European union adopts revised rules on alcohol excise duties | Deloitte Nederland


European Union adopts revised rules on alcohol excise duties

On 29 July 2020, the Council of the European Union (EU) adopted amendments to the Council Directive 92/83/EEC of 19 October 1992 on the harmonization of the structures of excise duties on alcohol and alcoholic beverages (Directive 92/83/EEC). The amendments apply from 1 January 2022.

The main changes following the amendments concern:

  • the alcohol content threshold for beer benefiting from reduced excise duty rates;
  • reduced excise duty rates for “independent small producers”; and
  • conditions on granting duty exemptions for denatured alcohol.

Revised alcohol content threshold for beer

Under the Directive 92/83/EEC, Member States are allowed to apply reduced excise duty rates on beer with low alcohol content. Following the adopted amendments, the low alcohol content threshold for beer will be increased from 2.8% volume to 3.5% volume. Beer with alcohol content volume of up to 3.5% will thus be able to benefit from reduced excise duty rates.

Reduced excise duty rates for “independent small producers”

The amended Directive 92/83/EEC further introduces the concept of “independent small producer”, for the purposes of applying reduced rates of excise duties on wine, certain fermented beverages other than wine and beer (e.g. cider), and intermediate products, made by such producers. An “independent small producer” is defined in this context as a producer that: (i) is “legally and economically independent of any other producer”; (ii) “uses premises situated physically apart from those of any other producers”; and (iii) “does not operate under licence”. In addition, in order to facilitate the recognition of their status as independent small producers in all Member States, the amended Directive 92/83/EEC provides a certification mechanism for such producers.

Clarified conditions on the exemption from excise duty for denatured alcohol

Under the conditions laid down by Member States, article 27 of the Directive 92/83/EEC provides for harmonized excise duty exemptions for certain products, such as denatured alcohol. The text of Article 27 has been revised in the amended Directive 92/83/EEC, in order to clarify the application of these exemptions. Regarding denatured alcohol, the following main elements are included:

  • For completely denatured alcohol, the exemption will be available to alcohol that has been completely denatured in accordance with the requirements of the Member State where it has been released for consumption (instead of the requirements of any Member State, as is the case under the current version of Article 27).

  • Regarding partially denatured alcohol used as part of the manufacturing process of products not for human consumption, the scope of exemption has been further specified. To qualify for an exemption, the following conditions must be met: (i) alcohol must be denatured in accordance with the requirements of any Member State for the given use; and (ii) such denatured alcohol must be incorporated into the product not for human consumption, or used for maintenance and cleaning of the manufacturing equipment used for this particular manufacturing process.

Impact on business

The amendments are intended to have an overall positive effect on business and consumers. It is expected that the revised alcohol threshold for beer benefiting from reduced duty rates will encourage the consumption of beverages with lower alcohol strength. The introduction of reduced rates for wine, certain fermented beverages and intermediate products made by “independent small producers” will stimulate small businesses. Also, the changes regarding denatured alcohol are expected to make the use of duty exemption for denatured alcohol more transparent, as well as reduce compliance burden. This would benefit both businesses and tax administrations. The amended Directive 92/83/EEC applies from 1 January 2022, which gives businesses time to prepare.

How we can help

Deloitte professionals have proven expertise in excise matters. We can help you in assessing the impact of the amended Directive 92/83/EEC on your supply chain and determining the best course of action for your business. For more information, please contact:

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