Tag Archives: Tax harmonisation

Excise duty on manufactured tobacco

Outline of the Community (European Union) legislation about Excise duty on manufactured tobacco

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Excise duty on manufactured tobacco

Document or Iniciative

Council Directive 2011/64/EU of 21 June 2011 on the structure and rates of excise duty applied to manufactured tobacco.

Summary

This directive establishes general principles for the harmonisation of the structure and rates of the excise duty which European Union (EU) countries apply to manufactured tobacco.

For the purposes of this directive, the term ‘manufactured tobacco’ includes the following:

cigarettes;
cigars and cigarillos;
smoking tobacco, including fine-cut tobacco for the rolling of cigarettes and other smoking tobacco.

Provisions applicable to cigarettes

Both cigarettes manufactured within the EU and those imported from non-EU countries are subject to an ad valorem excise duty calculated on the maximum retail selling price, including customs duties, and also to a specific excise duty calculated per unit of the product. EU countries may, however exclude customs duties from the calculation of ad valorem excise duty on cigarettes.

The rate of the ad valorem excise duty and the amount of the specific excise duty must be identical for all cigarettes.

The percentage of the specific component of excise duty in the amount of the total tax burden on cigarettes is established in accordance with the weighted average retail selling price. The weighted average retail selling price is calculated in accordance with the total value of all cigarettes released for consumption, based on the retail selling price including all taxes, divided by the total quantity of cigarettes released for consumption. The weighted average retail selling price must be determined by 1 March of each year based on the data for the previous year’s releases for consumption.

The specific component of the excise duty must not be less than 5 % and not more than 76.5 % of the amount of the total tax burden resulting from the sum of the specific excise duty and the ad valorem excise duty and the value added tax (VAT) imposed on the weighted average retail selling price. From 1 January 2014, the specific component must be between 7.5 % and 76.5 %. Where there is a change in the weighted average retail selling price of cigarettes in an EU country that takes the specific component of the excise duty below 5 % or 7.5 %, whichever is applicable, or above 76.5 % of the total tax burden, the EU country concerned may refrain from adjusting the amount of the specific excise duty until 1 January of the second year following that in which the change occurs.

EU countries may impose a minimum excise duty on cigarettes.

EU countries must apply minimum consumption taxes to cigarettes. This tax includes a specific excise duty per unit of the product, an ad valorem excise duty based on the maximum retail selling price, and a VAT proportional to the retail selling price.

The overall excise duty on cigarettes is the specific duty and ad valorem duty excluding VAT, and shall constitute at least 57 % of the weighted average retail selling price of cigarettes released for consumption. This excise duty must not be less than EUR 64 per 1 000 cigarettes irrespective of the weighted average retail selling price. EU countries which impose an excise duty of at least EUR 101 per 1000 cigarettes are not required to comply with the 57 % condition.

When an EU country increases the rate of VAT on cigarettes, it may reduce the overall excise duty to an amount equal to the increase in the rate of VAT when expressed as a percentage of the weighted average retail selling price.

Provisions applicable to manufactured tobacco other than cigarettes

EU countries shall apply an excise duty to manufactured tobacco other than cigarettes, which may be:

an ad valorem duty calculated on the basis of the maximum retail selling price of each product;
a specific duty expressed as an amount per kilogram or per 1000 pieces;
a mixture of an ad valorem element and a specific element.

The overall excise duty must be at least equivalent to the rates or minimum amounts established for:

cigars or cigarillos: 5 % of the retail selling price inclusive of all taxes or EUR 12 per 1000 items or per kilogram;
fine-cut smoking tobacco intended for the rolling of cigarettes: 40 % of the weighted average retail selling price or EUR 40 per kilogram;
other smoking tobaccos: 20 % of the retail selling price inclusive of all taxes, or EUR 22 per kilogram.

Maximum retail selling price

Manufacturers, their representatives or authorised agents in the EU, and importers of tobacco from non-EU countries have the right to determine the maximum retail selling price for each of their products for each EU country in which the products concerned are to be released for consumption. This does not however affect the implementation of national legislation regarding price control or the observance of imposed prices, provided that they are compatible with EU legislation.

This directive repealed directives 92/79/EEC, 92/80/EEC and 95/59/EC.

References

Act	Entry into force	Deadline for transposition in the Member States	Official Journal
Directive 2011/64/EU	1.1.2011	–	OJ L 176, 5.7.2011

Administrative cooperation in the field of value added tax

Outline of the Community (European Union) legislation about Administrative cooperation in the field of value added tax

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Administrative cooperation in the field of value added tax (until 31.12.2011)

Document or Iniciative

Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax and repealing Regulation (EEC) No 218/92 [See amending act(s)].

Summary

This regulation determines the conditions of cooperation between national authorities responsible for applying value added tax (VAT) legislation on:

supplies of goods and services;
intra-Community acquisition of goods;
importation of goods.

It also provides a structure for cooperation between these national authorities and the Commission.

More precisely, the regulation lays down rules and procedures to enable the competent authorities of European Union (EU) countries to cooperate and to exchange any information that may help them assess VAT correctly.

Definition of parties concerned and procedures

Each EU country designates a single central office to act as a point of contact for administrative cooperation. The competent authorities of EU countries may designate liaison departments and/or competent officials for direct exchanges of information. The central liaison offices are responsible for maintaining up-to-date lists of these departments or officials and making them available to the other EU countries concerned.

Liaison departments and competent officials are required to inform their central liaison office when they send or receive a request for assistance or a reply to a request for assistance. They must also notify their central liaison office and competent authority of any request for assistance received that requires action outside their territorial or operational area.

The obligation for EU countries to assist each other does not cover the provision of information or documents obtained by the authorities when acting with the authorisation or at the request of a judicial authority, unless provided for in their national law.

Exchange of information on request

This concerns requests for information and for administrative enquiries sent by the competent authority of one EU country (the requesting authority) to the competent authority of another EU country (the requested authority) to obtain information that may help with the correct assessment of VAT. The requested authority has the obligation to provide the information requested. To that end, it may make administrative enquiries and act for the requesting authority as if it were acting on its own behalf.

The requesting authority may make a reasoned request for an administrative enquiry. In such cases, the requested authority must justify any failure to carry out the enquiry.

The requesting authorities must use a standard form for all requests for information and administrative enquiries.

As regards the time limit for providing information, the requested authority must provide the information without delay and no later than three months following the date of receipt of the request. However, if the requested authority is already in possession of the information, the time limit is reduced to a maximum of one month. In certain cases, the requesting and requested authorities may agree on different time limits.

If the requested authority is unable to respond to the request by the deadline, it must immediately inform the requesting authority in writing of the reasons for its failure to do so and indicate a timeframe within which it will be able to respond.

The requesting and requested authorities may agree to allow officials of the first to be present in the administrative offices of the latter. The officials of the requesting authority may also participate in the administrative enquiries with a view to exchanging information, but never to exercise the powers of inspection conferred on the officials of the requested authority. They must at all times be in possession of a written authority, which states their identity and official capacity.

EU countries may also agree to conduct simultaneous controls in their respective territories on the tax situation of taxable persons, if this is more effective than controls carried out by only one EU country.

Exchange of information without prior request

The competent authority of an EU country must forward information by automatic or structured automatic exchange to the competent authority of the EU country concerned when:

tax is meant to be charged in the EU country of destination and the effectiveness of the control system depends on information from the EU country of origin;
an EU country believes that a breach of VAT legislation has or might have been committed in the other EU country;
there is a risk of tax loss in the other EU country.

The exact categories of information to exchange, the frequency of exchanges and the practical procedures for exchanging information are determined by the Commission, assisted by a standing committee on administrative cooperation. In addition, each EU country must determine whether it will take part in the exchange of a particular category of information and whether it will do so in an automatic or structured automatic way.

The competent authorities of EU countries may forward to each other any information of which they are aware by spontaneous exchange.

Storage and exchange of information relating to intra-Community transactions

Each EU country must maintain an electronic database in which it stores and processes information relating to VAT. It is the responsibility of each EU country to ensure that its database is complete, accurate and kept up to date.

The competent authority of an EU country can obtain directly from any other EU country, or have direct access to, data stored on:

VAT identification numbers issued by the EU country receiving the information;
the total value of all intra-Community supplies of goods and services to persons holding a VAT identification number by all operators identified for the purposes of VAT in the EU country providing the information.

If necessary for the control of intra-Community acquisition of goods and supply of services to prevent a breach of VAT legislation, the competent authority of an EU country must receive directly, or have direct electronic access to, the following information:

the VAT identification numbers of the persons who effected the intra-Community supplies of goods and services;
the total value of such supplies to persons holding a VAT identification number.

EU countries must provide access to the information without delay and no later than one month from the end of the period to which the information relates.

Conditions governing the exchange of information

The requested authority may refuse a request for assistance. In such cases, it must always inform the requesting authority of its reasons. Requests for assistance may be refused if the provision of information:

imposes a disproportionate administrative burden;
is contrary to the laws or administrative practices of the requested EU country;
leads to the disclosure of commercial, industrial or professional secrets;
is against public policy.

Information communicated on the basis of this regulation is covered by the obligation of official secrecy and is protected under the national law of the EU country that received it. Therefore, this information may only be used for clearly specified purposes, such as:

establishing the assessment base;
collection or administrative control of tax (for the purpose of establishing the assessment base);
assessment of other levies, duties and taxes covered by Article 2 of Council Directive 76/308/EEC; and
in connection with judicial proceedings that may involve penalties, initiated as a result of infringements of tax law (the documents may be invoked as evidence).

Context

This regulation belongs to a series of tax harmonisation measures taken to complete the internal market.

In the interests of facilitating contacts between local and/or national tax authorities to combat fraud more effectively, this regulation brings together into a single legal instrument and reinforces the provisions of the Directive on mutual assistance by competent authorities in the field of direct and indirect taxation and the Regulation on administrative cooperation in the field of indirect taxation.

On 7 October 2010, the Council adopted Regulation (EU) No 904/2010 which repeals the current Regulation on 1 January 2012. However, chapter V (with the exception of Article 27, paragraph 4) remains applicable until 31 December 2012. Certain provisions from the new Regulation entered into force on 1 November 2010, others will apply from 1 January 2012 and 1 January 2015.

REFERENCES

Act	Entry into force	Deadline for transposition in the Member States	Official Journal
Regulation (EC) No 1798/2003	1.1.2004	–	OJ L 264 of 15.10.2003

Amending act(s)	Entry into force	Deadline for transposition in the Member States	Official Journal
Regulation (EC) No 885/2004	1.5.2004	–	OJ L 168 of 1.5.2004
Regulation (EC) No 1791/2006	1.1.2007	–	OJ L 363 of 20.12.2006
Regulation (EC) No 143/2008	20.2.2008	–	OJ L 44 of 20.2.2008
Regulation (EC) No 37/2009	1.1.2010	–	OJ L 14 of 20.1.2009
Regulation (EU) No 904/2010	1.11.2010	–	OJ L 268 of 12.10.2010

RELATED ACTS

Commission Regulation (EC) No 1174/2009 of 30 November 2009 laying down rules for the implementation of Articles 34a and 37 of Council Regulation (EC) No 1798/2003 as regards refunds of value added tax under Council Directive 2008/9/EC [Official Journal L 314 of 1.12.2009].

Report from the Commission to the Council and the European Parliament of 18 August 2009 on the application of Council Regulation (EC) No 1798/2003 concerning administrative cooperation in the field of value added tax [COM(2009) 428 final – Not published in the Official Journal].

Commission Regulation (EC) No 1925/2004 of 29 October 2004 laying down detailed rules for implementing certain provisions of Council Regulation (EC) No 1798/2003 concerning administrative cooperation in the field of value-added tax [Official Journal L 331 of 5.11.2004].
This regulation establishes the categories of information to be exchanged without prior request, the frequency with which such exchanges must take place and other rules for implementing certain provisions of Regulation (EC) No 1798/2003.

Mutual assistance by Member States in the field of direct taxation and taxation of insurance premiums

Outline of the Community (European Union) legislation about Mutual assistance by Member States in the field of direct taxation and taxation of insurance premiums

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Other

Mutual assistance by Member States in the field of direct taxation and taxation of insurance premiums

To combat international tax evasion and avoidance the European Union is strengthening collaboration between the Member States’ tax administrations and facilitate the exchange of information which appears relevant for the correct assessment of taxes on income and on capital.

Document or Iniciative

Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums.

Summary

Under this Directive, Member States’ competent authorities are required to exchange any information which appears relevant for the correct assessment of taxes on income and on capital and the assessment of indirect taxes:

value added tax;
excise duty on alcohol and alcoholic beverages:
excise duty on manufactured tobacco.

Taxes on income and on capital are deemed to include all taxes, irrespective of the manner in which they are levied, imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the disposal of movable or immovable property, taxes on the amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

The competent authority of a Member State may request the competent authority of another Member State to forward the information referred to at point 1.

All information made known to a Member State under the directives must be kept secret in that state in the same manner as information received under its domestic legislation.

These directives impose no obligation to have enquiries carried out or to provide information if the Member State which should furnish the information would be prevented by its laws or administrative practices from carrying out these enquiries or from collecting or using this information for its own purposes.

Directive 79/1070/EEC makes some changes to the wording of Directive 77/799/EEC.

Directive 92/12/EEC amends Directive 77/799/EEC to extend its scope to cover excise duties.

Directive 2003/93/EC extends the scope of mutual assistance provided for in Directive 77/799/EEC to cover the taxes on insurance premiums referred to in Directive 76/308/EEC so as to better protect the financial interests of the Member States and the neutrality of the internal market.

Directive 2004/56/EC is designed to speed up the flow of information between Member States’ tax authorities. On direct taxation (income tax, company tax and capital gains tax), in conjunction with taxes on insurance premiums, it permits the Member States to coordinate their investigative action against cross-border tax fraud and to carry out more procedures on behalf of each other. It thus updates Directive 77/799/EEC on mutual assistance and rectifies its weaknesses.

Council Directive 2004/106/EC amends the original title and the content of Directive 77/799/EEC. As provisions covering administrative cooperation in the field of excise duties are included in Council Regulation 2073/2004, Directive 77/799/EEC will henceforth focus only on mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums.

References

Act	Entry into force	Deadline for transposition in the Member States	Official Journal
Directive 77/799/EEC [adoption by consultation]	23.12.1977	01.01.1979	OJ L 336 of 27.12.1977

Amending act(s)	Entry into force	Deadline for transposition in the Member States	Official Journal
Directive 79/1070/EEC	07.12.1979	01.01.1981	OJ L 331 of 27.12.1979
Directive 92/12/EEC	06.03.1992	01.01.1993	OJ L 76 of 23.03.1992
Directive 2003/93/EC	15.10.2003	31.12.2003	OJ L 264 of 15.10.2003
Directive 2004/56/EC	29.04.2004	01.01.2005	OJ L 127 of 29.04.2004
Directive 2004/106/EC	24.12.2004	30.06.2005	OJ L 359 of 04.12.2004
Directive 2006/98/EC	1.1.2007	1.1.2007	OJ L 363 of 20.12.2006