REPORT on the proposal for a Council directive amending Directive 92/84/EEC on the approximation of the rates of excise duty on alcohol and alcoholic beverages

18.4.2007 - (COM(2006)0486 – C6‑0319/2006 – 2006/0165(CNS)) - *

Committee on Economic and Monetary Affairs
Rapporteur: Astrid Lulling

Procedure : 2006/0165(CNS)
Document stages in plenary


on the proposal for a Council directive amending Directive 92/84/EEC on the approximation of the rates of excise duty on alcohol and alcoholic beverages

(COM(2006)0486 – C6‑0319/2006 – 2006/0165(CNS))

(Consultation procedure)

The European Parliament,

–   having regard to the Commission proposal to the Council (COM(2006)0486)[1],

–   having regard to Article 93 of the EC Treaty, pursuant to which the Council consulted Parliament (C6‑0319/2006),

–   having regard to Rule 51 of its Rules of Procedure,

–   having regard to the report of the Committee on Economic and Monetary Affairs (A6‑0148/2007),

1.  Approves the Commission proposal as amended;

2.  Calls on the Commission to alter its proposal accordingly, pursuant to Article 250(2) of the EC Treaty;

3.  Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

4.  Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;

5.  Instructs its President to forward its position to the Council and Commission.

Text proposed by the CommissionAmendments by Parliament

Amendment 1


(4) Those consultations led to a second Commission report, presented on 26 May 2004. The report concluded that more convergence of the rates of excise duty in the different Member States is needed so as to ensure the proper functioning of the internal market, in particular with regard to the potential for distortions of competition and fraud.


Amendment 2

RECITAL 4 A (new)


(4a) The most effective way to achieve convergence of excise duties on alcoholic beverages is by tax competition and this can in turn be best promoted by free, unrestricted and, indeed, facilitated movement of such products across the internal borders of the European Union, with taxation levied only at the point of purchase.


Tax competition is a good thing for consumers and the EU economy. This can only be ensured if the single market is permitted to operate fully and freely as enshrined in the founding treaties. This is one of the fundamental rights expected by our citizens.

Amendment 3


(5) In this respect, it is necessary to compensate for the fall in the real value of the Community minimum rates of excise duty on alcohol and alcoholic beverages. The minimum rates should therefore be increased in line with inflation.


Amendment 4


(6) In order to ease the difficulties that may be faced by those Member States that would need to increase their national rates substantially in order to meet the new minima, it is appropriate to provide for transitional periods.


Amendment 5


(7) It is also necessary to make the regular review procedure more flexible and less onerous, and to adjust the frequency with which it is to take place. The present period of two years is too short for changes in the legislation of the Member States to be properly evaluated. Reviews should take place every four years.


Amendment 6

RECITAL 7 A (new)


(7a) The setting of the minimum rates of excise on alcohol and alcoholic beverages by Directive 92/84/EEC has not resulted in approximation of these rates between Member States.

Amendment 7

RECITAL 7 B (new)


(7b) Such an approximation could be only achieved by setting both minimum and maximum rates through the establishment of a code of conduct which guides the Member States to converge their excise duty rates subject to the principle of subsidiarity.


It is commonly said that the last 15 years have not achieved convergence of excise duty rates as reflected in consumer prices. The reason behind this fact is not the revalorisation of minimum rates but the very high and even mounting level of tax in different Member States. In order to achieve the goal of converging tax rates and the accompanying relatively moderate distortion in the internal market, a general agreement is necessary to request the heavily taxing Member States to bring down their excise duty rates.

Amendment 8

RECITAL 7 C (new)


(7c) Member States wishing to increase the minimum rates, in order to take account of inflation for example, are free to do so.

Amendment 9

RECITAL 7 D (new)


(7d) Certain Member States have set excise rates on alcohol and alcoholic beverages at levels that are up to ten times higher than the minimum rates, even if these were in line with inflation.

Amendment 10

RECITAL 7 E (new)


(7e) Existing minimum levels of excise duties represent an important incentive for the informal economy, especially in the two newest Member States, Bulgaria and Romania.


GDP per capita varies greatly in the EU. As a result, minimum levels of excise duties have a different impact on different Member States and impose a much higher burden on consumers in countries like Bulgaria and Romania. Increased informal economic activities are the logical consequence.

Amendment 11

RECITAL 7 F (new)


(7f) Member States which fear distortions of competition on the single market following the increase in cross-border trade between themselves and a neighbouring Member State applying significantly lower rates are free to lower their rates.

Amendment 12

RECITAL 7 G (new)


(7g) It is up to Member States to set the level of their excise rates and there is no need to lay down minimum rates in the absence of maximum rates.

Amendment 13


(8) Directive 92/84/EEC should, therefore, be amended accordingly,

(8) Directive 92/84/EEC as a whole should, therefore, be repealed,

Amendment 14


Article 1, Article 3 (1), subparagraph 1, and Articles 4, 6 and 8 (Directive 92/84/EEC)

Directive 92/84/EEC is amended as follows:

(1) Article 1 is replaced by the following:

“Article 1

Not later than 1 January 2008, Member States shall apply minimum rates of excise duty in accordance with the rules laid down in this Directive.”

(2) In Article 3(1), the first subparagraph is replaced by the following:

“As from 1 January 2008, the minimum rate of excise duty on alcohol and alcohol contained in beverages other than those referred to in Articles 4, 5 and 6 shall be fixed at EUR 720 per hectolitre of pure alcohol.”

(3) Article 4 is replaced by the following:

“Article 4

As from 1 January 2008, the minimum rate of excise duty on intermediate products shall be fixed at EUR 59 per hectolitre of product.”

(4) Article 6 is replaced by the following:

“Article 6

As from 1 January 2008, the minimum rate of excise duty on beer shall be fixed at one of the following rates, by reference to the finished product:


(a) EUR 0.98 per hectolitre/degree Plato;


(b) EUR 2.45 per hectolitre/degree of alcohol.”


(5) The following Article 7a is inserted:

“Article 7a

By way of derogation from Article 1, Member States which on 31 December 2007 applied excise duty at a rate such that an increase of 10% or more would be required in order to reach the minima laid down in Articles 3, 4 and 6 may postpone the application of the minimum rates of excise duty until 1 January 2009. Where an increase of 20% or more would be required, application of the minimum rates of excise duty may be postponed until 1 January 2010.”

(6) Article 8 is replaced by the following:

“Article 8

Every four years, and for the first time not later than 31 December 2010, the Commission shall examine the rates of excise duty laid down in this Directive. Where appropriate, it shall adopt a report or a proposal. The Council, acting in accordance with Article 93 of the Treaty, shall adopt the necessary measures.”

Article 1, Article 3(1), subparagraph 1, and Articles 4, 6 and 8 of Directive 92/84/EEC are hereby repealed.


Member States with a lower level of excise duty rates denominated in EUR coexist with States having a lower than average GDP per capita level and lagging behind as regards the wage level. Moreover, it should be noted that these ‘catching up’ countries are obliged to join the euro zone as soon as they qualify. Due to the fact that accession to the euro zone lays down a low standard inflation rate maintained in a sustainable manner, any rise in excise duty must be implemented without distracting the anti-inflation policy from keeping the CPI on a downward trajectory.

Amendment 15

ARTICLE 1 A (new)


Article 1a

Code of Conduct


The Member States, on a proposal from the Commission, shall lay down a Code of Conduct no later than 31 December 2009 in which the Member States levying excise duty rates above the EU average should take measures with a view to freezing their excise duties and reducing them gradually, depending on the status of their economic cycles.

Member States levying excise duties falling short of the EU average should not decrease the excise duty rates based on the measures of 1 January 2007 but should consider raising their rates by an appropriate amount, depending on the status of their economic cycles.


The implementation of the Code of Conduct shall be reviewed for the first time in the fourth year after its adoption.


Same as Amendment 14.

Amendment 16


Article 2




1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 31 December 2007 at the latest. They shall forthwith communicate to the Commission the text of those provisions and a correlation table between those provisions and this Directive.


When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.


  • [1]  Not yet published in Official Journal.


1. Legislative context

On 8 September 2006 the Commission adopted a proposal for a directive amending Directive 92/84/CEE on the approximation of the rates of excise duty on alcohol and alcoholic beverages[1].

The proposal is aimed at increasing the minimum rates, supposedly to take account of inflation and avoid a reduction in the real value of rates by maintaining the level established by the Council in 1992. Based on Eurostat data on the annual rate of change of the HICP (harmonized index of consumer prices), the total inflation rate for the period between 1993 and 2006 has been estimated by the Commission at around 31%.


Rate expressed per

Present minimum rate

Proposed minimum rate






Hl degree Plato


Hl degree alcohol







Intermediate products





Hl of pure alcohol



This increase in the minimum rate for beer, pure alcohol and intermediate products apparently concerns nine of the 27 Member States, which should increase their respective excise rates. The Member States concerned are Latvia, Malta, the Czech Republic, Germany, Luxembourg, Lithuania, Spain, Romania and Bulgaria. The other Member States already apply rates which are above the minimum rates.

Some Member States, such as the United Kingdom, Ireland, Finland and Sweden, apply rates which are well above the minimum rates. With regard to beer, for example, the rates applied are higher than €15 per hectolitre per degree of alcohol of the finished product compared with the minimum rate of €1.87 which would be raised to €2.45 as a result of the Commission proposal.

2. The Commission's arguments

One of the main arguments put forward by the Council and the Commission to increase the minimum rates of excise duty on alcohol and alcoholic beverages is the need to reduce distortions of competition and to promote the single market. However, the impact of such an increase in minimum rates would be minimal as significant disparities would continue to exist between Member States. Another argument used is the need to combat distortions of competition linked directly to rate disparities between neighbouring Member States. The impact of an increase in minimum rates would make no difference. For instance, cross-border trade between the United Kingdom and France or between Finland and Estonia will not be affected by an increase in minimum rates as these countries are not concerned.

The increase in minimum rates could have an impact on cross-border trade between Germany and Sweden, on the one hand, and Denmark, on the other. However, this impact would itself be minimal, given that, even following an increase in rates in Germany, the Swedish rates would still be seven times higher, and the Danish rates three times higher, than in Germany.

3. The rapporteur's position

It must be acknowledged that Directive 92/84/EEC, which laid down minimum rates, has not succeeded in a period of 15 years in bringing about approximation of excise duty on alcohol and alcoholic beverages. Quite the contrary.

For instance, excise duty on a litre of beer at 5% abv is €0.09 in the Czech Republic and Malta and €1.43 in Finland. The rate for 70cl of still wine at 15% abv is € 0.02 in France and € 1.91 in Ireland. Excise duty on 70cl of sparkling wine at 15% max. abv is € 0.06 in France and €3.82 in Ireland. The rate for 70cl of an intermediate product at 22% max. abv is €0.31 in Greece and €4.94 in Finland. Finally, the rate for 70cl of spirits at 40% abv is € 1.68 in Cyprus and €15.41 in Sweden.

If those Member States which still apply the minimum rates set in 1992 had wished to increase them, either to avoid reducing the real value of these rates or to increase their tax revenues, they could have done so and are still free to do so.

If this was not the case for some Member States, we can conclude that these Member States, including three old and six new Member States, had valid reasons, which should be respected.

Member States which have set the excise duty rates in question at levels far higher than the minimum rates and which complain of growing cross-border trade should be aware that the increase in cross-border trade through the free movement of goods is one of the objectives of the single market. Tax competition is perfectly legitimate in the single market.

There is no reason to consider that there is a distortion of competition as a result of different rates in so far as Member States are free to set such rates as they wish.

The minimum rates set in 1992 and applied by a minority of the current Member States have not prevented the other Member States from widening the gap between rates currently applied by the 27 Member States by repeatedly increasing their rates.

Setting minimum rates is therefore no longer justified. Community legislation on the matter should be abolished.

In this connection, it should be noted that income from excise duties and consumption taxes accounts for an average of 2.7% of GDP in the 25-member EU. Excise duties on oil products and tobacco and, in some Member States, energy account for the bulk of this figure. In Member States which apply excise rates on alcoholic beverages around the minimum rates, the tax revenues generated account for a tiny proportion of this figure.

In the case of Germany, revenue from excise duty on beer in 2002 was €808.99 million and the tax revenue from excise duty on cigarettes was €13 346.2 million. The tax revenue generated by excise duty on unleaded petrol was €22.7 million. Thus, excise duty on alcohol products accounts for fairly limited tax revenues compared with those generated by tax duty on tobacco and oil products.

Lastly, when one considers the bureaucratic and administrative costs related to the collection of excise duty, the revenues generated by excise duty on alcohol barely cover these costs in most cases and the net income is minimal if not inexistent in Member States which apply minimum rates. Why impose minimum rates on them when they are free to set higher rates according to their budgetary needs?

4. Conclusions

The existence of minimum rates has in 15 years had no effect on the approximation of excise duty on alcohol and alcoholic beverages and is not helping to solve the alleged distortions of competition. The increase in cross-border trade is not the result of the minimum rates but of the excessive rates applied by northern Member States.

The Commission stresses the minimal impact of its proposal to increase minimum rates of excise duty on alcoholic beverages on final prices. It overlooks the fact that any increase in the minimum rates will have an impact on final prices through its multiplier effects (VAT and profit margins) and would therefore have an inflationary impact, especially in the new Member States, which are justifiably opposed to the idea.

Neither consumers nor producers will draw any benefit from this measure. As things stand, the minimum rates of excise duty on alcohol and alcoholic beverages have lost their raison d'être. They can therefore be abolished, and this will not prevent Member States from maintaining the current rates or even increasing them under their own responsibility.



Approximation of the rates of excise duty on alcohol and alcoholic beverages


COM(2006)0486 - C6-0319/2006 - 2006/0165(CNS)

Date of consulting Parliament


Committee responsible

       Date announced in plenary



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Not delivering opinion(s)

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       Date appointed

Astrid Lulling




Discussed in committee





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Result of final vote







Members present for the final vote

Zsolt László Becsey, Pervenche Berès, Udo Bullmann, David Casa, Manuel António dos Santos, Jonathan Evans, Elisa Ferreira, José Manuel García-Margallo y Marfil, Jean-Paul Gauzès, Robert Goebbels, Donata Gottardi, Gunnar Hökmark, Karsten Friedrich Hoppenstedt, Sophia in ‘t Veld, Othmar Karas, Christoph Konrad, Astrid Lulling, Gay Mitchell, Cristobal Montoro Romero, Lapo Pistelli, Joop Post, John Purvis, Alexander Radwan, Dariusz Rosati, Heide Rühle, Antolín Sánchez Presedo, Olle Schmidt, Lydia Shouleva, Peter Skinner, Margarita Starkevičiūtė, Ivo Strejček, Ieke van den Burg

Substitute(s) present for the final vote

Jorgo Chatzimarkakis, Pilar del Castillo Vera, Harald Ettl, Zbigniew Krzysztof Kuźmiuk, Thomas Mann, Maria Petre, Gianni Pittella

Substitute(s) under Rule 178(2)

present for the final vote

Gianluca Susta, Martin Dimitrov