Illegal imposition of a special excise duty on natural gas

Under Directive 2003/96/EC which lays down the framework for the taxation of energy products in Member States of the European Union, energy products are taxed only when used as motor fuel or heating fuel, and not when used as raw materials for chemical reduction or in electrolytic or metallurgical processes.

However, according to complaints by workers at an industrial plant in Kavala, Hellenic Fertilisers and Chemicals ELFE SA, a special excise duty has been illegally imposed on natural gas, thereby greatly increasing the plant’s energy costs and eroding the enterprise’s competitiveness. Employees are sounding the alarm, since the illegal imposition of a special excise duty on natural gas will lead to the closure of ELFE and the loss of hundreds of jobs.

In view of the above, will the Commission say:

Source: European Parliament

Answer given by Mr Moscovici on behalf of the Commission

According to Article 1 of Directive 2003/96/EC (‘Energy Taxation Directive’), Member States must impose taxation on energy products and electricity in accordance with the provisions of that directive. Products falling under the scope of the Energy Taxation Directive are listed in Article 2, which includes, in letter b), natural gas (CN 2709 00 10).

However, according to Article 2(4)(b), first indent, the harmonised system enshrined in the Energy Taxation Directive does not apply to the products listed in Article 2(1) if they are used for purposes other than as motor fuels or heating fuels. This means that the obligations arising from the harmonised system set by the directive (e.g. taxation at or above the minimum level according to Article 4, exemptions according to Article 14, etc.) do not apply to energy products employed to uses other than as motor fuel or heating fuel. Therefore taxation of energy products employed to uses other than as motor fuel or heating fuel falls outside the scope of the harmonised system enshrined in the Energy Taxation Directive.

If the taxation relates to the use of gas for other purposes than as motor fuels or heating fuels, such as the use of natural gas used for chemical reduction or in electrolytic or metallurgic process, which might be the case corresponding to the question of the Honourable Member, such a situation falls outside the scope of Directive 2003/96/EC. Thus Greece would remain free to tax natural gas used for chemical reduction or in electrolytic or metallurgic process, if it were actually the case, without taking into account the limits imposed by that directive.

Source: European Parliament