Proposal for a COUNCIL IMPLEMENTING DECISION authorising Ireland to apply reduced rates of excise duty for commercial use of gas oil by certain road transport operators, pursuant to Article 19 of Directive 2003/96/EC
Date: 2026-07-06
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Ireland, carriage of goods, carriage of passengers, derogation from EU law, diesel fuel, excise duty, fuel tax, road transport, tax relief

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   EUROPEAN COMMISSION  Brussels, 6.7.2026  COM(2026) 354 final 2026/0190 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising Ireland to apply reduced rates of excise duty for commercial use of gas oil by certain road transport operators, pursuant to 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 ‘Directive’). 

Pursuant 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. 

By letter dated 20 May 2026, the Irish authorities informed the Commission of their intention 
to apply for an authorisation to apply a temporary reduction of the effective national tax rates 
for the commercial use of gas oil by road transport operators qualifying under the commercial 
use provision of Article 7(2) of the Directive, which go below the minimum levels of taxation 
as laid down in Article 7 and Table A of Annex I to the Directive. By letter dated 1 July 2026, 
the Irish authorities further clarified the duration of the requested authorisation.  

Since the commencement of hostilities in the Strait of Hormuz on 28 February 2026 and the 
resulting increase in energy prices, the Government of  Ireland has introduced a reduction in 
the overall level of excise applied to gas oil used as a propellant to 37.185 cent per litre with 
effect from 15 April 2026. 

Additionally, Ireland operates a diesel  rebate scheme to the benefit of road haulage and bus 
passenger  operators  as  permitted  under  Article  7(2)  of  the  Directive.  Legislation  introduced 
since the beginning of this crisis results in parties qualifying for this scheme receiving such 
repayments that the effective level of excise duty for those parties shall be 0.25185 EUR per 
litre of gas oil used as a propellant until 31 August 2026 and 0.31689 EUR per litre of gas oil 
used as a propellant between 1 September 2026 and 30 September 2026. Both rates are below 
the Union minimum rate established by the Directive.    

The  requested  period  of  validity  of  the  measure  is  for  the  period  from  the  adoption  of  the 
Council  decision  to  30  September  2026,  which  is  within  the  maximum  period  allowed  by 
Article 19(2) of the Directive. 

According  to  the  Irish  authorities,  the  aim  of  the  measure  is  to  alleviate  the  effect  of  high 
retail prices of gas oil resulting from recent geopolitical events on the road haulage and bus 
passenger operators. This measure will mitigate second-round effects of higher fuel prices on 
consumer  prices  given  the  importance  of  these  sectors  in  the  provision  of  other  goods  and 
services.  

In  its  conclusions  of  19  March  2026,  the  European  Council  underlined  that  the  energy 
transition  remains  the  most  effective  strategy  for  achieving  Europe’s  strategic  autonomy, 
strengthening  resilience,  structurally  lowering  energy  prices,  and  delivering  the  clean, 
abundant and homegrown energy needed to power the economy of the future. 

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Council  Directive  2003/96/EC  of  27  October  2003  restructuring  the  Community  framework  for  the 
taxation  of 
(OJ  L  283,  31.10.2003,  p.  51,  ELI: 
and 
http://data.europa.eu/eli/dir/2003/96/oj).. 

energy  products 

electricity 

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At the same the European Council recognised that targeted solutions are needed in the short 
term to ensure affordable energy, taking into account technological neutrality and the specific 
situations of Member States, the particular exposure of certain industrial sectors to the risk of 
relocation,  and  the  need  to  improve  the  conditions  for  energy-intensive  innovative  sectors, 
without undermining predictability and the level playing field.  

In view of this, the European Council called on the Commission  to  present  without delay a 
toolbox of targeted temporary measures to address the recent spikes in the prices of imported 
fossil  fuels  arising  from  the  crisis  in  the  Middle  East.  The  European  Council  Conclusions 
provide political guidance from the Member States and constitute a political mandate to adopt 
fiscal  measures  allowing  for  the  requested  flexibilities.  These  Conclusions  clearly  advocate 
for the full utilisation of the derogations and flexibilities foreseen in the Directive, including 
the adoption of temporary reduced rates, carefully linked to the extraordinary circumstances 
and the objectives of energy affordability. 

The objectives of such measures would be to enable Member States to develop targeted and 
temporary  solutions  to  deal  with  the  negative  impact  of  the  current  energy  crises  on  prices. 
These  are  needed  in  the  short  term  to  ensure  affordable  energy,  taking  into  account 
technological neutrality and the specific situations of Member States, the particular exposure 
of certain industrial sectors to the risk of relocation, and the need to improve the conditions 
for  energy-intensive  innovative  sectors,  without  undermining  predictability  and  the  level 
playing field. 

Since the outbreak of hostilities on 28 February 2026 and the ensuing disruption of the Strait 
of  Hormuz  the  oil  price  (Brent)  has  risen  from  around  60  EUR/barrel  to  more  than  90 
EUR/barrel2.  According  to  the  Central  Statistics  Office  of  Ireland,  prices  for  gas  oil  as 
measured by the Harmonised Index of Consumer Prices (HICP), increased by 18 per cent on a 
monthly basis in March 2026 and were at their highest level since July 20223.  

Looking at the energy prices development of oil within the period of this derogation, prices 
are  expected  to  continue  to  be  elevated.  After  that,  expectations  depend  heavily  on  the 
duration of the hostilities in the Middle East and the disruption to the Strait of Hormuz. 

Fuel  prices  follow  the  dynamics  of  crude  oil  price  with  a  delay  of  a  week  or  two,  with  the 
distinction that gasoline prices tend to react less directly to oil prices, while gas oil that EU is 
importing tends to be more volatile than crude oil prices. 

The global nature of oil prices and the limited influence Member States have on those prices 
makes  this  crisis  an  exogenous  crisis.  All  Member  States  will  be  subject  to  similar  global 
prices for energy products.  

Due  to  its  specific  geographical  characteristics  and  insufficiently  developed  railway 
infrastructure,  the  Republic  of  Ireland  is  highly  dependent  on  road  transport  for  both 
passengers and goods. 

• 

Consistency with existing policy provisions in the policy area 

Article 19(1), first subparagraph, of Council Directive 2003/96 reads as follows:  

2 

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DG ENER, Weekly oil bulletin, 2 April 2026, https://energy.ec.europa.eu/data-and-analysis/weekly-oil-
bulletin_en. 
Focus on Fuel and Home Heating Costs March 2026 - Central Statistics Office 

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‘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  tax  reductions  in  question,  the  Irish  authorities  intend  to  help  mitigate  the 
effects of high retail prices of gas oil on the road transport sector triggered by the hostilities in 
the Middle East and ultimately, through mitigating second-round effects, pursue the objective 
of reducing the social and economic impacts on households and companies. 

These tax repayments would lead to a situation where recipients would benefit from effective 
excise  rates  which  are  below  the  EU  minimum  rate  under  the  Directive,  hence  the 
authorisation under discussion.  

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

The limited period of validity is within the maximum period allowed by Article 19(2) of the 
Directive, with the possibility of renewal. 

Finally, the tax reduction is not cumulative with any other sorts of tax reduction. 

Under these circumstances, it appears appropriate to grant the authorisation for the requested 
period. 

At the same time, tax repayments imply fiscal costs and tend to increase fossil fuel demand, 
thereby  exacerbating  the  imbalance  of  supply  and  demand.  Therefore,  the  measure  should 
remain  strictly  limited  in  time  and  its  expected  impact  on  fossil  fuel  demand  as  well  as  its 
fiscal cost should be assessed. Where needed, compensatory measures should be taken. 

State aid rules 

The reduction in effective taxation rates requested by the Irish authorities will result in rates 
below the minimum levels of taxation of transport fuels as laid down in Article 7 and Table A 
of Annex I to the Directive. Specifically, the effective tax rates will be 0.25185 EUR per litre 
of gas oil used as a propellant for the period to 31 August 2026 and 0.31689 EUR per litre of 
gas  oil  used  as  a  propellant  for  the  period  1  September  2026  to  30  September  2026.  These 
rates shall apply exclusively to those parties qualifying under a scheme established pursuant 
to Article 7(2) of the Directive.  

The present proposal is without prejudice to any assessment of the Irish 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 draft 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 Irish authorities, the envisaged tax repayment should partially alleviate the 
social  and  economic  burden  of  the  Irish  population  due  to  the  recent  transport  fuels  price 

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increase resulting  also from  hostilities in the Middle East  and the disruption in  the Strait of 
Hormuz  which  risks  second-round  price  effects  impacting  the  transport  of  goods  and  the 
provision of transport services. 

As a result of this exceptional situation, this temporary measure is not likely to affect intra-EU 
trade. Overall, the measure seems acceptable from the point of view of the proper functioning 
of the internal market and the need to ensure fair competition. Given its limited effects and the 
limited duration, the measure should not distort competition or hinder the functioning of the 
internal market.  

Environmental and climate policy 

The  Union  remains  firmly  committed  to  its  climate  and  energy  objectives  as  stated  in  the 
European Climate Law (Regulation 2021/1119). The temporary tax reductions allowed by this 
act should not lead to a structural weakening of price signals that encourage energy efficiency 
and the transition to renewable energy sources. 

Energy policy 

Given  the  scale  of  the  current  energy  price  spike  resulting  from  the  situation  in  the  Middle 
East,  Member  States  may  require  an  ability  to  temporarily  lower  the  excise  rates  below  the 
EU minimum rates for products.  

Given its short duration and the current exceptional circumstances linked to the geopolitical 
situation  coupled  with  an  exceptionally  high  market  price  of  energy  products,  an  ability  to 
reduce  excise  rates  below  minimum  rates  established  under  the  Directive  is  considered 
adequate and proportionate to the need to balance out the specific policy objectives listed in 
Article  19  of  the  Directive,  and  notably  the  EU’s  environmental  policy with  the  emergency 
imperative to ensure affordability for businesses and households.  

Internal market policy and fair competition 

As a result of the exceptional situation, this temporary measure is not likely to affect intra-EU 
trade. Overall, the measure seems acceptable from the point of view of the proper functioning 
of the internal market and the need to ensure fair competition. Given its limited effects and the 
limited duration, the measure should not distort competition or hinder the functioning of the 
internal market.  

Social policy  

The observed and expected increase in the cost of energy across the Union and the resulting 
second-round effects has a disproportionate impact on low-income households4. Reductions in 
excise  duties  targeted  at  road  haulage  and  bus  transport  operators  can  therefore  have  a 
positive  social  impact  by  contributing  to  minimising  cost  increases  for  low-income 
households.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 19 of Council Directive 2003/96/EC. 

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Economic  and  distributional  effects  of  higher  energy  prices  on  households  in  the  EU  -  Employment, 
Social Affairs and Inclusion 

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• 

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 Member States 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  authorisation  is  for  a  very  limited  period  of  time  (from  adoption  by  Council  to  30 
September 2026) and in an energy crisis context.  

• 

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 Ireland 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. In line with better regulation rules these types of 
acts are not subject to an impact assessment, by their nature. 

• 

Regulatory fitness and simplification 

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

• 

Fundamental rights 

The measure has no bearing on fundamental rights. 

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4. 

BUDGETARY IMPLICATIONS 

The  measure  does  not  impose  any  financial  or  administrative  burden  on  the  Union.  The 
proposal therefore has no impact on the budget of the Union. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

An  implementation  plan  is  not  necessary.  This  proposal  concerns  an  authorisation  for  an 
effective tax reduction, which is provided for a limited period of time. The applicable tax rates 
can  fall  below  the  minimum  levels  of  taxation  set  by  the  Energy  Taxation  Directive.  The 
measure can be evaluated in case of a proposal to extend the validity of this Decision. 

• 

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 Ireland will be allowed to apply reduced taxation rates to gas oil used 
for commercial use by the road transport sector below the minimum levels of taxation. 

Article 2 stipulates that the authorisation requested is granted until 30 September 2026 from 
the  entry  into  force  of  the  Decision,  as  requested  by  Ireland,  which  is  within  the  maximum 
period of 6 years allowed by the Directive. 

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2026/0190 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising Ireland to apply reduced rates of excise duty for commercial use of gas oil 
by certain road transport operators, pursuant to 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(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

Prior to the adoption of this Decision, geopolitical developments in the Middle East, 
which  impacted  supply  chains  of  oil  and  oil  products  globally,  triggered  sharp  and 
persistent increases in wholesale and retail prices of energy products. Those increases 
have  had  significant  adverse  effects  on  households,  in  particular  vulnerable 
consumers,  and  on  undertakings,  including  small  and  medium‑sized  enterprises, 
thereby  posing  a  serious  risk  to  social  cohesion,  economic  stability  and  the  proper 
functioning of the internal market.  
In  its  Conclusions  of  19  March  20266,  the  European  Council  recognised  the 
extraordinary  nature  of  the  energy  market  situation  and  its  macroeconomic 
implications.  The  Council  invited  the  Commission  to  work  closely  with  Member 
States  to  design  national  temporary  and  targeted  measures  to  mitigate  significant 
impacts of fuel price increases due to the crisis in the Middle East, and underlined in 
particular the need for a coordinated response as the conflict in the Middle East has an 
immediate impact on energy prices for Union citizens and businesses. 

Excise  duties  as  established  by  Directive  2003/96/EC  contribute  to  the  final  cost  of 
energy  products  supplied  within  the  Union.  A  reduction  in  excise  duties  below  the 
minimum  rates can mitigate some of the energy cost  increases  currently  experienced 
by Member States. 

The  mechanisms  provided  for  in  Directive  2003/96/EC  enable  Member  States  to 
lower, within defined limits, the tax burden on specific energy products in a targeted 
and  temporary  manner.  In  view  of  the  exceptional  and  urgent  nature  of  the  current 
situation,  it  is  necessary  to  provide  for  specific,  time‑limited  mechanisms  that 
explicitly aim to alleviate the impact of the energy price shock. 

Temporary  reductions  in  the  taxation  of  targeted  energy  products  are  able  to  deliver 
rapid  relief  to  households  and  undertakings,  by  directly  lowering  end‑user  prices.  In 
the  current  situation,  such  extraordinary  reductions  are  a  suitable  and  necessary 

5 
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OJ L , , p. . 
https://www.consilium.europa.eu/media/lwhk3itd/en-20260319-european-council-conclusions.pdf  

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(6) 

(7) 

(8) 

(9) 

(10) 

(11) 

instrument to address the serious disturbance in the economy resulting from the energy 
price shock. 

By  letters  dated  20  May  2026  and  01  July  2026,  the  Irish  authorities  requested 
authorisation, pursuant to Article 19 of Directive 2003/96/EC to apply, in the form of 
repayments,  reduced  rates  of  excise  duty  to  gas  oil  used  for  commercial  uses 
specifically road haulage and bus passenger sectors.  

Through such repayments, which Ireland would carry out by means of its diesel rebate 
scheme established for this purpose, the effective excise rate for gas oil for qualifying 
parties  would  fall  to  0.25185  EUR  per  litre  for  the  period  to  31  August  2026  and 
0.31689 EUR per litre for the period 1 September 2026 to 30 September 2026. Such 
effective  rates  fall  below  the  minimum  levels  of  taxation  applicable  to  motor  fuel 
referred to in Article 7 of Directive 2003/96/EC. 

According to the Irish authorities, the application of such reduced rates of excise duty 
aims  to  mitigate  the  impact  of  the  price  increase  of  gas  oil  resulting  from  the 
geopolitical situation and affecting directly or, through second-round effects, indirectly 
both households and companies. 

The Commission reviewed the requested authorisation and found it unlikely to hinder 
the proper functioning of the internal market. The Commission considers the requested 
derogation to be adequate and proportionate, given its short duration, the exceptional 
circumstances linked to the geopolitical situation, coupled with an exceptionally high 
market  price  of  oil,  and  the  need  to  strike  a  balance  between  the  specific  policy 
objectives  listed  in  Article  19(1),  third  subparagraph,  of  Directive  2003/96/EC,  in 
particular  the  Union  environmental  policy,  and  the  emergency  imperative  to  ensure 
energy affordability for businesses and households. 

Ireland  should  therefore  be  authorised  to  temporarily  apply  reduced  rates  of  excise 
duty  below  the  minimum  Union  levels  to  gas  oil  used  as  motor  fuel  by  persons  or 
entities that qualify for reimbursements under Ireland’s diesel rebate scheme. 

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  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 
new  minimum  levels  of  taxation  for  gas  oil  used  as  motor  fuel,  with  which  the 
authorisation  granted  by  this  Decision  is  not  compatible,  this  authorisation  should 
cease to apply. 

(12)  At  the  same  time,  tax  reductions  imply  significant  fiscal  costs  and  tend  to  increase 
fossil  fuel  demand,  thereby  exacerbating  the  imbalance  of  supply  and  demand. 
Therefore, the authorisation granted by this Decision should remain strictly limited in 
time, 

HAS ADOPTED THIS DECISION:  

Ireland is authorised to apply the following effective minimum excise rates to road transport 
operators that use commercial gas oil as a propellant, as defined in Article 7(3) of Directive 
2003/96/EC: 

Article 1 

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(a) 

(b) 

0.25185 EUR per litre of gas oil, for the period between the date of notification of 
this Decision and 31 August 2026; 

0.31689 EUR per litre of gas oil, for the period between 1 September 2026 and  30 
September 2026. 

This Decision shall apply until 30 September 2026. 

Article 2 

However,  where  the  Council,  acting  on  the  basis  of  Article  113  or  any  other  relevant 
provision  of  the  Treaty  on  the  Functioning  of  the  European  Union,  modifies  the  minimum 
levels of taxation referred to in Article 7 of Directive 2003/96/EC for gas oil used as motor 
fuel to  minimum levels of taxation  with  which the authorisation  granted in  Article 1 of this 
Decision is not  compatible, this Decision shall cease to apply on the  date from which those 
modified minimum levels of taxation apply. 

This Decision is addressed to the Republic of Ireland. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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