Proposal for a COUNCIL IMPLEMENTING DECISION authorising Sweden to apply reduced rates of excise duty to petrol, unmarked gas oil and equivalent fuels used as motor fuels, in accordance with Article 19 of Directive 2003/96/EC
Date: 2022-08-22
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Sweden, diesel fuel, excise duty, fuel, fuel tax, petrol, tax relief

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   EUROPEAN COMMISSION  Brussels, 22.8.2022  COM(2022) 398 final 2022/0250 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising Sweden to apply reduced rates of excise duty to petrol, unmarked gas oil and equivalent fuels used as motor fuels, 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  European  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 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. 

Sweden is seeking for  authorisation to apply a temporary reduction of the national tax rates 
for  petrol,  unmarked  gas  oil  and  equivalent  fuels  used  as  motor  fuels,  falling  below  the 
minimum levels of taxation as laid down in Table A of Annex I to the Directive.  

The  requested  period  of  validity  is  limited  to  3  months  and  is  within  the  maximum  period 
allowed by Article 19(2) of the Energy Taxation Directive. 

By  letter  dated  6  May  2022,  the  Swedish  authorities  informed  the  Commission  of  their 
intention to apply the temporary measure. Additional information was provided on 19 and 24 
May 2022. 

According  to  the  Swedish  authorities,  the  aim  of  the  measure  is  to  mitigate  the  high  retail 
prices of petrol and diesel in the country, resulting from the recent geopolitical developments, 
and  directly  affecting  both  households  and  companies.  They  highlighted  that  Sweden,  as  a 
sparsely  populated  country,  has  a  high  proportion  of  residents  that  depend  on  their  cars  for 
commuting and other daily trips.  

As  underlined  by  the  same  authorities,  the  price  of  petrol  has  increased  by  around  2.50 
SEK/litre,  rising  from  19.39  SEK/litre  on  24  February  2022  to  21.93  SEK/litre  on  16  May 
2022. Similarly, for diesel the price has increased by 2.14 SEK/litre, from 21.82 SEK/litre to 
23.96 SEK/litre for the same period. A reduction of excise duty of 1.80 SEK/litre was granted 
during that period. However, for 15 000 kilometres per year and a fuel consumption of 6 litres 
per 100 kilometres, the monthly fuel expense has increased by around 160-190 SEK/month. 

The table below provided by the Swedish authorities, shows fuel prices per litre and the price 
components  for  the  25th  of  each  month  from  January  to  April  2022  and  the  price  on  20  of 
May 2022.  

1 

OJ L 283, 31.10.2003, p. 51-70. 

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The Swedish excise duty was 5.37 SEK/litre for petrol and 3.35 SEK/litre for diesel in May 
2022.  It  comprises  an  energy  tax  and  a  carbon  dioxide  tax  levied  at  the  time  of  release  for 
consumption. Together they meet the minimum levels of taxation laid down in the Directive.  

Sweden requests authorisation to temporarily reduce to zero the energy tax component of the 
excise duty, while keeping the CO2 tax component for both products in line with the request 
of its national parliament2. Such a reduction of the energy tax component (corresponding to 
2.73 SEK/litre for petrol and 1.06 SEK/litre for diesel) would result in tax rates lower than the 
minimum EU levels of taxation (approximatively 30% below those levels).  

According to the Swedish authorities, the excise duty is the only price component on which 
Sweden  can  intervene  to  reduce  the  retail  price  in  the  short  term.  Hence,  in  their  view,  the 
derogation appears necessary to remedy the current situation Sweden faces.  

The tax reduction will be available to all those liable for excise duty on petrol and diesel. 

The budgetary expenditure is estimated at SEK 3.5 billion (SEK 2.1 billion deriving from the 
tax reduction on petrol and SEK 1.4 billion for diesel). 

• 

Consistency with existing policy provisions in the policy area 

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  to  introduce  further  exemptions  or  reductions  for  specific  policy 
considerations.’ 

By means of the requested temporary tax reduction, the Swedish authorities intend to mitigate 
the high retail prices of petrol and diesel, and reduce the social and economic impacts of the 
current geopolitical situation affecting both households and companies. 

2 

On 7 April, the Swedish Parliament decided on proposals put forward by the Parliamentary Committee 
on Finance (Bet. 2021/22:FiU473). One of the proposals included a request for an announcement to the 
government to apply for the derogation needed to reduce of the energy tax on petrol and diesel to zero 
for three months. The Swedish Parliament decided in accordance with the Committee’s proposal. 

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Date Fuel Product price incl. gross marginExcise duty     VAT    Price2022 01 25Petrol7.976.823.718.49Diesel11.984.84.1920.972022 02 25Petrol 9.296.824.0320.14Diesel13.344.84.5322.672022 03 25Petrol10.416.824.3121.54Diesel16.424.85.326.522022 04 25Petrol10.176.824.2521.24Diesel15.54.85.0725.372022 05 20Petrol12.055.374.3621.78Diesel15.063.354.623.01 
 
                                                 
Reducing the energy tax component to zero while keeping the CO2 component would lead to 
a  situation  where  beneficiaries  would  be  charged  national  rates  around  30%  below  the  EU 
minimum  tax  rates  under  the  Energy  Taxation  Directive.  In  the  present  exceptional 
geopolitical situation, this would be of relevance to the social cohesion policy considerations. 

The  possibility  to  introduce  such  a  tax  reduction  can  be  envisaged  under  Article  19  of  the 
Directive  since  its  purpose  is  to  allow  Member  States  to  introduce  further  exemptions  or 
reductions for specific policy considerations.  

The limited period of validity of 3 months is within the maximum period allowed by Article 
19(2) of the Energy  Taxation Directive, laying down, for this type of measure,  a maximum 
period of 6 years, with the possibility of renewal.  

However, the derogation should not undermine the future adoption by the Council of a legal 
act based on a Commission proposal for amendment of the Energy Taxation Directive3.  

State aid rules 

The temporary tax reduction envisaged by the Swedish  authorities falls  under the minimum 
levels of taxation as laid down in Table A of Annex I to the Directive.  

The  present  proposal  is  without  prejudice  to  any  assessment  of  the  Swedish  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. 

• 

Consistency with other Union policies 

Each  request  for  derogation  under  Article  19  of  the  Energy  Taxation  Directive  must  be 
examined  by  the  Commission  taking  into  account  the  proper  functioning  of  the  internal 
market, the need to ensure fair competition and EU health, environment, energy and transport 
policies. 

According  to  the  Swedish  authorities,  the  envisaged  tax  reduction  should  partially  alleviate 
the  social  and  economic  burden  of  the  Swedish  population  due  to  the  recent  price  increase 
resulting  also  from  the  conflict  in  Ukraine.  Indeed,  the  particular  geopolitical  situation, 
coupled  with  a  high  market  price  of  oil,  which  is  likely  to  further  rise  in  the  upcoming 
months, translates into higher costs for Swedish households and businesses. 

Since  the  measure  is  expected  to  temporarily  lower  fuel  prices,  it  might  make  refuelling  in 
Sweden more attractive in border areas, mainly for petrol. However, Sweden highlighted that 
it has higher quotas under the reduction obligation scheme, compared to other EU countries. 
In other words, the share of biofuels, especially in diesel, is higher in Sweden, which leads to 
higher  retail  prices.  As  a  result  of  this  situation,  lowering  the  diesel  price  in  Sweden  is  not 
likely  to  affect  intra-EU  trade.  Given  its  limited  effects  and  limited  duration,  the  measure 
should not distort competition or hinder the functioning of the internal market.  

3 

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

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As underlined in the RePowerEU Communication4, while focusing on vulnerable households 
and  businesses,  the  Commission  invites  Member  States  to  adopt  measures  incentivising 
energy  savings  and  reducing  fossil  fuels  consumption.  Nonetheless,  given  its  short  duration 
and the current exceptional circumstances linked to the geopolitical situation coupled with an 
exceptionally  high  market  price  of  oil,  the  requested  derogation  seems  adequate  and 
proportionate.  The  measure  takes  account  also  of  the  need  to  balance  the  specific  policy 
objectives  listed  in  Article  19  of  the  Energy  Taxation  Directive,  and  notably  the  EU’s 
environmental  policy,  with  the  imperative  emergency  to  ensure  energy  affordability  for 
businesses and households.  

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 TFEU is not in itself within the exclusive 
competence of the European Union within the meaning of Article 3 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 reductions do not exceed what 
is necessary to attain the objective in question.  

The tax reductions are applicable during a limited three-month period of time.  

• 

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 

EVALUATIONS, 

POST 

OF 

EX 

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 Sweden and concerns this Member State only. 

4 

Communication from the Commission to the European Parliament, the European Council, the Council, 
the European Economic and Social Committee and the Committee of the Regions  REPowerEU: Joint 
European  Action  for  more  affordable,  secure  and  sustainable  energy,  (COM(2022)  108  final, 
8.3.2022). 

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• 

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. 

• 

Regulatory fitness and simplification 

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

• 

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 European 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 of 3 months. The applicable tax rates will be below the minimum levels 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  Sweden  will  be  allowed  to  apply  reduced  taxation  rates  to  petrol, 
unmarked  gas  oil  and  equivalent  fuels  used  as  motor  fuels,  below  the  minimum  levels  of 
taxation. 

Article 2 stipulates that the authorisation requested is granted for three months after its entry 
into  force,  as  requested  by  Sweden,  within  the  maximum  period  of  6  years  allowed  by  the 
Directive. 

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2022/0250 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising Sweden to apply reduced rates of excise duty to petrol, unmarked gas oil 
and equivalent fuels used as motor fuels, 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 electricity5, and in particular 
Article 19 thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

By  letter  of  6  May  2022,  Sweden  requested  authorisation  to  apply  reduced  rates  of 
excise  duty  to  petrol,  unmarked  gas  oil  and  equivalent  fuels  used  as  motor  fuels 
pursuant  to  Article  19  of  Directive  2003/96/EC.  Additional  information  and 
clarifications in support of the request were provided by the Swedish authorities on 19 
and 24 May 2022. The authorisation was requested for a period of three months. 

According  to  the  Swedish  authorities,  the  application  of  a  reduced  tax  rate,  aims  at 
mitigating  the  social  and  economic  impacts  of  high  retail  prices  of  petrol  and  diesel 
resulting  from  the  exceptional  geopolitical  situation,  and  directly  affecting  both 
households  and  companies.  According  to  their  assessment,  as  Sweden  is  a  sparsely 
populated  country  and  therefore,  highly  car-dependent,  the  reduced  rates  of  excise 
duty  aim  to  meet  the daily needs  associated with the consumption of motor fuels by 
contributing to reduce the impact of the increase of retail prices. 

The  requested  authorisation  is  not  likely  to  distort  competition  or  hinder  the  proper 
functioning  of  the  internal  market.  Given  its  short  duration  and  the  exceptional 
circumstances  linked  to  the  geopolitical  situation  coupled  with  exceptionally  high 
prices  of  crude  oil,  the  requested  authorisation  is  considered  adequate  and 
proportionate.  The  authorisation  balances  out  the  specific  policy  considerations 
referred  to  in  Article  19(1)  of  Directive  2003/96/EC,  and  notably  the  Union’s 
environmental  policy,  with  the  imperative  emergency  to  ensure  energy  affordability 
for businesses and households. The tax reduction would partially offset the increased 
energy costs, and is not cumulative with any other type of tax reductions. 

Sweden should therefore be authorised to apply reduced rates of excise duty to petrol, 
unmarked gas oil and equivalent fuels used as motor fuels, as requested. 

In accordance with Article 19(2) of Directive 2003/96/EC, each authorisation granted 
under  that  provision  is  to  be  strictly  limited  in  time.  However,  in  order  not  to 
undermine  future  general  developments  of  the  existing  legal  framework,  it  is 

5 

OJ L 283, 31.10.2003, p. 51. 

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appropriate to provide that, 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, 
introduce a modified general system for the taxation of energy products and electricity 
to  which  this  authorisation  would  not  be  adapted,  this  authorisation  should  cease  to 
apply on the day on which those general rules become applicable.  

(6) 

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

HAS ADOPTED THIS DECISION:  

Sweden is  authorised to apply reduced rates of excise duty to  petrol, unmarked  gas oil,  and 
equivalent fuels used as motor fuels, below the relevant minimum levels of taxation referred 
to in Article 7 of Directive 2003/96/EC. 

Article 1 

Article 2 

This Decision shall apply until [last day of the month following [3] months after the date of 
notification of this Decision]. 

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,  introduce  a  modified 
general system for the taxation of energy products  and electricity to which the authorisation 
granted in Article 1 of this Decision would not be adapted, this Decision shall expire  on the 
day on which those general rules become applicable. 

This Decision is addressed to the Kingdom of Sweden. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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