In its latest compromise text on the Energy Taxation Directive (ETD), dated Monday 20 January, the Polish Presidency of the Council of the EU is proposing that Member States refer certain tax exemptions to the European Commission. These include exemptions on energy products and electricity used to produce electricity, as well as electricity used to maintain electricity production capacity.
According to the compromise text and the Note obtained by Agence Europe, Poland wishes to discuss with the delegations the issue of “single use” on Thursday 30 January in the Working Party on indirect taxation. In the course of their discussions, “the delegations came to the conclusion that a vertical ranking system would be sufficient as a pivotal principle of the Directive and that horizontal ranking would not be needed”, according to the Presidency Note. Horizontal classification involves maintaining the same rates for products in a given cluster or use. However, the wording “single use” is still retained in the compromise text, as it was intended to distinguish preferential treatment.
Four questions for the next Working Party. At the meeting of the Working Party on Tax Questions on Wednesday 23 October, representatives of the European Commission’s Directorate-General for Competition (DG COMP) explained the relationship between State aid regulations and the provisions of the proposed Directive on State aid for investment. “It became evident that the use of the term ‘single use’ in the text of the draft ETD does not automatically lead to the recognition of the preferential treatment specified therein as State aid situations that are either considered compatible with the common market or exempted from notification obligations”, Poland reported. With regard to the General Block Exemption Regulation (GBER), DG COMP representatives announced that this Regulation would probably be revised once work on the ETD had been completed.
According to Article 12 proposed by the Presidency, Member States would be allowed to tax these products or electricity instead of granting an exemption, provided they deem it necessary for their environmental policy. In this case, taxation does not necessarily have to comply with the minimum levels of taxation. However, the tax rates on Category 1 energy products must be higher than those on Category 2 products, and the latter must in turn be higher than those on Category 3 products. The Presidency therefore proposes that Member States inform the Commission of such a measure, specifying the rates established for such taxation.
Poland would therefore like to put four questions to the Member States on: - the need to retain the terms “single use” and “different single use”; - the risk of difficulty in understanding the rules; - potential rewording; - the risk of difficulties in understanding in the future for economic operators, tax authorities or citizens.
Read the compromise text: https://aeur.eu/f/f6q
Read the Presidency Note: https://aeur.eu/f/f6r (Original version in French by Anne Damiani)