Proposal for a COUNCIL IMPLEMENTING DECISION authorising Croatia to apply a tax exemption to gas oil used to operate machinery in humanitarian demining in accordance with Article 19 of Directive 2003/96/EC
Date: 2021-03-31
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Croatia, derogation from EU law, diesel fuel, fuel tax, humanitarian aid, machinery, mine action, tax relief

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   EUROPEAN COMMISSION  Brussels, 31.3.2021  COM(2021) 152 final 2021/0075 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising Croatia to apply a tax exemption to gas oil used to operate machinery in humanitarian demining 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  2014/921/EU  of  16  December  20142,  Croatia 
has already been authorised to apply a tax exemption to gas oil used to operate machinery in 
humanitarian demining in accordance with Article 19 of Directive 2003/96/EC. 

The objective of this  proposal  is  to  extend that  authorisation  as  requested by Croatia,  given 
that the current derogation expired on 19 December 2020. This exemption is meant to reduce 
the costs for legal persons registered to conduct demining activities and thus speed up these 
activities and contribute to the implementation of humanitarian demining policy in Croatia. 

The demining activities are taking place in accordance with the international Convention on 
the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and 
on  their  Destruction  (Ottawa  Convention)  of  1998,  and  the  international  Convention  on 
Cluster  Munitions  signed  in  Oslo  in  2018,  which  prohibits  all  use,  production,  transfer  and 
stockpiling of cluster munitions and establishes a framework for cooperation and assistance to 
ensure clearance of contaminated areas, as well as the Croatian Mine Action Act (OG 110/15, 
118/18 and 98/19). 

In  accordance  with  Article  5  of  the  Ottawa  Convention,  in  2018  the  Republic  of  Croatia 
submitted a second Request for extension of the demining deadline. The request was granted 
at the Seventeenth Meeting of the States Parties of the Convention and a new deadline of 1 
March 2026 is now set for the completion of the demining activities. 

In line with the extension of the deming deadline and by letter dated 18 September 2020, the 
Croatian authorities informed the Commission of their intention to prolong the tax exemption 
to  gas  oil  used  to  operate  machinery  in  humanitarian  demining  until  19  December  2026. 
Additional information was provided by letters dated 13 October 2020 and 6 November 2020. 

The  intention  of  the  Croatian  authorities  is  to  continue  to  apply  a  tax  exemption  to  gas  oil 
used  to  operate  machinery  in  humanitarian  demining  in  accordance  with  Article  19  of 
Directive 2003/96/EC. 

The  requested  period  of  validity  of  the  derogation  is  from  19  December  2020  until  19 
December 2026, which is in continuity with the current derogation and within the maximum 
period allowed by Article 19 of the Energy Taxation Directive. 

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OJ L 283, 31.10.2003, p. 51–70. 
OJ L 363, 18.12.2014, p. 50–51. 

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The  aim  of  of  the  measure  to  be  applied  by  Croatia  is  to  give  an  incentive  for  quicker 
clearance  of  suspected  minefields,  freeing-up  of  agricultural  land  and  forests  thus  making 
them  accessible  again  for  economic  activities.  The  measure  is  also  expected  to  have 
immediate positive effects on human life and health in the areas contaminated by mines and 
unexploded ordnance. 

The  measure  consists  of  a  tax  exemption  from  excise  duty  on  gas  oil  used  to  operate 
machinery in humanitarian demining of areas contaminated with mines, in such a way that the 
exemption  is  provided  only  to  legal  entities  registered  for  demining.  The  measure  is 
implemented  through  the  application  of  excise  duty  refunds.  Machines  that  will  use  gas  oil 
exempted  from  payment  of  excise  duties  will  be  classified  according  to  their  purpose,  their 
working  tools  and  their  method  of  operation.  The  competent  Croatian  Mine  Action  Centre 
departments will oversee and keep records of the operation of the machinery. There will be a 
special  form  for  each  machine  in  which  hours  of  operation,  performance  and  fuel 
consumption will be recorded for each day. When a project has ended, the demining operator 
will submit an excise tax return form for its machinery employed on the site, accompanied by 
a  log  form  for  each  machine.  In  line  with  its  general  responsibility  to  monitor  the 
implementation of excise legislation, the Tax Administration of the Ministry of Finance will 
perform,  on  the  basis  of  information  about  the  site  where  demining  activity  is  taking  place, 
systematic checks of fuel used in demining machinery. 

According  to  the  figures  provided  by  the  Croatian  authorities,  in  Croatia  there  are  44 
authorized  legal  entities  with  43  machines  used  in  humanitarian  demining.  However,  the 
measure is not meant to be restricted only to these accredited operators but will apply to any 
new  accredited  operator  and  demining  machinery  that  may  be  used  for  this  purpose,  in  the 
future.  The  Croatian  Mine  Action  Centre  accredits  and  keeps  a  record  of  all  new  mine 
clearance machines intended to be used for humanitarian demining. 

Without  the  application  of  the  measure  operators  of  demining  equipment  authorised  to 
perform  demining  operations  in  the  territory  of  Croatia  will  have  to  pay  the  national  excise 
duty  rate  on  gas  oil  used  as  motor  fuel  which  stands  at  HRK  3060  per  100  litres 
(approximately EUR 404 based on the exchange rate of 1 EUR = 7.5630 HRK on 1 October 
2020)  and  which  applies  to  propellant  use  as  well  as  uses  in  stationary  motors,  heavy 
machinery and in vehicles intended for use off the public roadway (Article 8(2)(b), (c) and (d) 
of the Energy Taxation Directive). The time-limited tax exemption would allow operators to 
reduce  their  costs  for  the  demining  activities  for  a  limited  period  of  time,  thus  creating  an 
incentive  for  intensifying  their  work  for  the  period  of  application  of  the  measure.  This  will 
speed  up  the  process  of  demining.  Beneficiaries  of  the  measure  are  legal  entities  who  have 
been issued permit of the Ministry of the Interior for demining operations in accordance with 
the  Mine  Action  Act  (OG  110/15,  118/18  and  98/19)  and  have  machines  accredited  in 
accordance  with  the  Ordinance  on  technical  requirements  and  conformity  assessment  of 
machines used in humanitarian demining operations (OG 53/07, 39/11 and 57/13). 

Croatia  requested  the  authorisation  to  be  granted  until  19  December  2026,  starting  from  19 
December  2020,  without  interruption  with  the  current  derogation  and  within  the  maximum 
period indicated in Article 19(2) of the Directive. 

• 

Consistency with existing policy provisions in the policy area 

Taxation  of  gas  oil  used  for  industrial  and  commercial  purposes  is  governed  by  Directive 
2003/96/EC,  in  particular  Article  8.  Articles  5,  15  and  17  provide  for  the  possibility  for 
Member States to apply tax differentiations, including exemptions and reductions, to certain 

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uses of gas oil. However, as such, these provisions do not provide for a tax exemption to gas 
oil used to operate machinery in humanitarian demining. 

Provisions under the Energy Taxation Directive 

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

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 

The possibility to introduce a favourable tax treatment to gas oil used to operate machinery in 
humanitarian demining 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.  

Croatia has requested that the measure should apply for 6 years, the maximum period allowed 
by  Article  19(2).  This  period  is  in  line  with  the  international  commitments  of  Croatia  to 
complete the deming operations. 

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  Directive3  and  the  Council  Conclusions  on  the  EU  energy  taxation 
framework from 28 November 20194. 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  19  December 
2026. 

State aid rules 

The Croatian authorities envisage to apply tax exemption to gas oil used to operate machinery 
in  humanitarian  demining  by  refunding  all  the  excise  duty  to  every  registered  operator 
involved in the demining activities. The Croatian authorities argue that the measure does not 
consitute state aid. This proposal is without prejudice to any assessment of the measure 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. 

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

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• 

Consistency with other Union policies 

Health and Environment policy 

The requested measure concerns mainly the EU's health and environment policy to the extent 
that it will help achieve quicker reduction of the mine-contaminated areas of the Republic of 
Croatia  which  present  a  threat  to  the  life  and  health  of  humans,  domesticated  animals  and 
wildlife. The objectives to be achieved with this measure are regional and sectoral in nature, 
as the areas to be demined are spread over different regions of the Republic of Croatia, and 
the  sectors  affected  by  the  measure  are  agriculture  and  forestry.  The  application  of  the 
measure  has  direct  positive  effects  on  the  protection  of  human  life  and  health  in  areas 
contaminated with mines and unexploded ordnance. 

Transport policy 

The measure is limited to gas oil used in  accredited special-purpose machines designed and 
built  specifically  for  clearing  mined  areas  and  that  it  is  also  limited  to  mine-contaminated 
areas of the Republic of Croatia. It should also be mentioned that these machines cannot be 
used for any kind of transportation on public roads. 

Internal market and fair competition 

Under the circumstances described, the measure also appears acceptable in view of the proper 
functioning of the internal market and the need to ensure fair competition. In particular, due to 
the  fact  will  not  favour  certain  enterprises  over  others  since  it  will  apply  to  all  enterprises 
involved in humanitarian demining in Croatia. Similarly, the measure will not affect intra-EU 
trade given its specific nature and that it is limited to mine-contaminated areas of the Republic 
of Croatia. 

It  can  thus  be  concluded  that  the  measure  is  compatible  with  the  health,  environment, 
transport and competition policies of the Union. 

The timeframe for which it is proposed to prolong the authorization to apply a tax exemption, 
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. 

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• 

Proportionality 

The  proposal  respects  the  principle  of  proportionality.  The  tax  exemption  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 Croatia 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. 

There are 295.9 km2 of mine suspected areas left in the Republic of Croatia, which concern 50 
cities and municipalities in 8 counties. In these areas any entry and movement is prohibited. 

Current demining operations are performed by 617 deminers, site managers and support staff 
employed  by  44  authorized  legal  entities  for  demining  operations.  Demining  operations  are 
performed using 43 specially designed demining machines. 

The information provided by Croatia suggests that the measure will have a limited impact on 
tax revenues. The Croatian authorities estimate that the total tax expenditure from the measure 
will amount HRK 3.199.475 (approximately EUR 423.043) for the total 6 year duration of the 
measure. 

Croatia expects the measure to have a positive impact on the succesful and timely completion 
of  the  deming  operations  through  the  reduction  of  the  operating  costs  of  the  economic 
operators engaged in the demining activities. 

• 

Regulatory fitness and simplification 

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

• 

Fundamental rights 

The measure has no bearing on fundamental rights. 

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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 
exemption for an individual Member State upon its own request. It is provided for a limited 
period  until  19  December  2026.  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 Croatia will be allowed to apply a a tax exemption to gas oil used to 
operate  machinery  in  humanitarian  demining  in  accordance  with  Article  19  of  Directive 
2003/96/EC. 

Under Article 2 the authorisation is granted with effect from 19 December 2020, in continuity 
with the current Council Implementing Decision 2014/921/EU, until 19 December 2026, the 
maximum period of 6 years allowed by the Directive, as requested by Croatia. 

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2021/0075 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising Croatia to apply a tax exemption to gas oil used to operate machinery in 
humanitarian demining 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 2014/921/EU2 Croatia was authorised  to  apply  a 
tax  exemption  to  gas  oil  used  to  operate  machinery  in  humanitarian  demining  in 
accordance with Article 19 of Directive 2003/96/EC until 19 December 2020. 

On  18  September  2020,  Croatia  sought  authorisation  to  continue  to  apply  a  tax 
exemption  to  gas  oil  used  to  operate  machinery  in  humanitarian  demining  for  the 
period  from  19  December  2020  until  19  December  2026.  At  the  request  of  the 
Commission, Croatia provided additional information in support of its application on 
13 October 2020, and on 6 November 2020. 

(3)  With the tax exemption it intends to apply, Croatia aims at speeding up the demining 
of the remaining mine contaminated areas in various regions. The measure would have 
immediate positive effects on human life and health in those regions. 

(4) 

(5) 

(6) 

(7) 

(8) 

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The  measure  should  be  limited  to  accredited  special-purpose  machines  designed  and 
built specifically for clearing mined areas. 

The measure should be limited to mine-contaminated areas in the territory of Croatia. 

The  measure  should  apply  to  all  operators  involved  in  humanitarian  demining  in 
Croatia, thus no economic advantage will be given to any particular operator involved. 

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 
compatible with the Union’s health, environment, energy and transport policies. 

Each  authorisation  granted  under  Article  19(1)  of  Directive  2003/96/EC  is  to  be 
strictly  limited  in  time.  In  order  to  provide  economic  operators  concerned  with  a 
sufficient degree of certainty and enough time to conclude the process of demining of 

OJ L 283, 31.10.2003, p. 51. 
Council Implementing Decision 2014/921/EU of 16 December 2014 authorising Croatia to apply a tax 
exemption to gas oil used to operate machinery in humanitarian demining in accordance with Article 19 
of Directive 2003/96/EC (OJ L 363, 18.12.2014, p. 150). 

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the contaminated areas, it is appropriate to grant  the authorisation for a period of six 
years. 

(9) 

In  order  to  provide  legal  certainty  to  economic  operators  involved  in  demining 
operations and to avoid a potential increase in the administrative burden resulting from 
changes to the applicable tax rate, Croatia should be able to apply the tax exemption to 
gas oil used to operate machinery in humanitarian demining without interruption. The 
authorisation  requested  should  therefore  be  granted  with  effect  from  19  December 
2020,  in  order  to  follow  seamlessly  on  from  the  prior  arrangements  under 
Implementing Decision 2014/921/EU. 

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

aid, 

HAS ADOPTED THIS DECISION:  

Croatia  is  authorised  to  exempt  from  taxation  gas  oil  used  to  operate  machinery  in 
humanitarian  demining  in  its  territory.  The  measure  shall  be  limited  to  accredited  special-
purpose machines designed and built specifically for clearing mined areas. 

Article 1 

Article 2 

This Decision shall apply from 19 December 2020 until 19 December 2026. 

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 humaniterian demining, this Decision shall cease to apply on the day on 
which those general rules become applicable. 

This Decision is addressed to Croatia. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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