It would appear that Romania is determined to hold hostage all excise duty legislation currently on the table of the EU Council until it has succeeded in obtaining the excise duty exemption it wants on its 'home-made' alcohol.
According to our information, it is now the proposal for a directive to exempt supplies to armed forces participating in a European defence effort from value added tax (VAT) and excise duty, presented by the European Commission in April (see EUROPE 12241/16), which would bear the brunt of their strategy, made possible by the unanimous voting rule regarding tax matters in the EU Council.
The case goes back to the May Ecofin Council (see EUROPE 12257/1). Romania - which at the time held the Presidency of the Council of the EU - blocked the adoption of the Regulation on administrative cooperation as regards the content of the electronic register and the Directive on the general arrangements for excise duty, because the Member States were not prepared to support an exemption it wanted, in a third legislative text, which was also blocked, namely the directive on the harmonisation of the structures of excise duties on alcohol (see EUROPE 12211/15).
However, the new proposal has nothing to do with excise duties on alcohol. It proposes to amend the two VAT and Excise Directives to rule that armed forces deployed outside of their own Member State would not pay VAT or excise duties to other Member States when they participate in a defence activity under the Common Security and Defence Policy (CSDP).
According to a European source, the compromise text is mostly sorted at the technical level, but it is Romania that is blocking the conclusion of an agreement between the Member States, in order to have an additional political leverage to negotiate its exemption on its homemade alcohols.
The dossier is currently on the agenda of the November Ecofin Council for agreement, but there is no guarantee at this stage that it will remain on the agenda. The subject was reportedly briefly discussed at the meeting of Member States' ambassadors to the EU (Coreper) on Wednesday 9 October. Romania, but also Germany, considered that the adoption of an agreement in November seemed premature. Finland's Presidency of the Council of the European Union is continuing its bilateral contacts with the Member States with a view to finding a solution.
On the European Parliament's side, the draft report for opinion by Paul Tang (S&D, Netherlands) has been ready since 3 October and has not yet been discussed in the Parliament's Committee on Economic and Monetary Affairs (ECON).
The rapporteur fully supports the Commission's proposal, but suggests that the definition of "defence effort within the Union" be amended in the text, in particular to ensure that all military actions, formations or structures carried out under Article 42 of the TEU, which defines the scope of the CSDP, are covered. (Original version in French by Marion Fontana with Camille-Cerise Gessant)