Proposal for a COUNCIL IMPLEMENTING DECISION authorising Italy to apply, in determined geographical areas, reduced rates of taxation on gas oil and liquid petroleum gas used for heating purposes in accordance with Article 19 of Directive 2003/96/EC
Date: 2025-03-13
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Italy, butane, derogation from EU law, fuel oil, gas, heating, less-favoured region, propane gas, tax relief

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   EUROPEAN COMMISSION  Brussels, 13.3.2025  COM(2025) 103 final 2025/0053 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising Italy to apply, in determined geographical areas, reduced rates of taxation on gas oil and liquid petroleum gas used for heating purposes 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  (EU)  2019/814  of  17  May  20192,  Italy  has 
already  been  authorised  to  apply,  in  certain  particularly  disadvantaged  geographical  areas, 
reduced rates of taxation on gas oil and liquid petroleum gas (LPG) used for heating purposes 
to partially offset the high heating costs of residents in such geographical areas.  

The objective of this proposal is to extend that authorisation as requested by Italy, given that 
the current derogation will expire on 31 December 2024. 

The  high  heating  costs  are  either  due  to  very  severe  climate  conditions  or  due  to  severe 
climate condition  or insularity of such zones combined with  difficult  fuel  procurement.  The 
tax  reduction  is  applicable  in  geographical  areas  fulfilling  the  following  criteria:  Under 
Article  8(10)  of  Italian  Law  No  448/1998,  the  advantage  applies  to  supplies  of  the  fuels  in 
question (gas oil and LPG) used in municipalities: • classified in climate zone F (most severe 
climate conditions within the Italian territory), as referred to in Presidential Decree No 412 of 
26 August 1993; • which do not have a gas supply network and are classified in climate zone 
E,  as  referred  to  in  the  abovementioned  Presidential  Decree  412/1993.  In  this  case,  as 
provided  for  in  Article  8(10)(c)  point  4)  of  Law  No  448/1998,  the  advantage  will  be 
withdrawn as soon as a municipality becomes connected to the gas supply network3. • in the 
region  of  Sardinia  and  the  smaller  islands,  as  long  as  the  natural  gas  network  has  not  been 
made available in the concerned communes. This part of the regimes covers all Italian islands 
apart from Sicily. 

By  letter  dated  24  April  2024,  the  Italian  authorities  informed  the  Commission  of  their 
intention  to  prolong  the  current  measure  until  31  December  2030.  The  Italian  authorities 
provided additional information by letters dated 12 September and 21 November 2024. 

The period of validity initially requested was from 1 January 2025 until 31 December 2030, 
which is within the maximum period allowed by Article 19 of the Energy Taxation Directive. 
Following  discussions  between  the  Italian  authorities  and  the  Commission,  in  particular  in 

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OJ L 283, 31.10.2003, p. 51–70. 
OJ L 133, 21.5.2019, p. 20–22. 
The number of communes lacking a gas distribution network that fall into climate zone E has  already 
been considerably reduced (from 608 to 260 communes) as the natural gas network has been extended 
but  this  process  can  be  considered  to  be  largely  completed  as  further  extension  is  proving  to  be 
particularly difficult or unfeasible in certain parts of the territory, also in relation to the costs involved. 

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view  of  the  proposed  revision  of  Directive  2003/96/EC4,  an  earlier  termination  date  of 
31 December 2028 was agreed. 

The requested reductions are the same as the reductions provided for in the previous Decision 
and amount to EUR 122.56 per 1 000 litres for gas oil used as heating fuel and to EUR 151.01 
per  1  000  kilograms  for LPG  used  as  heating  fuel5.  The  tax  advantage  cannot  be  combined 
with other excise duty reductions. 

According to  the  Italian authorities, the tax differentiation is  based on objective criteria and 
intends  to  ensure  geographical  continuity  with  the  rest  of  the  Italian  territory,  i.e.  it  aims  at 
putting  the population  of the eligible areas on more comparable  footing with  the rest  of the 
Italian population by means of reducing their disproportionately high heating costs. 

The amount of the tax reduction is the same for all users; it only aims at partially alleviating 
the  additional  heating  costs  of  the  population  of  the  eligible  areas,  which  are  due  to  cold 
climate or difficulties with fuel procurement. 

In  addition,  the  specificity  of  the  islands  consists  in  the  fact  that  due  to  their  geographical 
particularities, the fuel supply is restricted in scope and as a result, it is more expensive than 
on the Italian mainland due to additional transport costs. The tax reduction does not result in 
overcompensation  and  does  not  drive  the  prices  of  LPG  and  gas  oil  below  the  price  on  the 
mainland. With regard to the application of the subsidy in the smaller islands, in the locations 
in  question the logistics chain  is  inevitably more expensive than that in mainland Italy. The 
higher costs are the result of a lack of primary logistics, which gives rise to higher distribution 
costs. Higher costs are also due to often problematic road access, higher motor fuel costs than 
those on the mainland  and the transportation  costs for accessing the smaller islands and the 
limited quantities of individual supplies. 

The Italian authorities noted that on average from 2019 to 2023 the tax reduction equated to 
9% of the price of gas oil used for heating purposes and 13% of the price of LPG used for the 
same purpose.  

As for the additional transport costs borne in the disadvantaged areas covered by the measure 
(mountainous  areas,  Sardinia  and  small  islands)  relative  to  other  parts  of  the  country,  it  is 
estimated  that  transport  costs  are  around  120%  higher  than  in  other  parts  of  Italy.  This  is 
because  longer  (and  more  complicated)  routes  are  used  to  reach  more  remote  areas  and,  in 
addition,  smaller  means  of  transport  need  to  be  used.  The  figure  given  above  is  an  average 
that  also  takes  account  of  the  potential  additional  costs  of  supplying  Sardinia  and  the  small 
islands by ship.  

In the areas eligible for the reduction, expenditure on LPG used for heating is estimated to be 
around 90% higher in climate zone E and 170% higher in climate zone F.  

Considering  all  these  factors,  in  climate  zones  E  and  F  and  in  Sardinia  and  on  the  small 
islands, the cost of gas oil and LPG used for heating is currently 10% lower on average than it 
would be without the reduction.  

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COM/2021/563 final: Proposal for a COUNCIL DIRECTIVE restructuring the Union framework for  
the taxation of energy products and electricity (recast). 
The standard rate of excise duty currently applicable is EUR 0.40321391 per litre for gas oil and EUR 
0.18994458 per kilogram for LPG 

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As regards the number of beneficiaries of the measure, the number of potential beneficiaries is 
currently estimated to be 3,961,546 households. 

The annual budgetary expenditure of the measure is around EUR 142.8 million. 

• 

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 

The  possibility  to  introduce  a  favourable  tax  treatment  to  gas  oil  and  LPG  used  for  heating 
purposes in some disadvantaged geographical areas 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 (from 1 January 2025 to 31 December 2030). In principle, 
the period of application of the derogation should be long enough to provide the geographical 
areas concerned with a sufficient degree of certainty. 

Following  discussions  between  the  Italian  authorities  and  the  Commission,  in  particular  in 
view  of  the  proposed  revision  of  Directive  2003/96/EC,  an  earlier  termination  date  of  31 
December 2028 was agreed. Considering the likely absence of negative impact of the current 
arrangement on intra-EU trade and on the general level of taxation of fuels in Italy, in order to 
ensure legal certainty for the geographical areas concerned, the Commission suggests granting 
the requested authorisation for four years, i.e. from 1 January 2025 until 31 December 2028. 
Moreover,  in  order  not  to  undermine  future  general  developments  of  the  existing  legal 
framework, it is appropriate to provide that, should the Council, acting on the basis of Article 
113 of the Treaty on the Functioning of the European Union, or any other relevant provision 
of  the  Treaty,  introduce  a  modified  general  system  for  the  taxation  of  energy  products  to 
which the present authorisation would not be adapted, this Decision shall expire on the day on 
which those modified rules become applicable. 

Under  these  circumstances,  it  appears  appropriate  to  grant  the  authorisation  for  the  above-
mentioned period. 

• 

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. 

The tax differentiation partially alleviates the additional heating costs incurred by citizens in 
certain geographical areas of Italy that are particularly disadvantaged compared to the rest of 
the  territory  and  for  which,  therefore,  the  standard  tax  rates  applicable  to  LPG  and  gas  oil 

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used  for  heating  purposes  would  result  in  an  excessive  tax  burden.  The  geographical 
disadvantage  translates  into  additional  heating  costs  which  are  due  to  severe  climate 
conditions  or  insularity  of  such  zones,  combined  with  unavailability  of  alternative  heating 
resources, in particular unavailability of access to the natural gas network. The reduced rates 
of taxation both for gas oil and LPG remains higher than the EU minimum levels of taxation 
set out in the Energy Taxation Directive, and it only partially alleviates the additional heating 
costs incurred in the geographical areas in question. 

It  can  be  thus  considered  that  the  reduction  is  compatible  with  the  goal  of  providing  a  tax 
incentive for the purpose of energy efficiency. 

The  measure  has  not  been  found  to  be  incompatible  with  the  relevant  EU  policies  on  the 
environment and energy. 

Furthermore, the measure is acceptable from the point of view of the proper functioning of the 
internal market and the need to ensure fair competition. It merely seeks to partially offset the 
additional heating costs associated with the objective conditions of the areas in question. The 
tax reduction is not cumulative with any other sorts of tax reduction and it does not apply to 
other use of the heating fuels then space heating. 

• 

State aid rules 

The measure may constitute State aid in accordance with Article 107(1) of the TFEU. Since 
the  reduced  rates  are  above  the  EU  minima,  the  measure  seems  to  fall  under  Article  44  of 
Commission  Regulation  (EU)  651/2014,  which  stipulates  the  conditions  under  which  aid  in 
the form of reductions in 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  (EU) 
651/2014. The proposal for a Council implementing decision is also without prejudice to the 
Member State’s obligation to  notify the  aid  to  the Commission  before putting  it into effect, 
pursuant to Article 108(3) of TFEU, should the new aid not be covered by a block exemption. 

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 reduction does not exceed what 
is  necessary  to  attain  the  objectives  in  question.  The  tax  reductions  are  applicable  in 
determined  geographical  areas.  The  authorised  tax  rates  are  above  the  minimum  levels  of 
taxation prescribed by Directive. 

• 

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. 
Therefore, no stakeholder consultation has been conducted. 

• 

Collection and use of expertise 

There was no need for external expertise. 

• 

Impact assessment 

No impact assessment has been carried out. 

• 

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 until  31  December 2028. The tax rates that  will apply  will have to be in accordance 
with 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. 

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• 

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 provides that Italy will be allowed to apply reduced rates of taxation to gas oil and 
LPG  used  for  heating  purposes  in  certain  disadvantaged  geographical  areas.  The  tax  rates 
must be in line with the minimum levels of taxation set by the Directive. 

Article 2 establishes that the eligibility of some of the geographical areas concerned shall be 
subject to the non-availability of the natural gas network in the communes concerned. 

Article 3 provides that the authorisation requested is granted with effect from 1 January 2025, 
in  continuity with  the current  Council  Implementing  Decision 2019/814, until  31 December 
2028, within the maximum period allowed by the Directive. 

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2025/0053 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising Italy to apply, in determined geographical areas, reduced rates of taxation 
on gas oil and liquid petroleum gas used for heating purposes 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 electricity6, and in particular 
Article 19(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

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By  Council  Implementing  Decision  (EU)  2019/8147  Italy  was  authorised  to  apply  in 
certain particularly disadvantaged geographical areas reduced rates of  excise duty on 
gas  oil  and  liquid  petroleum  gas  (LPG)  used  for  heating.  The  authorisation  was 
granted until 31 December 2024. 

By  letter  of  24  April  2024,  Italy  sought  authorisation  to  continue  to  apply  in  certain 
particularly disadvantaged geographical areas reduced rates of excise duty on gas oil 
and LPG used for heating. The Italian authorities provided additional information by 
letters dated 12 September 2024 and 21 November 2024. The authorisation concerns 
the period from 1 January 2025 to 31 December 2028. 

Italy  has  a  very  diverse  territory  with  variable  climate  and  geographical  conditions. 
Taking  into  account  the  particularities  of  its  territory,  Italy  has  introduced  reduced 
rates  of  taxation  on  gas  oil  and  LPG  with  the  purpose  of  partially  offsetting  the 
disproportionately high heating costs for residents in certain geographical areas. 

The tax differentiation is based on objective criteria and aims at putting the population 
of  the  eligible  areas  on  a  more  comparable  economic  footing  with  the  rest  of  the 
population  of  Italy by means of reducing  their disproportionately high  heating costs, 
which  are  due  to  severe  climate  conditions  or  increased  costs  of  fuel  purchases  in 
comparison with the rest of the Italian territory. 

The reduced rates of taxation are applicable in geographical areas fulfilling one of the 
following criteria:  (a) most severe climate conditions within the Italian territory, that 
is,  communes  situated in  zone  F  as  defined  in  the  Presidential  Decree  No  412  of  26 

OJ L 283, 31.10.2003, p. 51 (ELI: http://data.europa.eu/eli/dir/2003/96/oj). 
Council  Implementing  Decision  (EU)  2019/814  of  17  May  2019  authorising  Italy  to  apply,  in 
determined geographical areas, reduced rates of taxation on gas oil and liquid petroleum gas used for 
heating purposes in accordance with Article 19 of Directive 2003/96/EC (OJ L 133, 21.5.2019, p. 20, 
ELI: http://data.europa.eu/eli/dec_impl/2019/814/oj). 

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(6) 

(7) 

(8) 

(9) 

(10) 

August  1993  8;  (b)  severe  climate  conditions  combined  with  difficulties  with  fuel 
procurement, that is, communes situated in zone E as defined in the Presidential decree 
No 412 of 26 August 1993; and (c) geographical isolation combined with difficult and 
costly  fuel  procurement,  that  is,  Sardinia  and  small  islands.  The  reduced  rates  of 
taxation should only be applied until the completion of the natural gas network in the 
communes concerned.  

The requested measure has been reviewed by the Commission  and been found not to 
distort  competition  or  hinder  the  operation  of  the  internal  market  and  it  is  not 
considered incompatible with Union policy on the environment, energy and transport. 
The reduced rates of taxation both for gas oil and LPG would remain higher than the 
Union  minimum  levels  of  taxation  set  out  in  Directive  2003/96/EC  and  would  only 
partially  alleviate  the  additional  heating  costs  incurred  in  the  geographical  areas 
concerned. 

Italy  should  therefore  be  authorised,  pursuant  to  Article  19(2)  of  Directive 
2003/96/EC,  to  apply,  in determined geographical  areas, reduced  rates of  taxation of 
gas oil and LPG used for heating purposes. 

It should be ensured that Italy can apply the specific reduction to which this Decision 
relates  from  1  January  2025,  following  seamlessly  on  from  the  prior  arrangements 
under Implementing Decision 2019/814. The authorisation requested should therefore 
be granted with effect from 1 January 2025. 

In accordance with Article 19(2) of Directive 2003/96/EC, each authorisation granted 
under that provision is to be limited in time.  

In  order  to  provide  the  geographical  areas  concerned  with  a  sufficient  degree  of 
certainty, the authorisation should be granted for a period of  four years. However, in 
order not to undermine future general developments of the existing legal framework, it 
is 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 to which this 
authorisation would not be adapted, this Decision should expire on the date on which 
that system becomes applicable. 

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

aid, 

HAS ADOPTED THIS DECISION:  

Article 1 

1. Italy is authorised to  apply reduced rates of taxation to gas oil and LPG used for heating 
purposes in the following disadvantaged geographical areas: 

(a) communes situated in the climate zone F as established by the Presidential Decree No 412 
of 26 August 1993; 

(b) communes situated in the climate zone E as established by the Presidential Decree No 412 
of 26 August 1993; 

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The Presidential decree No 412 of 26 August 1993 divides the Italian territory into six climate zones (A 
to F). The classification is based on the unit ‘degree per day’ which represents the amount of days per 
year in which the outside temperature differs from the optimum 20 °C and thus heating is needed. 

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(c) communes situated on the island of Sardinia and small islands, that is all Italian islands, 
except Sicily. 

2. In order to avoid  any overcompensation, the reduction shall not go beyond the additional 
costs  of  heating  in  the  areas  concerned.  In  the  particular  case  of  the  areas  covered  by 
paragraph 1, point (c), the tax reduction shall not drive the price below the price of the same 
fuel on the Italian mainland. 

3. The reduced rates shall comply with the requirements set out in Directive 2003/96/EC, and 
in particular with the minimum levels of taxation laid down in Article 9 of that Directive. 

The eligibility of the geographical areas referred to in Article 1(1), points (b) and (c), shall be 
subject to the non-availability of the natural gas network in the communes concerned. 

Article 2 

Article 3 

This Decision shall apply from 1 January 2025 until 31 December 2028. 

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  to  which  the  authorisation  granted  in 
Article  1  of  this  Decision  would  not  be  adapted,  this  Decision  shall  expire  on  the  day  on 
which that system becomes applicable. 

This Decision is addressed to the Italian Republic. 

Done at Brussels, 

Article 4 

For the Council 
The President 

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