Proposal for a COUNCIL DIRECTIVE amending Directive 2008/118/EC and Directive (EU) 2020/262 (recast) as regards tax-free shops situated in the French terminal of the Channel Tunnel
Date: 2021-12-16
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: English Channel, France, Nord-Pas-de-Calais, cross-channel connection, duty-free sale, excise duty, rail transport, tax exemption

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   EUROPEAN COMMISSION  Brussels, 16.12.2021  COM(2021) 817 final 2021/0418 (CNS)  Proposal for a COUNCIL DIRECTIVE amending Directive 2008/118/EC and Directive (EU) 2020/262 (recast) as regards tax-free shops situated in the French terminal of the Channel Tunnel  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Following  the  United  Kingdom’s  withdrawal  from  the  European  Union,  this  proposal 
reintroduces in the Excise Directive1 a former provision of Directive 92/12/EEC recognising 
the specific status of the Channel Fixed Link and the similarity of its situation with that of a 
port.  

The proposal will restore a previous provision authorising the reopening of tax-free shops in 
the French terminal of the Channel Fixed Link, as is  notably the case in the French ports of 
Calais and Dunkirk and in the British terminal of the Channel Fixed Link (Folkestone). 

The  Channel  Fixed  Link  is  a  twin  bored  tunnel  rail  link,  with  an  associated  service  tunnel, 
under the English Channel between Folkestone (Kent, United Kingdom) and Coquelles (Pas-
de-Calais, France), and terminal areas for control of access to, and egress from, the tunnels. It 
has the characteristics of a maritime link with border controls at the two access terminals to 
the Channel Fixed Link. 
Directive 92/12/EEC2 recognised the specific status of the Channel Fixed Link and likened its 
situation to that of a port as regards the regime of tax-free shops. This was motivated by the 
concern  to  take  into  account  this  new  link  between  France  and  the  United  Kingdom  in 
comparison to the ferries providing the sea link and thus to set a level playing field between 
the Channel Fixed Link and maritime links. 

However,  this  provision  was  not  carried  over  when  tax-free  sales  between  Member  States 
were  abolished  in  1999  because  the  tax-free  shops  in  question  did  not  supply  to  passengers 
travelling outside of the Union’s fiscal territory. 

Therefore, in accordance with the current rules under the Excise Directive, tax-free shops are 
only  permitted  in  Union  airports  and  ports  for  sales  to  passengers  who  have  a  destination 
outside of the Union’s fiscal territory. This is justified with a view to avoiding tax evasion and 
abuse3.  

On  31  December  2020,  following  the  United  Kingdom’s  withdrawal  from  the  European 
Union,  the  Channel  Fixed  Link  became  a  cross-border  link  between  the  Union  and  a  third 
country. As allowed  by  the Excise Directive,  ferry  companies  reintroduced tax-free sales  of 
goods supplied on board their ships during the sea-crossing to the United Kingdom. Tax-free 
shops have also opened in the ports of Calais and of Dunkirk. Moreover, the United Kingdom 
has  already  granted  permission  for  an  outlet  at  their  terminal  of  the  Channel  Fixed  Link  in 
Folkestone.  However,  the  French  terminal  of  the  Channel  Fixed  Link  cannot  open  tax-  free 
shops under the current rules. 

The proposal intends to provide to travellers using the Channel Fixed Link from France to the 
United  Kingdom  tax-free  facilities  which  are  comparable  to  those  available  to  persons 
travelling from a Member State to a third country by sea.  

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3 

Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise 
duty  and  repealing  Directive  92/12/EEC  (OJL9,  14.1.2009,  p.12)  repealed  and  replaced  by  Directive 
(EU) 2020/262 which will come into force 13 February 2023. 
Council Directive 92 /12/EEC of 25 February 1992 on the general arrangements for products subject to 
excise duty and on the holding, movement and monitoring of such products (OJ L 76, 23.3.1992, p. 1). 
Recital 14 of Council Directive 2008/118/EC. 

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The passengers of the Channel Fixed Link are in the same position as sea passengers leaving 
the Union’s fiscal territory. Once the passengers of the Channel Fixed Link have checked in 
for their trip and entered the terminal with tax-free shops, they would be in a similar position 
as those passengers in a port in the sense that those passengers are bound to continue their trip 
to a third country.  

The Channel Fixed Link terminal is not comparable to a railway terminal in that no train stops 
at  this  terminal  but  only  shuttles  which  are  only  accessible  to  vehicles  and  not  foot 
passengers.  Passengers  using  the  Channel  Fixed  Link  cannot  exit  until  they  reach  the 
destination.  Therefore,  the  risk  of  non-compliance  with  the  excise  duty  and  tax  free  import 
allowances  by  travellers  and  consequently  the  control  burden  for  the  customs  authorities 
would be limited and similar to persons travelling by boat or aircraft. 

• 

Consistency with existing policy provisions in the policy area 

According to the current rules, the  situations  in  which  tax-free  sales  to  travellers  leaving  
the  territory  of  the  Union are  allowed  is  clearly  determined  with  a  view  to  avoiding  
tax evasion  and  abuse. The terminal of the Channel Fixed Link has the characteristics of a 
port  and  is  linked  directly  to  the  port  of  Calais.  Both  infrastructures  allow  a  sea-crossing 
under the same conditions. 

The traveller’s destination is fixed to a third country and it is easier to check the  quantity of 
tax-free goods the traveller has purchased. Thus, the risk of fraud, in particular the risk that 
passengers purchase tax-free goods without departing the Union is limited. 

• 

Consistency with other Union policies 

The  measure  is  respectful  of  the  proper  functioning  of  the  Single  Market  and  the  need  to 
ensure fair competition. It will minimise the differential treatment between the Channel Fixed 
Link and the ports of Calais and Dunkirk and between its French terminal (Coquelles) and its 
British  terminal  (Folkestone),  which  could  be  considered  as  being  in  a  similar  legal  and 
factual  situation  for  the  purposes  of  the  Excise  Directive.  Moreover,  the  transport  of 
passengers  through  the  Channel  Fixed  Link  is  competing  on  the  same  relevant  market  as 
maritime transport. The reintroduction of the special status exclusively concerns the Channel 
Fixed  Link  in  the  French  terminal  (Coquelles)  and  not  railway  terminals.  Given  this,  the 
measure will not lead to undue distortion of competition or hindering of the functioning of the 
Single Market.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The proposed Directive will amend the Excise Directive based on Article 113 of the Treaty on 
the  Functioning  of  the  European  Union.  That  provision  provides  for  the  Council,  acting 
unanimously  in  accordance  with  a  special  legislative  procedure  and  after  consulting  the 
European Parliament and the European Economic and Social Committee, to adopt provisions 
to harmonise Member States’ rules in the area of indirect taxation.  

• 

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 14 of Directive 2008/118/EC, tax-free shops are only permitted 
in union airports and ports for sale to passengers who have destinations outside of the union 
fiscal territory. 

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As  a  result,  only  an  amendment  to  the  Directive  2008/118/EC  can  authorise  the  opening  of 
tax-free shops in the French terminal (Coquelles) of the Channel Fixed Link.  

• 

Proportionality 

The proposal is consistent with the principle of proportionality, as it does not go beyond what 
is  necessary  to  meet  the  objectives  of  the  Treaties  linked  to  the  smooth  functioning  of  
the Single Market  

• 

Choice of the instrument 

A Directive is proposed in view of amending the Excise Directive. 

3. 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

This proposal is a technical amendment of tax-free shops rules and as such does not constitute 
new policy or a substantial change to the existing policy.  

It is a direct consequence of the United Kingdom’s withdrawal from the European Union and 
the fact that the Channel Fixed Link has become a cross-border link between a third country 
and the Union. 
This proposal restores a previous provision4 which allowed the operation of tax-free shops in 
the terminals of the Channel Fixed Link. The goal of this provision was explained in the 1996 
report of the Commission on the vendor  control  systems applied by the Member States:  “In 
order  to  ensure  equal  treatment  with  the  ferries,  the  Council  also  authorised  exempted 
supplies of goods in either of the two Channel Tunnel terminals”. 

Overall, there are no significant economic impacts on the Single Market as it will be limited 
to  the  French  terminal  of  the  Channel  Fixed  Link  and  thus  only  apply  to  one  outlet.  The 
potential for tax leakage will be very limited. 

Indeed, the Channel Fixed Link terminal is not comparable to a railway terminal in that it is 
not accessible to foot passengers but only to vehicle. Persons travelling through the Channel 
Fixed Link cannot move as frequently and freely as compared to persons travelling over land. 
The risk of fraud is limited. 

Moreover, the situation of the Channel  Fixed Link is  unique in Europe in  that it is  a tunnel 
under the sea between an EU country and a third country. 

For those reasons, neither impact assessment nor public consultation were deemed necessary. 

4. 

BUDGETARY IMPLICATIONS 

Excise duty is not an own resource. Therefore, the proposal does not entail any implications 
for the Union budget. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

An implementation plan is not necessary. This proposal reintroduces in the Excise Directive a 
former  provision  of  the  Directive  92/12/EEC  recognising  the  specific  status  of  the  Channel 
Fixed Link and likening its situation to that of a port or an airport. The measure will have no 

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Article 28 of Council Directive 92/12/EEC. 

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significant economic impacts on the Single Market as it will be limited to the French terminal 
of the Channel Fixed Link. 

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2021/0418 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2008/118/EC and Directive (EU) 2020/262 (recast) as regards tax-
free shops situated in the French terminal of the Channel Tunnel 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 113 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Parliament1, 
Having regard to the opinion of the European Economic and Social Committee2,  

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

Article 14(1) of Council Directive 2008/118/EC3 authorise Member States to exempt 
from payment of excise duty excise goods supplied in tax-free shops located in Union 
airports and ports for sale to travellers to a third territory. 

The  Channel  Fixed  Link  is  a  twin  bored  tunnel  rail  link,  under  the  English  Channel 
between Folkestone (Kent, United Kingdom) and Coquelles (Pas-de-Calais, France). It 
has an associated service tunnel and terminal areas at either end for control of access 
to,  and  egress  from,  the  tunnels.  It  has  the  characteristics  of  a  maritime  link  with 
border controls at the two access terminals. Both infrastructures allow a sea-crossing 
under the same conditions.  

The terminal of the Channel Fixed Link should therefore be considered equivalent to a 
port within the meaning of Article 14 of Council Directive 2008/118/EC.  

Due to the United Kingdom’s withdrawal from the Union which lead to the opening of 
the tax-free shops in notably the ports of Calais and Dunkirk and in the UK terminal of 
the Channel Fixed Link in Folkestone, it is appropriate to authorise the opening of tax-
free shops in the French terminal of the Channel Fixed Link in Coquelles. 

Given that  Passengers using the Channel  Fixed Link cannot  exit until  they  reach the 
destination,  the  risk  of  non-compliance  with  the  excise  duty  and  tax  free  import 
allowances  by  travellers  and  consequently  the  control  burden  for  the  customs 
authorities  would  be  limited.  However,  to  prevent  any  evasion,  avoidance  or  abuse, 
France  shall  take  the  necessary  control  measures  to  ensure  the  proper  application  of 
the tax exemption in the tax-free shops of the French terminal in Coquelles. 

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OJ C , , p.  
OJ C , , p. . 
Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for  excise 
duty and repealing Directive 92/12/EEC (OJL9, 14.1.2009, p.12). 

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(6) 

Given  that  Council  Directive  (EU)  2020/2624  repeals  and  replaces  Directive 
2008/118/EC  with  effect  from  13  February  2023,  the  corresponding  provision  in 
Directive (EU) 2020/262 should also be amended. 

(7) 

Directives 2008/118/EC and (EU) 2020/262 should therefore be amended accordingly, 

HAS ADOPTED THIS DIRECTIVE: 

Article 1 

Amendment to Directive 2008/118/EC 

Article 14 of Directive 2008/118/EC is amended as follows: 

(1) 

the following paragraph 1a is inserted: 

‘1a. The exemption provided in paragraph 1 shall also apply to products supplied by tax-free 
shops  situated  in  the  French  terminal  of  the  Channel  Tunnel  in  Coquelles  to  passengers 
holding transport documents which are valid for a journey to the United Kingdom through the 
Channel Fixed Link.’; 

(2) 

paragraph 3 is replaced by the following: 

‘3. Member States shall take the measures necessary to ensure that the exemptions  provided 
for in  paragraphs 1, 1a and 2 are  applied in  such a way  as to  prevent  any  possible evasion, 
avoidance or abuse.’. 

Article 2 

Amendment to Directive (EU) 2020/262 

Article 13 of Directive (EU) 2020/262 is amended as follows: 

(1) 

the following paragraph 1a is inserted: 

‘1a. The exemption provided in paragraph 1 shall also apply to products supplied by tax-free 
shops  situated  in  the  French  terminal  of  the  Channel  Tunnel  in  Coquelles  to  passengers 
holding transport documents which are valid for a journey to the United Kingdom through the 
Channel Fixed Link.’; 

(2) 

paragraph 3 is replaced by the following: 

‘3. Member States shall take the measures necessary to ensure that the exemptions provided 
for in  paragraphs 1, 1a and 2 are  applied in  such a way  as  to  prevent  any  possible evasion, 
avoidance or abuse.’. 

Article 3 

Where  a  Member  State  decides  to  apply  the  exemption  provided  for  in  Article  14(1)  of 
Directive  2008/118/EC  in  accordance  with  Article  1  of  this  Directive  or  the  exemption 
provided for in Article 13(1) of Directive (EU) 2020/262 in accordance with Article 2 of this 
Directive,  and  adopts  the  laws,  regulations  and  administrative  provisions  necessary  to  give 
effect  to  this  Directive,  it  shall  forthwith  communicate  to  the  Commission  the  text  of  those 
provisions.   

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Council  Directive  (EU)  2020/262  of  19  December  2019  laying  down  the  general  arrangements  for 
excise duty (OJ L 58, 27.2.2020, p. 4). 

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When  the  Member  State  adopts  those  provisions,  they  shall  contain  a  reference  to  this 
Directive or be accompanied by such a reference on the occasion of their official publication. 
The Member State shall determine how such reference is to be made. 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 4 

This Directive is addressed to the Member States. 

Done at Brussels, 

Article 5 

For the Council 
The President 

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