Proposal for a COUNCIL IMPLEMENTING DECISION authorising Italy to apply a reduced rate of taxation to electricity directly supplied to vessels, other than private pleasure craft, at berth in a port [in accordance with Article 19 of Directive 2003/96/EC]
Date: 2021-10-13
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Italy, electrical energy, electricity supply, excise duty, harbour installation, tax relief, vessel

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 13.10.2021  COM(2021) 630 final 2021/0324 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising Italy to apply a reduced rate of taxation to electricity directly supplied to vessels, other than private pleasure craft, 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. 

Italy asked to be authorised to apply a reduced rate for the supply of shore-side electricity to 
vessels at berth in a port equipped with electrical installations with a rated installed capacity 
of more than 35 kW, for a period of six years. The objective of this proposal is to grant that 
authorisation by means of a derogation valid, as requested, for six years from 18 October.  

By letter dated 14 September 2020, the Italian authorities informed the Commission of their 
intention to apply the measure. Additional information was provided on 12 May 2021. 

Italy 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  at  berth  in  a  port  equipped  with  electrical 
installations with a rated installed capacity of more than 35 kW. 

The requested period of validity is six years, which is within the maximum period allowed by 
Article 19 of the Energy Taxation Directive. 

With  the  requested  measure  Italy  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,  the  reduced  rate  for  the 
beneficiaries will be EUR 0.50/MWh. That is the minimum rate for electricity as specified in 
Article 10(1) and Table C of Annex I to the Directive). Due to the degressive structure of the 
energy tax, the relative advantage will be higher for operators (and users) of installations with 
a relative low consumption.  

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. The exemption may also apply 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. Italy confirmed the transposition of 
this latter optional exemption.  

As  indicated  in  the  request,  the  electrification  of  port  quays  is  currently  not  widespread  in 
Italy and, therefore, the implementation of the tax reduction should not have financial effects 
in  the  short  term.  The  Italian  authorities  could  not  make  an  estimation  of  the  number  of 
beneficiaries  of  the  measure  ex  ante  and,  therefore,  could  not  provide  the  annual  budgetary 
expenditure.  

1 

OJ L 283, 31.10.2003, p. 51–70. 

EN 

1 

  EN 

                                                 
The Italian authorities have indicated that the tax reduction applies to all vessels at berth in a 
port equipped with electrical installations with a rated installed capacity of more than 35 kW 
other  than  private  pleasure  craft,  meaning  that  all  ships  involved  in  commercial  navigation, 
regardless of size or flag, can benefit from the tax reduction.  

The reason why the scope of the measure at issue has been restricted to vessels that are fitted 
with  electrical  systems  with  a  rated  installed  capacity  of  more  than  35  kilowatts  is  closely 
linked to the environmental objective pursued. The Italian authorities assume that vessels with 
electrical  systems  of  low  rated  capacity,  whilst  in  ports,  would  usually  resort  to  electricity 
directly provided by ground installations to vessels at berth in a port (“shore-side electricity”) 
and  not  to  stand-alone  electrical  generators  through  their  own  internal  combustion  engines. 
Therefore,  vessels  with  a  rated  capacity  of  less  than  35  kW  lying  at  berth  in  ports  do  not 
contribute to the pollution. The rationale for addressing the tax measure in question to vessels 
with  larger  electrical  systems  that  normally  keep  their  own  fossil  fuel-powered  electrical 
generators in operation is indeed to encourage them to use, during their berth, the electricity 
supplied by shore-side installations.  

The  measure  is  not  available  to  businesses  in  financial  difficulties,  or  businesses  which  are 
subject  to  recovery  orders  on  the  basis  of  an  earlier  Commission  decision  declaring  an  aid 
measure to be unlawful and incompatible with the internal market. 

With the tax reduction, Italy wants to provide an incentive for relevant operators to develop 
and use shore-side electricity in order to reduce air pollution 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 
exemptions and reductions, to certain uses of electricity. However, as such, these provisions 
do not provide for reduced taxation of shore-side electricity. 

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  Italian  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  hence  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 

EN 

2 

  EN 

environmental  advantages2.  Beneficiaries  would  be  charged  the  EU  minimum  tax  rate  for 
electricity under the Energy Taxation Directive of EUR 0.50/MWh, which can contribute to 
the stated policy objectives. 

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.  

Italy 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. 
That 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 revision of the Energy Taxation Directive and a 
possible  adoption  by  the  Council  of  a  legal  act  based  on  the  Commission  proposal  for 
amendment of the Energy Taxation Directive published on 14 July 20213.  

Under  these  circumstances,  while  it  appears  appropriate  to  grant  the  authorisation  for  the 
requested  period,  the  duration  of  validity  of  the  derogation  might  be  shorter  than  that 
requested should the entry into application of general provisions on the matter happen earlier.  

State aid rules 

The reduced tax rate of EUR 0.50 per MWh envisaged by the Italian 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 
(GEBR),  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/EU4. 

• 

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 reduce the burning of bunker fuels on board the vessels in ports, the 
measure  will  contribute  to  the  objective  of  improving  local  air  quality.  In  its  Article  13, 

2 

3 

4 

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). 
Proposal for a council directive restructuring the Union framework for the taxation of energy products 
and electricity (recast), 14.7.2021, COM(2021)563 final 2021/0213 (CNS) 
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). 

EN 

3 

  EN 

 
                                                 
Directive  2008/50/EC  on  Ambient  Air  Quality5  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 are respected. Those obligations require 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 those problems exist, the use of shore-side 
electricity is encouraged as one element of the overall air quality strategy. The use of shore-
side  electricity  is  also  encouraged  under  Directive  (EU)  2016/8026  regulating  the  sulphur 
content  in  marine  fuels.  That  would  also  contribute  to  comply  with  nitrogen  deposition 
requirements pursuant to Directive 92/43/EEC on the conservation of natural habitats and of 
wild  fauna  and  flora.  In  that  regard,  the  Italian  authorities  expect  local  emissions  to  be 
reduced by the use of shore side electricity.  

The  measure  would  encourage  the  use  of  shore-side  electricity  to  contribute  to  sustainable 
ports and sustainable shipping.  It  is  in  line with  the EU policy ambitions. Deploying shore-
side  electricity  in  European  ports  is  one  of  the  proposed  measures  to  achieve  the  ambitions 
targets set in the European Green Deal. 

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.  

Energy policy 

The  measure  is  in  line  with  Directive  2014/94/EU  on  the  deployment  of  alternative  fuels 
infrastructure7, 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 TFEU8. 

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  make  such  declarations  for  every  Member  States 
whose territorial  waters  are concerned. Analogous considerations apply to inland navigation 

5 

6 

7 

8 

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). 
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) 
C(2014) 2231 final of 9 April 2014. 

EN 

4 

  EN 

                                                 
and  the  optional  tax  treatment  provided  by  Article  15(1)(f)  of  the  Directive  (actually 
implemented by Italy). Under these circumstances, it can be justified not to penalize the less-
polluting  alternative  of  shore-side  electricity  by  allowing  Italy  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  ports9  and  with  the  Commission 
Communication  Strategic  goals  and  recommendations  for  the  EU's  maritime  transport 
policy10. 

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 according to 
the Italian authorities there are currently no vessels at berth in a port equipped with electrical 
installations  with  a  rated  installed  capacity  of  more  than  35  kW,  which  use  shore-side 
electricity.  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 generation11 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 Italy 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 
economic  advantage  over  operators  generating  their  own  electricity  on  board  because  this 
electricity is exempted from taxation. According to the Italian 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 advantage12. 

9 

10 

11 

12 

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) 
The  Italian  Authorities  providing  the  example  of  a  medium-sized  vessel  equipped  with  electrical 
systems  with  a  total  rated  installed  capacity  of  200  kW:  The  economic  advantage  deriving  from  the 
application of the envisaged rate of excise duty of EUR 0.5 per MWh would amount  - considering the 

EN 

5 

  EN 

                                                 
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 restriction to apply the reduced rate of taxation to supplies of shore-side electricity of at 
least 380 Volt to vessels could be regarded as a distortion of the market. However, the Italian 
authorities have indicated there is no supply of shore-side electricity of less than 380 Volt to 
commercial vessels, electricity of this voltage is only supplied to small pleasure crafts. 

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. 

• 

Proportionality 

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

currently applicable national rate and a reasonable simultaneity factor in the use of electricity - to only 
thirty euros calculated with reference to a whole day at berth in the port 

EN 

6 

  EN 

                                                                                                                                                         
 
• 

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 Italy 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  Italy  suggests  that  the  measure  will  have  no  impact  on  tax 
revenues on the short term. As mentioned above, the Italian authorities could not estimate the 
numbers  of  beneficiaries.  The  tax  rate  for  shore-side  electricity  will  still  be  above  the 
minimum level of taxation set in Directive 2003/96/EC. Italy expects the measure to have a 
positive  impact  on  the  achievement  of  its  environmental  goals  and  in  particular  on  the 
reduction of emissions, improvement of local air quality in port cities. 

• 

Regulatory fitness and simplification 

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

EN 

7 

  EN 

• 

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  Italy  will  be  allowed  to  apply  a  reduced  taxation  rate  to  electricity 
directly supplied to vessels, other than private pleasure craft, berthed in Italian 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  for  6  years,  from  18  October 
2021 until 17 October 2027, which is the maximum period allowed by the Directive. 

EN 

8 

  EN 

2021/0324 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising Italy to apply a reduced rate of taxation to electricity directly supplied to 
vessels, other than private pleasure craft, 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) 

(3) 

(4) 

(5) 

(6) 

By letter of 14 September 2020, Italy requested authorisation to apply a reduced rate 
of  taxation  to  electricity  directly  supplied  to  maritime  and  inland  waterway  vessels, 
other than private pleasure craft, at berth in a port (‘shore-side electricity’) pursuant to 
Article  19  of  Directive  2003/96/EC.  By  letter  of  12  May  2021,  Italy  provided 
additional information. 

Through  the  reduced  rate  of  taxation,  Italy  aims  to  promote  the  use  of  shore-side 
electricity,  which  is  considered  to  be  an  environmentally  less  harmful  way  of 
satisfying the electricity needs of vessels at berth in a port than the burning of bunker 
fuels by such vessels. 

Insofar as the use of shore-side electricity avoids emissions of air pollutants resulting 
from  the  burning  of  bunker  fuels  by  vessels  at  berth  in  a  port,  it  improves  local  air 
quality in port cities. The reduced rate of taxation is therefore expected to contribute to 
the environmental, health and climate policy objectives of the Union. 

Allowing Italy 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 a 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. 

In order to enable port and ship operators, as well as distributors and redistributors of 
electricity to  continue promoting the use of shore-side electricity, it is  appropriate to 
authorise Italy to apply a reduced rate of taxation to that type of electricity. 

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 

1 

OJ L 283, 31.10.2003, p. 51. 

EN 

9 

  EN 

                                                 
authorisation  period  is  sufficiently  long  so  as  not  to  discourage  relevant  economic 
operators  from  making  the  necessary  investments,  it  is  appropriate  to  grant  the 
requested  authorisation  for  six  years  from  18  October  2021.  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  the  end-date  of 
application of the requested authorisation. 

(7) 

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

HAS ADOPTED THIS DECISION:  

Italy is authorised to apply a reduced rate of taxation to electricity directly supplied to vessels, 
other than private pleasure craft, at berth in a port (‘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 18 October 2021 until 17 October 2027. 

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 Italian Republic. 

Done at Brussels, 

Article 3 

For the Council 
The President 

EN 

10 

  EN