Excise duties: Commission welcomes agreement on rules governing alcohol

alcohol bottles

(Credit: Unsplash)

This article is brought to you in association with the European Commission.


The Commission welcomes today’s agreement reached in the Council on the new rules governing excise duties on alcohol within the EU. This agreement paves the way for a better business environment and reduced costs for small alcohol-producing businesses.

The agreed new rules will ensure that small and artisan alcohol producers have access to a new EU-wide certification system confirming their access to lower excise duty rates across the Union. This will have a positive impact on consumers, which will benefit from a crackdown on the illegal use of tax-free denatured alcohol to make counterfeit drinks. There will also be an increase in the threshold for lower strength beer to which reduced rates may apply to encourage brewers to produce beverages with a lower alcohol content. The Commission will monitor the introduction of an excise duty or reduced excise rates for private production of ethyl alcohol and will report to the Council on this measure.

Following the agreement, Paolo Gentiloni, Commissioner for Economy said: “Today’s agreement is a welcome move towards a more modern and fairer tax regime for alcohol which also supports our fight against fraud.”

Background

Excise duties are indirect taxes on the sale or use of specific products, such as alcohol, and are usually applied as an amount per quantity of the product (e.g. per 100 litres). All revenues from excise duties go to national budgets and account for around 5-18% of tax revenues or 2 to 5% of the GDP of Member States. EU Member States can set national rates as they see fit, provided they respect EU-wide minimum rates.

Existing EU rules on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages were agreed in 1992 (Directive 92/83/EEC). They set out common definitions of alcoholic products that are subject to excise duty and ensure that all Member States treat the same products in the same way. They also specify the method to calculate excise duty on alcoholic products and the criteria for products to benefit from reduced rates or exemptions.

New rules will be applicable from 1 January 2022.

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