General arrangements for excise duty (from 2023)

 

SUMMARY OF:

Directive (EU) 2020/262 laying down the general arrangements for excise duty

WHAT IS THE AIM OF THE DIRECTIVE?

The directive lays down excise duties on the following goods:

• energy products and electricity covered by Directive 2003/96/EC (see summary);
• alcohol and alcoholic beverages covered by Directives 92/83/EEC (see summary) and 92/84/EEC;
• manufactured tobacco covered by Directive 2011/64/EU (see summary).

It allows European Union (EU) Member States to levy:

• other indirect taxes for specific purposes on goods liable for excise duty, provided these respect EU rules;
• taxes on products other than excise goods and on certain services.

KEY POINTS

The directive:

• applies to the territory of the EU and Northern Ireland on the basis of the Northern Ireland Protocol to the United Kingdom Withdrawal Agreement;
• confirms that the following are not treated as non-EU countries under excise goods movement rules:
  • Monaco,
  • San Marino,
  • the United Kingdom sovereign bases of Akrotiri and Dhekelia in Cyprus,
  • the Isle of Man,
  • Jungholz and Mittelberg (Kleines Walsertal);
• does not apply to the following territories which are part of the EU customs union:
  • the Canary Islands,
  • French overseas territories,
  • the Åland Islands,
  • the Channel Islands,
  • the Island of Heligoland,
  • the territory of Büsingen,
  • Ceuta,
  • Melilla,
  • Livigno.

The directive sets out the general rules that apply when goods are under a duty suspension arrangement.

• A ‘duty suspension arrangement’ is a tax arrangement applied to the production, processing, holding, storage and movement of excise goods whereby excise duty is suspended.
• Excise goods are subject to duty when any of the following occur in the EU:
  • production or extraction;
  • importation, legally or illegally.
• Excise duty becomes chargeable at the time that, and in the Member State where, excise goods are released for consumption.

The directive lays down the general rules that apply when excise goods, after being released for consumption in one Member State, are moved to another Member State for commercial purposes. In such cases, excise goods may only be moved from a certified consignor* to a certified consignee*.

• Goods released for consumption means:
  • the departure of excise goods from a duty suspension arrangement;
  • the holding or storage of excise goods outside a duty suspension arrangement where excise duty has not been levied according to the applicable provisions of EU law and national legislation;
  • the production, including processing, of excise goods outside a duty suspension arrangement;
  • the importation of excise goods, unless the excise goods are placed under a duty suspension arrangement immediately upon importation.
• People liable to pay the duty are:
  • authorised warehouse keepers*, who must meet certain conditions to be recognised;
  • registered consignees*;
  • any other person releasing the goods.
• The duty applied is the one that applies in the Member State when the goods are released for consumption.
• Each Member State determines its own rules on the production, processing, holding and storage of excise goods.
• The production, processing, holding and storage of excise goods, when the duty has not been paid, takes place in a tax warehouse.

Excise goods are exempt from duty and must be accompanied by an exemption certificate when used for:

• diplomatic and consular purposes;
• international organisations;
• EU or NATO Member States’ armed forces, except in their own jurisdiction;
• United Kingdom armed forces stationed in Cyprus;
• consumption under an agreement with a non-EU country or international organisation.

Passengers travelling to a non-EU country by air or sea do not pay duty on excise goods purchased on board or in tax-free shops for personal use.

Rules on the movement of excise goods under suspension of duty* set out the following.

• They allow the goods to be moved from a tax warehouse, or from where they are imported, to another warehouse, a registered consignee or EU exit point.
• They require:
  • a unique excise number identifying the registered consignor* or consignee;
  • a valid EU-wide guarantee from the dispatching authorised warehouse keeper or registered consignor to cover any risks (except for energy products moved by fixed pipeline);
  • a covering electronic administrative document or fallback document* containing the same data if the computerised system is unavailable.
• They provide special arrangements, and allow consignments to be split into two or more parts, for energy products transported by sea or inland waterway.
• They specify the start and end of a movement period and the formalities at destination.
• They offer simplified procedures for goods being moved solely within one Member State or on a frequent and regular basis between two or more Member States.

Registered consignees:

• may not produce, process, hold, store or dispatch goods under a duty suspension arrangement;
• must:
  • guarantee payment of duty before dispatching the goods,
  • enter the goods into their accounts on arrival,
  • agree to checks to ensure receipt of the goods.

Rules on private individuals transporting excise goods for their own use from one Member State to another stipulate the following.

• The duty is paid where the goods are bought.
• Member States determine ‘own use’ against tests such as:
  • the individual’s commercial status;
  • the place where the goods are held or type of transport used;
  • the documentation relating to, or the nature or quantity of, the goods.
• National authorities may lay down quantity guide levels as a form of evidence, but these may not be lower than the following amounts for certain products.
  • tobacco: 800 cigarettes, 400 cigarillos, 200 cigars, 1 kg smoking tobacco.
  • alcohol: 10 l spirits, 20 l intermediate products, 90 l wine, 110 l beer.

The rules on excise goods released for consumption in one Member State and transported commercially to another Member State are as follows.

• Duty is paid in the country of destination.
• The certified consignee:
  • is liable for the duty;
  • provides a guarantee covering possible non-payment before the goods are dispatched;
  • agrees to any checks;
  • reports within 5 days of receiving the goods.
• An electronic simplified administrative document, or fallback document containing the same data, must accompany the delivery.
• Simplified procedures may be used for excise goods moving between two or more Member States.

Cross-border distance selling rules require duty to be paid in the destination country.

Excise duty is:

• not chargeable if goods sent to another Member State are totally destroyed or irretrievably lost due to unforeseeable circumstances, force majeure or by order of that Member State;
• chargeable, for goods sent from one Member State to another, in the Member State where an irregularity occurs.

Member States may:

• require excise goods to carry tax markings or national identification marks for fiscal reasons;
• exempt small wine producers, who produce less than 1,000 hl a year, from many of the movement and monitoring rules and requirements;
• maintain national rules on boat and aircraft stores until EU measures are adopted;
• apply special arrangements for goods used in the construction or maintenance of a cross-border bridge.

The European Commission submits a report to the European Parliament and the Council of the European Union every 5 years – the first at the latest 3 years after the application of the directive – on the implementation of the legislation.

The directive empowers the Commission to adopt the following.

(a) Delegated acts to establish the common partial loss thresholds due to the nature of the goods, the structure and content of the electronic administrative document and fallback document and those of the electronic simplified administrative document and fallback document.

Delegated Regulation (EU) 2022/1636, applicable as of 13 February 2023:

• establishes a common partial loss threshold 0 % for manufactured tobacco, falling within the scope of Directive 2011/64/EU;
• repeals Implementing Regulations 684/2009 and 3649/92 from the date of its application.

(b) Implementing acts to lay down the rules and procedures for exchanging the electronic administrative document and fallback document, and the electronic simplified administrative document and fallback document, and for establishing the form to be used for the exemption certificate.

Implementing Regulation (EU) 2022/1637, also applicable as of 13 February 2023:

• establishes the exemption certificate form for the excise goods from one Member State to another, when Member States exempt the payment of excise duty;
• replaces Regulation (EC) No 31/96.

The directive:

• revises and replaces Directives 2008/118/EC (see summary) and 2010/12/EU from 13 February 2023;
• is closely linked to Decision (EU) 2020/263 on computerising the movement and surveillance of excise goods.

FROM WHEN DO THE RULES APPLY?

Several articles had to be transposed into national law by 31 December 2021, while the rest of the articles apply in the Member States from 13 February 2023.

BACKGROUND

• The directive modernises the existing framework for excise goods by improving the conditions for fair competition in the single market and reducing the administrative burden on businesses. It aligns EU excise and customs procedures.
• Revenue from excise taxes goes entirely to the country in which they are paid. Since 1992, the EU has had common rules in place to ensure excise duties are applied in the same way and to the same products.
• For further information, see:
  • Excise duties on alcohol, tobacco and energy (European Commission).

KEY TERMS

MAIN DOCUMENT

Council Directive (EU) 2020/262 of 19 December 2019 laying down the general arrangements for excise duty (recast) (OJ L 58, 27.2.2020, pp. 4–42).

Successive amendments to Directive (EU) 2020/262 have been incorporated into the original text. This consolidated version is of documentary value only.

RELATED DOCUMENTS

Decision (EU) 2020/263 of the European Parliament and of the Council of 15 January 2020 on computerising the movement and surveillance of excise goods (recast) (OJ L 58, 27.2.2020, pp. 43–48).

Council Directive 2011/64/EU of 21 June 2011 on the structure and rates of excise duty applied to manufactured tobacco (codification) (OJ L 176, 5.7.2011, pp. 24–36).

Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC (OJ L 9, 14.1.2009, pp. 12–30).

See consolidated version.

Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ L 283, 31.10.2003, pp. 51–70).

See consolidated version.

Council Directive 92/83/EEC of 19 October 1992 on the harmonization of the structures of excise duties on alcohol and alcoholic beverages (OJ L 316, 31.10.1992, pp. 21–27).

See consolidated version.

Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise duty on alcohol and alcoholic beverages (OJ L 316, 31.10.1992, pp. 29–31).

last update 14.10.2022