Proposal for a Council Decision amending the period of application of Council Decision 2004/162/EC concerning the dock dues in the French overseas departments

The Treaty on the Functioning of the European Union (TFEU) applies to the outermost regions of the Union. The French outermost regions, however, are excluded from the territorial scope of the VAT and excise duty directives.

The TFEU, in particular Article 110, does not in principle authorise any difference in the French outermost regions between the taxation of local products and the taxation of products from metropolitan France, the other Member States or non‑member countries. Article 349 of the TFEU (former Article 299(2) of the EC Treaty) 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. Such measures concern various policies, including taxation.

Council Decision 2004/162/EC of 10 February 2004 (as amended by Council Decisions 2008/439/EC of 9 June 2008 and 448/2011/EU of 19 July 2011), adopted on the basis of Article 299(2) of the EC Treaty, authorised France, until 1 July 2014, to apply exemptions or reductions to the ‘dock dues’ tax for certain products produced in the French outermost regions (excluding Saint Martin). The Annex to that Decision contains a list of the products to which tax exemptions and reductions may be applied. The difference between the taxation of locally manufactured products and that of other products may not exceed 10, 20 or 30 percentage points, depending on the product.

Decision 2004/162/EC sets out the reasons for adopting specific measures: remoteness, raw-material and energy dependence, the obligation to build up larger stocks, the small size of the local market combined with the low level of export activity, etc. The combination of these handicaps increases production costs and therefore the cost price of goods produced locally, so that without specific measures they would be less competitive than those produced elsewhere, even taking into account the cost of transporting such goods to the French overseas departments. This would make it harder to maintain local production. The specific measures contained in Decision 2004/162/EC were thus designed to strengthen local industry by making it more competitive.

The French authorities believe that the handicaps suffered by the French outermost regions persist and between 25 January and 7 June 2013 they sent several letters to the European Commission requesting that a system of differentiated taxation similar to the current system be maintained after 1 July 2014 until 31 December 2020.

Analysing the lists of the products to which the French authorities wish to apply differentiated taxation is a lengthy process requiring verification, for each product, of the reasons for differential taxation and the proportionality of the tax, so as to ensure that such differential taxation does not undermine the integrity and the coherence of the Union legal order, including the internal market and common policies.

An additional period of six months is required to complete the work under way and to give the Commission time to present a balanced proposal that takes account of the various interests at stake.

• Primary Source

EUR-Lex: COM(2014)181: Follow the progress of this proposal through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2014:181:FIN

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