tax  reduction  in  question,  the  French  authorities  pursue  the  objective  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  advantages7.  Currently 
is 
EUR 22.50/MWh;  the  requested  tax  concession  stands  at  EUR 22.00/MWh.  As  a  result, 
beneficiaries would be charged at the EU minimum tax rate for electricity under the Energy 
Taxation Directive of EUR 0.50/MWh and this can  therefore contribute  to  the stated policy 
objectives. 

the  national  standard  rate  for  electricity 

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.  

France  has  requested  that  the  measure  should  apply  for  the  maximum  period  allowed  by 
Article  19(2)  of  the  Directive  (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  starting  -or  continuing-  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.  

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  Directive8  and  the  Council  Conclusions  on  the  EU  energy  taxation 
framework from 28 November 20199. 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 

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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). 
SWD(2019) 329 final. 
Council conclusions of 28 November 2019, 14608/19, FISC 458.  

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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.  

The French authorities highlighted that additional  measures  (such as regulatory measures to 
decrease the connection costs or to allow, in certain cases, the introduction of an obligation to 
use  shore-side  electricity,  as  well  as  other  legal  instruments  to  further  and  more  closely 
involve public and private sectors) are needed while certain regulatory measures are already 
in  place.  The  objective  of  these  measures  is,  among  others,  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 French 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  measure  thus  seems  to  fall  under  Article  44  of  Commission 
Regulation  651/2014/EU,  which  stipulates  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. However it cannot be established at this stage whether all 
the conditions set in this Regulation are fulfilled and the proposal for a Council implementing 
decision does not prejudge the Member State’s obligation to ensure compliance with State aid 
rules,  in  particular,  in  case  of  exempted  aid,  falling  under  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 
noise. Directive 2008/50/EC on Ambient Air Quality10 requires Member States to ensure that 
the levels of several air pollutants are kept below the limit values, target values and other air 
quality standard 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 
encouraged as one element of the overall air quality strategy. The use of shore-side electricity 
is also encouraged under Directive (EU) 2016/80211 regulating the sulphur content in marine 
fuels. 

According to the French authorities, the measure is also likely to lead to an overall reduction 
of pollution, which is estimated based on the actual consumption of shore-side electricity in 
2019.  

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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). 

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In  the  maritime  transport,  this  consumption  was  around  10  400  MWh;  the  equivalent 
consumption of heavy fuel oil according to the available data would have generated: 

• 

• 

• 

4 472 kgSOx of SOx emissions,  

135 200 kgNOx of NOx emissions,  

5 919  kgPM2.5 of particulates.   

In  terms  of  greenhouse  gas  emissions,  an  equivalent  consumption  of  heavy  fuel  oil  would 
have emitted 3 369 600 kg of CO2. 

For inland waterway transport, as the shore-side electricity consumption was 1 800 MWh, an 
equivalent consumption of non-road diesel would have resulted in pollutant emissions of the 
order of: 

• 

• 

• 

155.56 kg of SOx,  

1 101.6 kg NOx,  

584.56 kg of fine particles (including 553.71 kg of PM2.5).   

As regards greenhouse gases, the equivalent consumption of diesel would have generated 553 
780 kg of CO2. 

On the other side, concerning the electricity from the onshore grid and the estimated impact of 
renewable  energy  sources,  France  underlined  that  in  the  national  energy  mix  the  share  of 
renewable energy has increased by about 4 points over the last ten years, from 6.6 % in 2007 
to  10.7  %  in  2017.  Renewable  energy  is  thus  the  fourth  source  of  primary  energy  in  2017, 
behind nuclear (40.0 %), petroleum products (28.9 %) and gas (15.7 %). Beyond this trend, 
the primary consumption of renewable energy varies from one year to another, according to 
different factors12.  

Energy policy 

The  measure  is  in  line  with  Directive  2014/94/EU  on  the  deployment  of  alternative  fuels 
infrastructure13, 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 
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 TFEU14. 

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 

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14 

Moreover, regarding the above-mentioned use of LNG to produce and supply shore-side electricity, the 
reduction of CO2 emissions is estimated at 22 % (compared to the use of navigation fuel).     
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) 
C(2014) 2231 final of 9 April 2014. 

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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  make  such  declarations  for  every  Member  States 
whose territorial  waters  are concerned. Analogous considerations  apply to inland navigation 
and  the  optional  tax  treatment  provided  by  Article  15(1)(f)  of  the  Directive  (actually 
implemented  by  France).  Under  these  circumstances,  it  can  be  justified  not  to  penalize  the 
less-polluting alternative of shore-side electricity by allowing France 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  ports15  and  with  the  Commission 
Communication  Strategic  goals  and  recommendations  for  the  EU's  maritime  transport 
policy16. 

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  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 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  generation17  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 France will respect 
the minimum level of taxation prescribed by Directive 2003/96/EC for electricity for business 
use.  

Moreover, as already mentioned, the ship operators, receiving shore-side electricity taxed at 
the  minimum  level  provided  for  in  Directive  2003/96/EC,  do  not  in  principle  gain  an 

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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. 
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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economic  advantage  over  operators  generating  their  own  electricity  on  board  because  this 
electricity is exempted from taxation. According to the French authorities substitution of own 
generation on board by shore-side electricity taxed at the applicable minimum level would not 
lead to an overall significant cost advantage18. 

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 French authorities argue that other factors (such as destination of the cargo) play a 
role in the selection of ports, so that the mere availability of shore-side electricity subject to a 
reduced tax rate does not seem decisive.  

The timeframe for which it is proposed 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. 

• 

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. 

18 

In  terms  of  cost  comparison,  according  to  the  French  Authorities,  the  purchase  price  of  electricity 
supplied  via  shore-side  electricity  terminals  is  around  EUR  0.10/kWh;  for  inland  waterway  transport, 
the national tariff applied by VNF (Voies navigables de France) and some other ports for the use of the 
terminals  is  EUR  0.20/kWh  (including  the  purchase  price  for  electricity).  On  the  other  hand,  the 
minimum cost of a kWh for diesel is around EUR 0.2192 (inland waterway) and for heavy fuel oil is 
around EUR 0.0953 (maritime). 

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• 

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 France 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. 

The information provided by France suggests that the measure will have a limited impact on 
tax revenues (as mentioned before, an actual loss of around EUR 300 000 is estimated for the 
coming period) and the tax rate for shore-side electricity will still be above the minimum level 
of taxation set in Directive 2003/96/EC. France expects the measure to have a positive impact 
on the achievement of its environmental goals and in particular on the reduction of emissions 
(the estimation is reported above), improvement of local air quality and reduction of noise in 
port cities. 

• 

Regulatory fitness and simplification 

The  measure  does  not  provide  for  a  simplification.  It  is  the  result  of  the  request  made  by 
France 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. 

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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 France will be allowed to apply a reduced taxation rate to electricity 
directly supplied to vessels, other than private pleasure craft, berthed in French 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  1  January 
2020, until 31 December 2025, as requested by France, within the maximum period of 6 years 
allowed by the Directive. 

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2020/0255 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising France 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) 

By  letter  of  7  August  2019,  France  sought  authorisation  to  apply  a  reduced  rate  of 
taxation  to  electricity  directly  provided  to  maritime  and  inland  waterway  vessels, 
berthed  in  ports  (‘shore-side  electricity’)  pursuant  to  Article  19  of  Directive 
2003/96/EC. The French authorities provided additional information and clarifications 
on 4 March 2020 and 30 April 2020.  

(2)  With the reduced tax rate that it intends to apply, France aims at further promoting the 
deployment  and  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. 

(3) 

(4) 

In  so  far  as  the  use  of  shore-side  electricity  avoids  emissions  of  air  pollutants 
originating  from  the  burning  of  bunker  fuels  by  vessels  at  berth,  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  France, 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 France 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 
in  competition  during  its  lifetime  and  will  thus  not  negatively  affect  the  proper 
functioning of the internal market. 

(5) 

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 

1 

OJ L 283, 31.10.2003, p. 51. 

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operators  from  making  the  necessary  investments,  it  is  appropriate  to  grant  the 
authorisation  from  1  January  2020  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 enable port and ship operators, as well as distributors and redistributors of 
electricity to pursue the promotion of shore-side electricity, it should be ensured that 
France may apply the tax reduction, as requested, with effect from 1 January 2020. 

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

(6) 

(7) 

HAS ADOPTED THIS DECISION:  

France is authorised to apply a reduced taxation rate 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 1 

Article 2 

This Decision shall apply from 1 January 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 French Republic. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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