Excise duties in the EU

Excise duties are indirect taxes imposed on goods that damage consumer health or pollute the environment. The duties increase the price paid by the consumer, thereby discouraging the consumption or waste of the products concerned.

The general arrangements for movement and storage of goods subject to excise duty covers mineral oils, manufactured tobacco, alcohol and alcoholic beverages

Legislation on this issue can be categorised into the structure (taxable amount and event) and rates of excise duties

The rates set by the EU are minimum rates. EU countries can set their tax rates at higher levels suitable to their needs.


Taxable Event

The taxable products are subject to excise duty upon their production (wherever in the EU) or upon importation (from non-EU countries).

However, the excise duty is only payable upon release for consumption. If the product is imported into a EU country but transported to and supplied to another EU country, excise duties are due in the EU country where the products will eventually be consumed or used.

Excises duties paid on alcoholic beverages can be claimed back, subject to certain conditions and in specific cases, such as when goods are finally exported to non-EU countries.


Taxable Products and Rates

Alcohol and alcoholic beverages

Beer

Standard Rate Reduced Rates
The excise duty may be based on the quantity and alcoholic strength of the beer, measured either on hL/degree Plato, or on hL/alcohol by volume:
  • EUR 0.748 per hL / degree Plato of finished product, or
  • EUR 1.87 per hL / degree of alcohol of finished product.
EU countries may apply reduced rates to beer brewed by independent small breweries whose annual production does not exceed 200 000 hL. The reduced rates shall not be set more than 50% below the standard national rate of excise duty. EU countries may also apply reduced rates for beer with an actual alcoholic strength by volume not exceeding 2.8% volume. The number of degrees Plato measures the percentage in weight of the original extract per 100 grams of beer, this value being calculated from the actual extract and the alcohol contained in the finished product (for tax purposes one degree Plato is legally equivalent to 0.4% alcohol)

Wine

Standard Rate: EUR 0.00 / hL of product, meaning that EU countries may apply a zero rate, or higher, on wine. Reduced Rates: where EU countries have not set a zero standard rate, they may apply reduced rates of excise duty to any type of still and sparkling wine of an actual alcoholic strength by volume not exceeding 8.5% volume.

Fermented beverages other than wine and beer

Standard Rate: EUR 0.00 / hL of product, meaning that EU countries may apply a zero rate, or higher. Reduced Rates: where EU countries have not set a zero standard rate, they may apply reduced rates of excise duty to any type of other still and sparkling fermented beverages of an actual alcoholic strength by volume not exceeding 8.5% vol.

Intermediate products

Standard Rate: EUR 45 / hL of product. Reduced Rates: EU countries may apply a single reduced rate of duty to intermediate products with an actual alcoholic strength by volume not exceeding 15% vol. The reduced rate shall not be set more than 40% below the standard national rate of excise duty, and may not be less than the standard national rate applied to wine and other fermented beverages.

Ethyl alcohol

Standard Rate: EUR 550 / hL of pure alcohol. Reduced Rates: EU countries may apply reduced rates of excise duty to ethyl alcohol produced by small distilleries whose annual production of pure alcohol does not exceed 10 hL. The reduced rates shall not be set more than 50% below the standard national rate of excise duty.

Manufactured tobacco

Cigarettes

Cigarettes are subject to an ad valorem (proportional to its value) excise duty calculated on the maximum retail selling price, including customs duties, and also to a specific excise duty calculated per unit of the product.

Each EU country applies an overall minimum excise duty (specific duty plus ad valorem duty excluding VAT), the incidence of which is set at 57% of the weighted average retail selling price of cigarettes released for consumption. It can not be less than €64 per 1000 cigarettes, irrespective of the weighted average retail selling price.

EU countries which charge an overall minimum excise duty of at least €101 per 1000 cigarettes (of the weighted average retail selling price) do not need to comply with the 57% minimum incidence requirement.

From 1 January 2014, the overall excise duty on cigarettes will represent at least 60% of the weighted average retail selling price. That excise duty shall not be less than €90 per 1000 cigarettes irrespective of the weighted average retail selling price. EU countries shall gradually increase excise duties in order to reach the fixed level.

Cigars and cigarillos

Cigars and cigarillos are subject to an excise of 5% of the retail selling price inclusive of all taxes, or €12 per 1000 items or per kilogram

Fine cut tobacco (intended for the rolling of cigarettes)

The overall excise duty shall be at least equal to 40% of the weighted average retail selling price of fine-cut smoking tobacco intended for the rolling of cigarettes released for consumption, or €40 per kilogram.

From 1 January 2013, the overall excise duty shall represent at least 43 % of the weighted average retail selling price of fine-cut smoking intended for the rolling of cigarettes released for consumption, or at least €47 per kilogram

Other smoking tobaccos

The overall excise duty shall be at least equal to 20% of the retail selling price inclusive of all taxes, or €22 per kilogram.

Mineral oils

Petrol

Leaded Petrol: €421 per 1000 litres.

Unleaded Petrol: €359 per 1000 litres.

Gas oil

Used as propellant: €330 per 1000 litres.

Used for some industrial and commercial purposes: €21 per 1000 litres.

Used for heating purposes (both business and non-business use): €21 per 1000 litres.

Liquid Petroleum Gas (LPG) and Methane

Used as propellant: €125 per 1000 kg.

Used for some industrial and commercial purposes: €41 per 1000 kg.

Used for heating purposes (both business and non-business use): €0 per 1000 L.

Heavy fuel oil

Used for heating purposes and both business and non-business use: €15 per 1000 kg.

Kerosene

Used as propellant: €330 per 1000 litres.

Used for some industrial and commercial purposes: €21 per 1000 litres.

Used for heating purposes (both business and non-business use): €0 per 1000 litres.

Energy products and electricity

Natural gas

Used as propellant: €2.60 per GJ gross calorific value.

Used for some industrial and commercial purposes: €0.30 per GJ

Used for heating purposes:

  • business use: €0.15 per GJ
  • non-business use: €0.30 per GJ

Coal and coke

Business use: €0.15 per GJ gross calorific value.

Non-business use: €0.30 per GJ

Electricity

Business use: €0.50 per MWh.

Non-business use: €1 per MWh.

EU countries legislation can set tax rates that may not be less than the minimum levels of taxation prescribed by the EU Directives.

For energy products and electricity, the Council Directive 2003/96/EC establishes minimum levels of taxation. However, for some EU countries, it allows transitional periods during which they are required to progressively reduce their gap. The minimum levels of taxation are described in the table above.


Suspensive Arrangements

As a consequence of the free movement of goods within the European single market, EU countries need a control mechanism to assure the implementation of the fiscal principle of charged on destination to movable goods. Those goods are usually placed under a suspensive arrangement which indicates that goods can be dispatched from one EU country to another, before taxes have been levied on them, provided duties are eventually paid at destination.

Traders who transport products under suspensive arrangements must inform the tax authorities in the EU countries about their supplies using an administrative or commercial accompanying document:

  • The information appearing on the copies of the accompanying document can also be transmitted by computerised means.
  • Internal transit documents and TIR or ATA Convention documents can also be used as the accompanying document for excise-duty purposes.
  • A guarantee must be lodged to cover the risks inherent in the movement of goods.
  • In case of frequent and regular movements of products subject to excise duty under suspensive arrangements, EU countries may permit a reduction of discharge procedures.