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Taxation and Customs Union

Excise Duties: Current Energy Tax Rules

Current EU rules for taxing energy products and electricity are laid down in the Energy Tax Directive 2003/96/EC, which entered into force on 1 January 2004.

This Directive includes:

  • A common EU framework for taxing motor fuels, heating fuels and electricity
  • Minimum rates for energy products used as motor or heating fuel
  • Minimum rates for commercial and industrial purposes, such as agriculture, stationary motors and machinery used in construction and public works (Article 8)
  • Some options for exemptions for use of energy products and electricity (Article 15)
  • Special provisions for commercial diesel (Article 7(2))
  • Out of the scope provisions for energy products and electricity (Article 2(4))

Background

Prior to the entry into force of the Energy Tax Directive 2003/96/EC, the Community framework for energy taxation only covered mineral oils. The 2003 Directive widened the scope of the minimum rate system to include to all energy products, including coal and coke, natural gas and electricity. It also updated the minimum rates for mineral oils, which had not been revised since 1992.

The aim of this legislation was to reduce distortions caused by divergent national tax rates, remove competitive distortions between mineral oils and other (unlegislated) energy products, and create incentives for energy-efficiency and emission reductions.

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