COUNCIL DIRECTIVE 2004/74/EC OF 29 APRIL 2004 AMENDING DIRECTIVE 2003/96/EC AS REGARDS THE POSSIBILITY FOR CERTAIN MEMBER STATES TO APPLY, IN RESPECT OF ENERGY PRODUCTS AND ELECTRICITY, TEMPORARY EXEMPTIONS OR REDUCTIONS IN THE LEVELS OF TAXATION

• Coming into Force: 01 May 2004
• End of Effective Date: 31 December 9999
• Celex Number: 32004L0074
• ELI: http://data.europa.eu/eli/dir/2004/74/oj
• Published date: 30 April 2004
• Date: 29 April 2004
• Official Gazette Publication: Official Journal of the European Union, L 157, 30 April 2004

30.4.2004 EN Official Journal of the European Communities L 157/87

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COUNCIL DIRECTIVE 2004/74/EC

of 29 April 2004

amending Directive 2003/96/EC as regards the possibility for certain Member States to apply, in respect of energy products and electricity, temporary exemptions or reductions in the levels of taxation

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 93 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament (1),

Having regard to the opinion of the European Economic and Social Committee (2),

Whereas:

(1)(2)(3)(4)(5)(6)(7) Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (3) replaced, with effect from 1 January 2004, Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils (4) and Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils (5). It defines the fiscal structures and the levels of taxation to be imposed on energy products and electricity.The minimum rates set by Directive 2003/96/EC are liable to create serious economic and social difficulties for certain Member States, namely Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia and Slovakia, in view of the comparatively low level of excise duties previously applied, the ongoing economic transition of those Member States, their relatively low income levels and their limited ability to offset that additional tax burden by reducing other taxes. In particular, the price increases brought about by application of the minimum rates set by Directive 2003/96/EC are likely to have adverse effect on their citizens and national economies, creating for instance an unbearable burden for small and medium-sized enterprises.Those Member States should therefore be permitted, on a temporary basis, to apply additional exemptions from or reduced levels of taxation, where it will not be detrimental to the proper functioning of the internal market and will not result in the distortion of competition. Moreover, consistent with the principles in accordance with which transitional periods were originally granted under Directive 2003/96/EC, any such measures should be designed to bring about a progressive alignment with the applicable Community minimum rates.The 2003 Treaty of Accession (6) provides for transitional arrangements, in the case of Poland and Cyprus, for the implementation of Directives 92/8 I/EEC and 92/82/EEC. The Treaty also provides for specific measures on issues relating to energy in Lithuania and Estonia. Those measures should be adequately taken into account in the context of permitting dedicated tax exemptions.This Directive should not prejudice the outcome of any procedures relating to distortions of the operation of the single market that may be undertaken, in particular under Articles 87 and 88 of the Treaty. It should not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 88 of the Treaty.Certain provisions of Directive 2003/96/EC should be clarified as regards the references to the transitional period set out therein.Directive 2003/96/EC should therefore be amended accordingly,

HAS ADOPTED THIS DIRECTIVE:

Article 1

Directive 2003/96/EC is hereby amended as follows:

1. Article 18 is hereby amended as follows: (a) in paragraph 1, the first subparagraph shall be replaced by the following: ‘By way of derogation from the provisions of the present Directive, the Member States specified in Annex II are authorised to continue to apply the reductions in the levels of taxation or the exemptions set out in that Annex.’; (b) in paragraph 2, ‘in paragraphs 3 to 12’ shall be replaced by ‘in paragraphs 3 to 13’;

2. the following Article shall be inserted: ‘Article 18a 1. By way of derogation from the provisions of the present Directive, the Member States specified in Annex III are authorised to apply the reductions in the levels of taxation or the exemptions set out in that Annex. Subject to a prior review by the Council, on the basis of a proposal from the Commission, this authorisation shall expire on 31 December 2006 or on the date specified in Annex III. 2. Notwithstanding the periods set out in paragraphs 3 to 11 and provided that this does not significantly distort competition, Member States with difficulties in implementing the new minimum levels of taxation shall be allowed a transitional period until 1 January 2007, particularly in order to avoid jeopardising price stability. 3. The Czech Republic may apply total or partial exemptions or reductions in the level of taxation of electricity, solid fuels and natural gas until 1 January 2008. 4. The Republic of Estonia may apply a transitional period until 1 January 2010 to adjust its national level of taxation on gas oil used as propellant to the new

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