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Greece Referred To European Court Over Excise Duty

by Ulrika Lomas, Tax-News.com, Brussels

21 February 2017

The European Commission has referred Greece to the Court of Justice in a case concerning the reduced rate of excise duty it applies to the alcoholic spirits Tsipouro and Tsikoudià.

The Commission said that under EU law, the same excise duty rate should apply to ethyl alcohol used in the production of alcoholic beverages, unless exemptions or derogations apply.

It explained that Greece does not have a derogation for Tsipouro or Tsikoudià and currently applies a reduced rate of excise duty (50 percent) to both, along with a super-reduced rate (of around six percent) to the production of the same spirits by small producers.

Tsipouro and Tsikoudià are traditional alcoholic drinks, produced in the north of Greece and in Crete. Both drinks have protected geographical indications.

According to the Commission, the application of these reduced rates infringes EU rules because it favors spirits produced in Greece. The Commission said this runs counter to the principle that prohibits internal taxation that affords indirect protection to domestic products or the imposition on the products of other member states any internal taxation in excess of that imposed on similar domestic products. It added that although small distilleries may benefit under certain conditions from a reduced rate of excise duty, this cannot be less than 50 percent of the standard national rate.

In September 2015, the Commission formally asked Greece to amend these rules. As Greece has not complied to the Commission's satisfaction, it has now been referred to the Court of Justice.

TAGS: compliance | tax | European Commission | tax compliance | tax incentives | law | excise duty | tax rates | Greece | tax breaks | tax reform | European Union (EU) | Europe

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