Proposal for a Council Decision amending Decision 2009/831/EC as regards its period of application

The Treaty on the Functioning of the European Union (TFEU), which applies to the outermost regions of the EU, which include the autonomous region of Madeira and the autonomous region of the Azores, does not in principle allow any difference between the taxation of local products and the taxation of products from Portugal or other Member States. Article 349 of the TFEU provides, however, for the possibility of introducing specific measures for those regions because of the permanent handicaps which affect the economic and social conditions of the outermost regions.

Council Decision 2009/831/EC of 10 November 2009 authorises Portugal, up to 31 December 2013, to apply a reduced rate of excise duty in the autonomous region of Madeira on locally produced and consumed rum and liqueurs and in the autonomous region of the Azores on locally produced and consumed liqueurs and eaux-de-vie. Article 2 of that Decision confines the above derogation to specific products. Portugal can apply to those products a rate of excise duty lower than the full rate on alcohol laid down in Article 3 of Council Directive 92/84/EC, and lower than the minimum rate of excise duty on alcohol set by this Directive but not more than 75% lower than the standard national excise duty on alcohol.

Decision 2009/831/EC sets out the reasons for adopting specific measures, which include small size, fragmented nature and low mechanisation of agricultural holdings. Moreover, the transport to the islands of certain raw and packaging materials not produced locally leads to additional cost, as compared to the transport merely of the finished product. Transport and installation of equipment in those remote insular regions further increase the additional costs. Finally, the producers concerned also bear extra costs generally borne by the local economies, in particular increases labour and energy costs.

The 75% reduction does not go beyond what is necessary to counterbalance the levels of additional costs that are incurred by operators as a result of the said particular characteristics of Madeira and of the Azores as outermost regions. Since the tax advantage is limited to what is necessary to offset additional costs and since the volumes at stake remain modest, the measure does not undermine the integrity and coherence of the Community legal order. Moreover, the tax advantage is limited to consumption in the regions concerned.

The Portuguese authorities have requested the renewal of the authorisation to apply a reduced rate of excise duty in the autonomous region of Madeira on locally produced and consumed rum and liqueurs and in autonomous region of the Azores on locally produced and consumed liqueurs and eaux-de-vie until 31 December 2020. The renewal needs to be approved both by a Council Decision and by a Commission Decision on state aid. The Council Decision is without prejudice to the Commission's Decision on the prolongation of this measure under state aid rules.

On 28 June 2013 the Commission adopted new regional aid guidelines for the period 2014-2020. These Guidelines are part of a broader strategy to modernise state aid control, aiming at fostering growth in the Single Market by encouraging more effective aid measures and focusing the Commission’s enforcement on cases with the biggest impact on competition. Considering that these Guidelines will enter into force on 1 July 2014, it seems justified to extend the period of application of Decision 2009/831/EC for six months, so that its expiry date coincides with the expiry date of the current Guidelines.

• Primary Source

EUR-Lex: COM(2013)930: Follow the progress of this proposal through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2013:930:FIN

---