EU Seeking Sanctions Against UK Over Tax Rules On Marked Fuels

by Ulrika Lomas, Tax-News.com, Brussels

10 December 2020

The EU has referred the UK to the Court of Justice over its failure to comply with EU rules on marked fuel.

In 2018, the Court of Justice found that, by allowing the use of marked fuel for the purposes of propelling private pleasure craft – even where that fuel is not subject to any exemption from or reduction in excise duty – the UK had failed to fulfil its obligations under EU rules on the fiscal marking of gas oils and kerosene.

The Commission said that the UK has not amended its rules to comply with the ruling. In May 2020, the Commission sent a letter of formal notice to the UK under Article 260(2) of the Treaty on the Functioning of the EU (TFEU). This article covers the rules for complying with a judgment of the Court of Justice in cases where an EU member state is found to have failed to fulfil an obligation under the EU's treaties.

On December 3, 2020, the Commission said that the UK has not taken the appropriate steps to implement the Court's judgment. It has called on the Court of Justice to impose financial sanctions on the UK, in the form of a lump sum and a daily penalty payment.

The lump sum covers the period between the first judgment of the Court and either the day of full compliance by the UK with that judgment or the day of the judgment under Article 260(2) TFEU. The daily penalty payment covers the period after the judgment of the Court of Justice under Article 260(2) TFEU up to the date of compliance.

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