Brussels, 16/03/2007 (Agence Europe) - On Thursday 15 March, the European Commission adopted a communication whereby it opposes the requests made by Finland, Denmark and Ireland to extend, after 31 December 2006, the exemption to taxation on fuel used for private recreational aviation and private leisure craft. In line with the provisions of the 2003 directive on energy taxation, the Council, enacting unanimously on a Commission proposal, may authorise any member state to introduce tax reductions or exemptions in certain sectors. After looking at the requests put forward by these countries, the Commission will either submit a proposal to the Council or inform it of the reasons why it objects to authorising such measures. The Commission considers that Finland, Denmark and Ireland did not present reasons justifying the need to keep in place exemptions to the legislation unanimously adopted in the EU. The Council deliberately chose to submit private recreational aviation and private leisure navigation to the normal taxation regime and not to grant exemptions except for overcoming a number of initial difficulties.
Finland would like to apply an exemption from excise duties to fuel used for the purpose of private pleasure flying. It also calls for application of a reduced taxation rate (7.06 centimes per litre) to gas oil used as fuel for private pleasure navigation. The aim of the request is to preserve the operating conditions for both services and industry associated with boating at their current level and to ensure the preservation of the conditions of pleasure boating. Both requests provide for a date of termination by 31 December 2012.
Denmark would like to apply an exemption from excise duties to fuel used for the purpose of private pleasure flying (to avoid the administrative burden resulting from the need to implement a complex system of controls related to the shift to the standard tax treatment).
Ireland calls for application of a reduced rate of excise duty to fuel used in private pleasure flying (amounting to €276.52 per 1,000 litres for aviation gasoline and €16.00 per 1,000 litres of jet kerosene). According to the authorities of Ireland, the end of the exemption would impose excessive compliance costs on suppliers of aviation fuels. There could also be very significant one-off costs for airfields/aerodromes. Ireland would also like to apply a reduced rate of taxation (€47.36 per 1,000 litres) to gas oil used as fuel for private pleasure navigation. The requests do not provide for a date of termination.
We recall that fuels used in private recreational aviation and in private pleasure navigation have been taxable in the Community since 1993 unless an exemption is granted to a specific member state. With a view to giving greater consistency to its transport, environment and taxation policy, the Commission for the first time suggested in 1996 that these exemptions should be abolished. After this, the gradual phasing out of such derogations was begun by the Commission in 2000 when it decided exemptions should disappear by the date set for entry into effect of the directive on energy taxation, and, at any rate, by 31 December 2002 at the latest. Finally, derogations were extended until 31 December 2006 and were then incorporated into the directive on energy taxation with a view to providing for their gradual elimination. In its June 2006 communication entitled “Review of derogations in Annexes II and III of Council Directive 2003/96/EC that expire by the end of 2006”, the Commission recommended that the favourable tax treatment of fuel used for the activities in question, compared to fuel used for comparable (transport or leisure) activities, should not be renewed. The Commission also invited the member states, in cases where they considered that for specific policy considerations a further derogation was still necessary, to submit a request for extension of exemptions. The arguments put forward by these countries did not convince the Commission, which therefore refuses to authorise the requests. (lc)