The EU way to simplify legislation: the revision of Directive 2008/118/EC on excise duty

Will the EU get a completed Single Market?

The harmonization of excise duties is a precondition for completing the EU Single Market.  Directive 2008/118/EC[1]and related EU Law seek to harmonise the general conditions for the changing excise duty.

The REFIT[2]initiative on general arrangements for excise duty, announced in the Commission’s Work Programme for 2018, intends to further harmonise and simplify provisions for the export, import and transit of goods subject to excise, inter alia through automation of movement control procedures. Disparities in the application of these rules can result in tax-induced movements of goods, loss of revenue and fraud. So far, EU legislation regulates Member States’ excise duties for a defined number of types of alcohol, tobacco and energy products in terms of the structure of duties and minimum rates. Furthermore, it creates the conditions for electronic control of the movement of these types of excise goods[3].

Main objects of Directive 2008/118/EC

Directive 2008/118/EC specifies which goods are subject to it by referring to specific directives, in particular to: Council Directive 92/83/EEC, on the harmonization of the structures of excise duties on alcohol and alcoholic beverages; Council Directive 92/84/EEC on the approximation of the rates of excise duty on alcohol and alcoholic beverages; Council Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity; Council Directive 2011/64/EU on structure and rates of excise duty applied to manufactured tobacco.

The Directive also covers the structure of excise duty categories and minimum excise duty rates for alcohol and alcoholic beverages, manufactured tobacco, and energy products and electricity. In the first part of the Directive the definition of concepts such as “authorised warehousekeeper” and “tax warehouse” are set out. In addition, it establishes the time and place of chargeability, who is liable, the effect of destruction and irretrievable loss, irregularities, refunds, and remissions and exemptions.

Chapters III and IV of the Directive set out the major change concerning the holding and movement of excise goods under duty suspension with the Excise Movements and Control System (EMCS) that monitors movements of excise goods under excise duty suspension between authorised and registered locations electronically.

In particular Chapter IV added two new types of economic operators associated with a location: the “registered consignee”, a type of economic operator that can transport goods under excise duty suspension from a place of importation.

The Directive moreover covers duty paid movements. There are still paper based and represent 1% to 3% of all intra-EU movements of excise duty goods.

Institutional Activities for simplification (REFIT)

    1. The Commission

In Annex 2 of its Work Programme 2017 the European Commission announced the revision of Directive 2008/118/EC to align and ensure the uniform application of EU legislation (including impact assessment) as a REFIT initiative.

Consequently, the Commission published in April 2017 a Report[4]on the implementation and evaluation of the Directive in which it concludes that the arrangements for the holding and movement of excise goods under excise duty suspension (Chapter III and IV of the Directive) work effectively and efficiently in the frame of a Union-wide action . However, the Report finds that the coordination of excise and customs procedure is hampered by “significant levels of legal uncertainty and it sees “considerable scope for improving the coordination of technical procedures”. Furthermore, whilst recognising that the introduction of EMCS [5]for the supervision of movement under duty suspension helps to improve the collection of excise duty, the Commission sees “a number of possible legal and technical changes that would further reduce evasion and fraud”.

Concerning the application of the articles of the Directive relating to the “movement and taxation of excise goods after release for consumption”[6], the current arrangements for moving goods already released for consumption to another Member State are considered “inefficient, insufficient to provide for the free movement of excise goods and potentially open to tax evasion and fraud”.

The Commission follow-up actions concern:

  • Possible legal and technical improvements to the treatment of irregularities and the handling of claims by Member State;
  • To explore a “less burdensome regime than either EMCS or the SAAD (administrative documents) system for the movement of excise goods of low fiscal risk, such as denatured alcohol, flavourings, perfumes and certain energy products”;
  • Examine “legal and technical changes to the arrangements used for the supervision of the import, export and transit of excise goods”;
  • Analyse “the partial or full automation of the duty-paid B2B arrangements with a view to reducing administrative burden and compliance costs on traders and Member States”;
  • Check how to improve the arrangements for the cross-border distance selling of excise goods”.
    1. The European Parliament
  • EP Resolution of 3 April 2014 on the Annual Report 2012 on the Protection of the EU’s Financial Interests-Fight against fraud agencies

A section of this Resolution is dedicated to EMCS. The European Parliament noted that increased abuse of the EMCS by criminal groups had been observed by enforcement agencies; it believed that physical controls of goods being transported under the EMCS was lacking; that it underlined the benefits of increased inspections and demanded a higher degree of cooperation with tax authorities; Parliament also expressed concern that the Member States had implemented their own EMCS systems based on (too) broadly defined requirements.

  • Written questions by MEPs

Numerous questions were addressed to the Commission on specific types of excise duties – or on the exemption from these. Some questions addressed the general arrangements for excise duty, which are the object of Directive 2008/118/EC. In particular, a written question by Anna Hedh (Socialist and Democrats Group, Sweden) pointed to the substantial differences in the process of alcoholic beverages in countries such as Denmark, Estonia, Finland, Germany and Sweden, which originate mainly from differences in the levels of excise duty and the provisions of Council Directive 2008/118/EC set out minimum guide levels for how much alcohol individuals are allowed to buy and personally carry on driving across borders without paying excise duty in the country of entry. Hedh asked whether the indicative allowances were not very high, contributed to excise duty dumping between Member States, and therefore were worth focusing on more clearly in the revision of current Directive. Hedh also asked why the reduction in the allowances for cross-border private movement of alcoholic beverages is not already being considered as a policy option in the ongoing revision of the Directive.

The answer to this written question was given by Pierre Moscovici[7]on behalf of the Commission. The Commissioner explained that the guide levels in Article 32 of Directive 2008/118/EC should help the authorities to assess whether the quantity of excisable goods being moved within the EU is for the use of the private individual transporting those goods. He added that Member States may carry out checks on their territory to see whether private individuals carrying goods falling under Directive 2008/118/EC from another Member State are doing so within acceptable limits.

  1. Council and European Council

At its meeting of 5 December 2017, the Council (ECOFIN) adopted its Conclusions on the Commission Report[8]on the implementation of directive 2008/118/EC and endorsed its report to the European Council on tax issues.

The Council Conclusions were preceded by discussions in which some of the national delegations initially had reservations against the draft Conclusions, that is also showing the level of detail considered and the reasoning that led to these conclusions, e.g. consideration of the intertwined workings of customs and excise.

In its Conclusions, the Council welcomed the Commission report and agreed that the current arrangements for the holding and movement of excise goods under Directive 20008/118/EC function effectively and efficiently, and in a way that could not be achieved without Union-wide action. However, concerning the arrangements for moving goods already released for consumption to another Member State, the Council noted that the Commission finds these arrangements inefficient, insufficient to provide for the free movements of excise goods, and potentially open to tax evasion and fraud. The Council therefore invited the Commission to further explore whether any improvements can be made in the area of the directive’s efficiency and effectiveness. This notably concerned B2B duty paid arrangements, especially in cases where it can be determined that these arrangements impose a substantial burden on businesses, particularly in the case of SMEs, and are not compatible with the objectives of the free movement of goods and the single market (e.g. excessive use of paper-based documents, variations between national requirements and lack of clear information about national procedures). Furthermore, the Council agreed that EMCS could be adapted to cover movements of excise goods under duty-paid arrangements, but held the position that an extension of EMCS could be justified after a careful cost/benefit analysis, taking into account the aim of maintaining reasonable costs for Member States, and in regard to the benefit of such extension.

The ECOFIN report of 5 December 2017 to the European Council on tax issues provides an overview of the state of play on the most important dossiers in the area of taxation. Its section on excise duties confirms the above-mentioned Council conclusions.

The European Council underlined on several occasions that the fight against tax fraud, evasion and avoidance remained a priority.

  1. Court of Justice

On several occasions, the Court of Justice of the European Union has decided on aspects of EU Law on excise duties. Some of these decisions concerned the “General Arrangements for excise duty” in Directive 2008/118/EC.

Two cases are particularly relevant:

  1. In Case C-409/14 the Court ruled, inter alia, that the concept of “customs suspensive procedure” laid down in Articel 4(6) of Directive 2008/118/EC, must be interpreted as meaning that the placement of specific goods under a customs suspension procedure of arrangements cannot be challenged if the chapter of the Common Customs Tariff, which covers those goods, is correctly mentioned in their accompanying documents, but the specific subheading is incorrectly indicated. In such cases, Article 2(b) and Article 4(8) of the Directive must be interpreted as meaning that there has no importation of those goods, and that they are not excise goods.
  2. In Case C-355/14 the Court ruled that Article 7(2) of the Council Directive 2008/118/EC must be interpreted as meaning that the sale of excise goods held by an authorized warehouse keeper in a tax warehouse does not bring about their release for consumption until the time at which those goods are physically removed from that tax warehouse.

A new Proposal to amend Directive 92/83/EEC

In the light of these considerations the Commission put forward a proposal to amend Directive 92/83/EEC in May 2018[9].

As set out in the explanatory memorandum “several legal acts define the EU system for harmonized excise duties”: Council Directive 2008/118/EC sets out the general arrangements for goods subject to excise duty, with particular emphasis on the production, storage and movement of excise goods between Member States. Energy products and electricity are covered by Directive 2003/96/EC and manufactured tobacco is covered by Directive 2011/64/EU.

Directive 92/83/EEC on the structure of excise duty on alcohol and alcoholic beverages sets out the common rules on the structure of excise duty and defines and classifies the different types of alcohol and alcoholic beverages, according to their characteristics, and provides a legal framework for reduced rates, exemptions and derogations in some sectors.

The explanatory memorandum argues that “The Directive has not kept pace with the challenges and the opportunities offered by new technologies and developments within alcohol industry”. In a working document[10]the Commission underlines that some problems and inefficiencies have been identified causing possible distortions of the internal market. “The large variation in duty levels between Member States, which provides a strong incentive for tax evasion, and other weakness in the design of taxes necessitate the use of burdensome administrative procedures for both tax administrations and economic operators” and consequently “….these disproportionate administrative and compliance costs for economic operators restrict the participation of small and medium-size enterprises in intra-EU trade in alcohol and alcoholic beverages”.

  1. Council Working Party

A first Council Working Party on Tax Questions was held in Brussels in June  2018 to discuss the new proposal. The Member State delegates had a very generic exchange point of views.


The REFIT process in this matter is very important and relevant for stakeholders and industry. Technical and legislative adjustments to the modernization in progress for alcohol, tobacco and electricity are numerous and sophisticated, so the European Commission, Parliament and Council must proceed toward texts which would satisfy the different needs coming from stakeholders.

A new methodology of work could be interesting and applicable in this REFIT case: a WG enlarged with the direct contributions deriving from agriculture, energy and environment Working Parties, a sort of WP enlarged and able to take advanced solutions.




The content of this article is only for information and does not constitute professional advice.
For further information contact Giovanni Moschetta.




[1]Council Directive of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC, In EUOJ L 9, 14.1.2009

[2]The REFIT platform was set up by the May 2015 Better Regulation Communication to advice the Commission on how to make EU regulation more efficient and effective while reducing burden and without undermining policy objectives

[3]The rates lavied still vary considerable between EU Member States. On certain other types of products not covered by European legislation some Member States levy further excise duties. In addition to excise duties, Member States also impose their VAT rates on the products


[5]Excise Movement and Control System. The EMCS is a computerised system for monitoring the movement of excise goods under duty suspension in the EU. It records in real time the movement of alcohol, tobacco and energy products for which excise duties have still to be paid.

[6]Articles 32-44

[7]Commissioner to the Economic and Financial Affairs, Taxation and Customs

[8]COM (2017) 184 of April 2017, see above.

[9]Proposal for a Council Directive amending Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages, COM (2018) 334 final.

[10]Revision 2008/118/EC Horizontal Directive – CNAPA 22/03/2017

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