Energy taxation

Energy taxation

Taxes account for a significant share of the final prices consumers pay for energy around the EU and can have a significant impact on consumption and investment patterns, the type of energy consumed and their use.

This is reflected by the different rates of energy taxation in different EU countries with significant variations between households and industrial use, between different energy sources, between diesel and other transport fuels, and with rates that bare little relation to the energy content or externalities such as CO2 emissions or air pollution. Above all, the current tax framework has not changed since 2003, and so there are still a range of incentives for fossil fuels despite the EU's energy and climate objectives and international commitments. These tax benefits have been persistent over the last decade in the EU and amounted to around €40 billion in 2016. For more detailed figures, see the factsheet on energy taxation for energy products below.

Taxation policy is an important instrument to ensure achievement of the energy union objectives, and in particular to faciliate the clean energy transition, while respecting the principle of subsidiarity and proportionality. Progress towards the completion of the single energy market is on-going and energy taxation has an important role to play. For more details, see the latest 'Energy prices and costs in Europe'.

Making energy taxation more consistent with EU energy and climate objectives

As part of the 4th State of the energy union report, the European Commission published a communication on a more efficient and democratic decision making in EU energy and climate policy in April 2019. This document asks the European Parliament and Council to reflect on how energy taxation could better contribute to the EU's energy and climate objectives, and how a move to qualified majority voting (QVM) decision-making amongst Member States could help to unlock progress in this area. This strand of work builds on the Commission's blueprint for a gradual transition to QMV decision-making in all areas of taxation, first published in January 2019.