Considerations on COM(2021)563 - Proposal for a COUNCIL DIRECTIVE restructuring the Union framework for the taxation of energy products and electricity (recast)

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dossier COM(2021)563 - Proposal for a COUNCIL DIRECTIVE restructuring the Union framework for the taxation of energy products and electricity ...
document COM(2021)563 EN
date July 15, 2021
 
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(1) Council Directive 2003/96/EC 26 has been substantially amended several times 27 . Since further amendments are to be made, that Directive should be recast in the interests of clarity.

(2) Directive 2003/96/EC was adopted in order to ensure the proper functioning of the internal market as regards the taxation of energy products and electricity. Directive 2003/96 also integrated environmental protection requirements, in particular, in the light of the Kyoto Protocol to the United Nations Framework Convention on Climate Change.


 2003/96/EC recital 1 (adapted)

The scope of Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils 28 and of Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils 29 is restricted to mineral oils.


 2003/96/EC recital 2 (adapted)

The absence of Community provisions imposing a minimum rate of taxation on electricity and energy products other than mineral oils may adversely affect the proper functioning of the internal market.


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(3) It is necessary to ensure that clear taxation rules for energy products and electricity continue to contribute to the smooth functioning of the internal market while at the same time tackling the climate and environmental-related challenges in the context of the Communication from the Commission ‘The European Green Deal’ 30 . Energy taxation can contribute to the ambition of at least 55 % reduction in net greenhouse gas emissions by 2030 compared to 1990, as well as to the objective of zero pollution through the implementation of the polluter-pays principle, by ensuring that the taxation of motor fuels, heating fuels and electricity better reflects the impact they have on the environment and on health. The contribution of energy taxation to those objectives has been endorsed by the Council Conclusions on the EU energy taxation framework 31 .


 2003/96/EC recital 3 (adapted)

The proper functioning of the internal market and the achievement of the objectives of other Community policies require minimum levels of taxation to be laid down at Community level for most energy products, including electricity, natural gas and coal.


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(4) Environmental taxation can be a cost-effective mean for Member States to achieve the targeted reductions of greenhouse gasses. The proper functioning of the internal market requires common rules on that taxation.

(5) Member States should, however, be able to use the energy taxation of motor fuels, heating fuels and electricity for a variety of purposes not necessarily nor specifically or exclusively related to the reduction of greenhouse gases.


 2003/96/EC recital 4

(6) Appreciable differences in the national levels of energy taxation applied by Member States could prove detrimental to the proper functioning of the internal market.


 2003/96/EC recital 5 (adapted)

(7) The establishment of appropriate Community   Union  minimum levels of taxation may enable existing differences in the national levels of taxation to be reduced.


 2003/96/EC recital 6 (adapted)

In accordance with Article 6 of the Treaty, environmental protection requirements must be integrated into the definition and implementation of other Community policies.


 2003/96/EC recital 7 (adapted)

(8) As a party to the United Nations Framework Convention on Climate Change, the Community   Union  has ratified the Kyoto Protocol   Paris Agreement  . The taxation of energy products and, where appropriate, electricity is one of the instruments available for achieving the Kyoto Protocol   Paris Agreement  objectives.


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(9) Rules should be laid down to base energy taxation on the energy content of energy products and electricity, coupled with their environmental performances. For those purposes, reference should be made to the definitions of Directive 2012/27/EU of the European Parliament and of the Council 32 , to Directive (EU) 2018/2001 of the European Parliament and of the Council 33 , and to Regulation (EU) 2020/852 of the European Parliament and of the Council 34 . Moreover, the list of energy products should be updated to include certain energy products, in order to ensure a unified and standardised treatment of those fuels.


 2003/96/EC recital 8 (adapted)

The Council needs to examine the exemptions and reductions and the minimum levels of taxation periodically, taking into consideration the proper functioning of the internal market, the real value of the minimum levels of taxation, the competitiveness of Community businesses in the international framework and the wider objectives of the Treaty.


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(10) In the interest of fiscal neutrality, the same minimum levels of taxation should apply for each component of energy taxation, to all energy products put to a given use. Where equal minimum levels of taxation are thus set, Member States should, also for reason of fiscal neutrality, ensure equal levels of national taxation on all products concerned.


 2003/96/EC recital 9 (adapted)

Member States should be given the flexibility necessary to define and implement policies appropriate to their national circumstances.


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(11) Member States should also replicate at any time the ranking of minimum levels of taxation as laid down in the annex in relation to different products for each given use in order to ensure an environmentally tailored structure of rates. The minimum levels of energy taxation should be automatically aligned every year to take into account the evolution of their real value in order to preserve the current level of rate harmonization and therefore reduce the volatility stemming from energy and food prices. This alignment should be made on the basis of the changes in the Union-wide harmonised index of consumer prices excluding energy and unprocessed food as published by Eurostat.

(12) In order to ensure a smooth implementation of certain provisions relating to some products or uses, a transitional period of application is needed.


 2003/96/EC recital 10 (adapted)

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(13)  As a general principle, Member States should apply to energy products and electricity levels of taxation not less than the minimum levels of taxation as set out by the Directive.   Member States wish to introduce or retain different types of taxation on energy products and electricity. To that end, Member States should be permitted to comply with the Community   Union  minimum taxation levels by taking into account the total charge levied in respect of all indirect taxes which they have chosen to apply (excluding VAT).


 2003/96/EC recital 11 (adapted)

(14) Fiscal arrangements made in connection with the implementation of this Community   Union  framework for the taxation of energy products and electricity are a matter for each Member State to decide. In this regard, Member States might decide not to increase the overall tax burden if they consider that the implementation of such a principle of tax neutrality could contribute to the restructuring and the modernisation of their tax systems by encouraging behaviour conducive to greater protection of the environment and increased labour use.


 2003/96/EC recital 12 (adapted)

(15) Energy prices are key elements of Community energy, transport and environment policies  in the Union  .


 2003/96/EC recital 13

Taxation partly determines the price of energy products and electricity.


 2003/96/EC recital 14

The minimum levels of taxation should reflect the competitive position of the different energy products and electricity. It would be advisable in this connection to base the calculation of these minimum levels as far as possible on the energy content of the products. However, this method should not be applied to motor fuels.


 2003/96/EC recital 15

The possibility of applying differentiated national rates of taxation to the same product should be allowed in certain circumstances or permanent conditions, provided that Community minimum levels of taxation and internal market and competition rules are respected.


 2003/96/EC recital 16 (adapted)

(16) As heat is only subject to very limited intra-Community   Union  trade, output taxation of heat should remain outside the scope of this Community   Union  framework.


 2003/96/EC recital 17 (adapted)

(17) It is necessary to establish different Community   Union  minimum levels of taxation according to the use of the energy products and electricity.


 2003/96/EC recital 18

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(18) Energy products used as a motor fuel for certain industrial and commercial purposes and those used as heating fuel are normally taxed at lower levels than those applicable to energy products used as a propellant.  Electricity should always be among the least taxed energy sources in view of fostering its use, notably in the transport sector. To that purpose, Member States should endeavour to apply the same level of taxation to electricity used to charge electric vehicles as for heating purposes during the necessary time following the entry into force of this Directive. 


 2003/96/EC recital 19

The taxation of diesel motor fuel used by hauliers, notably those engaging in intra-Community activities, requires a possibility for a specific treatment, including measures to allow for the introduction of a system of road user charges, in order to limit the distortion of competition operators might be confronted with.


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(19) The need to pursue the objectives of the Directive requires that no distinction is made between commercial and non-commercial diesel as well as business and non-business use for heating fuels and electricity.


 2003/96/EC recital 20

Member States may need to differentiate between commercial and non-commercial diesel. Member States may use this possibility to reduce the gap between the taxation of non-commercial gas oil used as propellant and petrol.


 2003/96/EC recital 21

Business use and non-business use of energy products and electricity may be treated differently for tax purposes.


 2003/96/EC recital 22 (adapted)

(20) Energy products should essentially be subject to a Community   Union  framework when used as heating fuel or motor fuel. To that extent, it is in the nature and the logic of the tax system to exclude from the scope of the framework dual uses and non-fuel uses of energy products as well as mineralogical processes. Electricity used in similar ways should be treated on an equal footing.


 2003/96/EC recital 23

Existing international obligations and the maintaining of the competitive position of Community companies make it advisable to continue the exemptions of energy products supplied for air navigation and sea navigation, other than for private pleasure purposes, while it should be possible for Member States to limit these exemptions.


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(21) The Union and the Member States have concluded multilateral agreements regarding air services and air transport, or bilateral agreements with third countries. Those agreements include provisions related to the taxation of aviation fuel. Aviation fuel has traditionally had a privileged tax regime. The need to pursue the objectives of the Directive requires that, without prejudice to those international agreements, energy products and electricity supplied for intra-EU air navigation, except cargo-only flights should be taxed. The exemption for the fuel used by cargo-only flights is still needed in the absence of more efficient alternatives.

(22) In order to ensure a smooth implementation of this Directive, the minimum levels of taxation for motor fuels used for intra-EU non-business and non-pleasure flights would be reached over a transitional period of ten years, whereas sustainable alternative fuels and electricity would be subject to a zero minimum rate for ten years. Energy products and electricity used for intra-EU business aviation and pleasure flights should be subject to the standard levels of taxation applicable to motor fuels and electricity in the Member States.

(23) Fuel used for waterborne navigation, including fishing, should also be taxed, and the Member States party to international agreements providing for the exemption of that fuel, have to, by the date of the application of this Directive, ensure they eliminate the incompatibilities. It is necessary to allow for a different level of taxation to be applied to the use of energy products and electricity for intra-EU waterborne regular service navigation, fishing and freight transport and their respective at berth activities. Considering the specificity of those uses, the minimum levels of taxation should be lower than the ones applicable to general motor fuel use. In order to provide an incentive to the use of sustainable alternative fuels and electricity, such fuels and electricity should be exempted from taxation for ten years. Energy products and electricity used for the remaining intra-EU waterborne navigation should be subject to the standard levels of taxation applicable to motor fuels and electricity in the Member States. 

(24) For extra-EU air navigation, without prejudice to international obligations, and for extra-EU waterborne navigation, including fishing, Member States may exempt or apply the same levels of intra-EU taxation, according to the type of activity.


 2003/96/EC recital 24

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(25) Member States should be permitted to apply certain other exemptions or reduced levels of taxation, where that will not be detrimental to the  environmental objectives, to the  proper functioning of the internal market and will not result in distortions of competition.


 2003/96/EC recital 25

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(26) In particular,  highly efficient  combined heat and power generation and, in order to promote the use of alternative energy sources, renewable forms of energy may qualify for preferential treatment.


 2003/96/EC recital 26

It is desirable to establish a Community framework to allow Member States to exempt or reduce excise duties so as to promote biofuels, thereby contributing to the better functioning of the internal market and affording Member States and economic operators a sufficient degree of legal certainty. Distortions of competition should be limited and the incentive of a reduction in the basic costs for producers and distributors of biofuels should be maintained through, inter alia, the adjustments by Member States taking into account changes in raw material prices.


 2003/96/EC recital 27 (adapted)

This Directive shall be without prejudice to the application of the relevant provisions of 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 35 , and Council Directive 92/83/EEC of 19 October 1992 on the harmonization of the structures of excise duties on alcohol and alcoholic beverages 36 , when the product intended for use, offered for sale or used as motor fuel or fuel additive is ethyl alcohol as defined in Directive 92/83/EEC.


 2003/96/EC recital 28

Certain exemptions or reductions in the tax level may prove necessary; notably because of the lack of a stronger harmonisation at Community level, because of the risks of a loss of international competitiveness or because of social or environmental considerations.


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(27) Targeted reductions in the tax level may prove necessary to incentivise the achievement of environmental protection objectives and improvements in energy efficiency of the Union productive sector.

(28) Targeted reductions in the tax level may prove necessary to tackle the social impact of energy taxes. An exemption from taxation may temporarily prove necessary to protect vulnerable households.


 2003/96/EC recital 29

Businesses entering into agreements to significantly enhance environmental protection and energy efficiency deserve attention; among these businesses, energy intensive ones merit specific treatment.


 2003/96/EC recital 30

Transitional periods and arrangements may be required in order to allow Member States to smoothly adapt to the new levels of taxation, thus limiting possible negative side effects.


 2003/96/EC recital 31

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(29)  In view of the financial, economic and environmental effects on each Member State, such as the need of electrification of the transport sector,   Iit is necessary to provide for a procedure authorising the introduction by Member States, for a set period, of other exemptions or reduced levels of taxation.  For reasons of protection of environment and human health, including the reduction of air pollution, it is necessary to provide for a procedure authorising the introduction by Member States, for a set period, of specific increased rates. Such authorisation, following a justified request by Member States and on a proposal from the Commission, should be adopted by means of a Council implementing decision in accordance with Article 291 of the TFEU.    Such exemptions or reductions   measures  should be under regular review.


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(30) The list of energy products subject to the control and movement provisions of Council Directive 2008/118/EC 37 should include selected energy products, in order to ensure a unified and standardised treatment of those products and to take into account the risk of tax evasion, avoidance or abuse.

(31) In order to ensure free movement whilst at the same time respecting the security requirements applicable to commercial motor vehicles and special containers, the definition of standard tanks of such vehicles should reflect the fact that fuel tanks are not exclusively fitted to commercial vehicles by their manufacturer.


 2003/96/EC recital 32 (adapted)

(32) Provision should be made for the Member States to notify the Commission of certain national measures. Such notification does not release Member States from the obligation, laid down in Article 88   108  (3) of the Treaty   TFEU  , to notify certain national measures. This Directive does   should  not prejudice the outcome of any future State aid procedure that may be undertaken in accordance with Articles 87   107  and 88   108  of the Treaty   TFEU  .


 2003/96/EC recital 33

(33) The scope of Directive 92/12/EEC Directive 2008/118/EC should, where appropriate, be extended to the products and indirect taxes covered by this Directive.


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(34) In order to ensure uniform conditions for the implementation of this Directive, implementing powers should be conferred on the Commission to determine whether the control and movement provisions of Directive 2008/118/EC are to apply to the products giving rise to evasion, avoidance or abuse. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council 38 .


 2003/96/EC recital 34 (adapted)

The measures necessary for the implementation of this Directive should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission 39 ,


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(35) Reference should be made to the version presently applicable of the Combined Nomenclature. In order to ensure that the references to Combined Nomenclature (CN) codes in this Directive are updated whenever necessary, and that the minimum rates of taxation reflect prices evolution, the power to adopt acts in accordance with Article 290 of the TFEU should be delegated to the Commission in respect of updating the reference to those CN codes, and in respect of updating the minimum tax rates based on yearly variations of the consumer price index. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the Council receives all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(36) Every five years and for the first time five years after the entry into force of this Directive, the Commission should report to the Council on the application of this Directive, examining in particular the minimum levels of taxation, the impact of innovation and technological developments, especially as regards energy efficiency, the use of electricity in transport and the justification for the exemptions, reductions and differentiations laid down in this Directive. The report should take into account the proper functioning of the internal market, environmental and social considerations, the real value of the minimum levels of taxation and the wider relevant objectives of the Treaties.

(37) The obligation to transpose this Directive into national law should be confined to those provisions which represent a substantive amendment as compared to the earlier Directive. The obligation to transpose the provisions which are unchanged arises under the earlier Directive.

(38) This Directive should be without prejudice to the obligations of the Member States relating to the time-limits for the transposition into national law and the dates of application of the Directives set out in Annex II, Part B,


 2003/96/EC