Excise duties are indirect taxes on the consumption or the use of certain products. In contrast to Value Added Tax (VAT), they are mainly specific taxes, i.e. expressed as a monetary amount per quantity of the product.
The most commonly applied excise duties are those on
- alcoholic beverages,
- manufactured tobacco products and
- energy products (motor fuels and heating fuels, such as petrol and gasoline, electricity, natural gas, coal and coke).
All EU Member States apply excise duties to these three product categories. The revenue from excise duties accrues entirely to the Member States.
EU legislation in the area of excise duties on these products was mainly adopted in the context of the establishment of the Internal Market on 1 January 1993 , which involved the abolition of controls of a fiscal nature at internal borders between Member States.
This legislation, which has been further developed since, can be divided into three main categories:
- The structure of the tax to be applied to a particular group of products. The structure of taxation means the definition of the product categories, the way in which the excise duty is calculated (e.g. per hl; per degree alcohol; per 1000 pieces, etc.), the scope of possible exemptions, etc.
- The minimum rates of duty that Member States have to respect for each type of product. Above those minimum rates, Member States can freely fix their own rate levels.
- General provisions that apply across the product categories. These provisions concern in particular the production, storage and movement between Member States of excise products.
A new Council Directive (2008/118/EC) concerning the general arrangements for products subject to excise duty (alcoholic beverages, tobacco products and energy products) entered into force on 15 January 2009. It will apply across the EU from 1 April 2010. Directive 92/12/EEC will be repealed as of that date. See the press notice, the Council's press release and the full text.