The Energy Taxation Directive or ETD (2003/96/EC) is a

European directive A directive is a legal act of the European Union that requires member states to achieve particular goals without dictating how the member states achieve those goals. A directive's goals have to be made the goals of one or more new or changed na ...

, which establishes the framework conditions of the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

for the taxation of

electricity Electricity is the set of physical phenomena associated with the presence and motion of matter possessing an electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by Maxwel ...

motor An engine or motor is a machine designed to convert one or more forms of energy into mechanical energy. Available energy sources include potential energy (e.g. energy of the Earth's gravitational field as exploited in hydroelectric power gene ...

and

aviation fuel Aviation fuels are either petroleum-based or blends of petroleum and synthetic fuels, used to power aircraft. They have more stringent requirements than fuels used for ground applications, such as heating and road transport, and they contain add ...

s and most heating

fuel A fuel is any material that can be made to react with other substances so that it releases energy as thermal energy or to be used for work (physics), work. The concept was originally applied solely to those materials capable of releasing chem ...

s. The directive is part of European Union energy law; its core component is the setting of minimum tax rates for all Member States.

Purpose and scope

The directive is intended to ensure the functionality of the EU internal energy market and to avoid distortions of competition through different tax systems. In addition, it should also contribute to a low-carbon, energy-efficient economy, that is, to exert a steering effect with the aim of protecting the environment and the climate. For this purpose, it sets EU-wide minimum tax amounts for electricity and for fuels when they are used as motor fuel, aviation fuel or heating fuel. The minimum tax amounts vary according to the type of fuel (petrol, kerosene, gas oil, liquid and natural gas) and their use. When used as a heating fuel or when used in, for example, stationary engines, agriculture or construction machinery for public works, lower minimum amounts apply than when used as motor fuel. The Member States have extensive freedom in the design of taxes, the directive only requires that the

indirect tax An indirect tax (such as a sales tax, per unit tax, value-added tax (VAT), excise tax, consumption tax, or tariff) is a tax that is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of ...

es reach the minimum amounts without

value-added tax A value-added tax (VAT or goods and services tax (GST), general consumption tax (GCT)) is a consumption tax that is levied on the value added at each stage of a product's production and distribution. VAT is similar to, and is often compared wi ...

(VAT). There are a number of exceptions to the directive: * Lower taxes are permitted for commercial diesel. * Tax exemptions and reductions may be granted for environmental and health reasons. * Tax exemptions are possible for renewable energy sources and electricity for public transport. * Tax reductions are possible for energy-intensive businesses. * Some energy-intensive sectors, such as the metal industry, as well as substances that can be used for various purposes, for example for both heating and the production of chemical substances, are exempt from the directive. * There are also a number of special and transitional rules for many Member States. Member States are mandated to largely exempt commercial aviation and commercial shipping in the European Community's marine waters (referred to as 'air navigation and sea navigation'), but Member States are allowed to limit these exemptions (Preamble §23). For example, Member States are prevented from levying jet fuel tax, except on domestic flights and or with a bilateral agreement between member states (Article 14(1)(b) and (2)). No such agreements exist.

Development

The directive replaced Directive 92/81/EEC and Directive 92/82/EEC – which only harmonised mineral oil taxes – after ten years of negotiations. European primary law, which is the legal basis for the directive, requires a unanimous decision of the European Council for tax law requirements. Unanimous decisions are also required for changes to the directive. When they were introduced in 2004, the tax rates in most countries were above the minimum tax amounts. In 2008, the Council asked the Commission to come up with proposals on how to better align the Directive with the energy and climate targets of the European Union. The Commission concluded in 2011 that the directive was unsustainable and that it provided the wrong incentives. It proposed an

amendment An amendment is a formal or official change made to a law, contract, constitution, or other legal document. It is based on the verb to amend, which means to change for better. Amendments can add, remove, or update parts of these agreements. They ...

that would have set the minimum rates based on energy content and CO₂ emissions. However, the proposal met with opposition from Luxembourg, Poland and, according to internal voices, Germany as well. In 2015 the Commission removed the proposal from its work programme. According to the March 2020 feedback report of Transport and Environment, 'the Energy Taxation Directive (ETD) has not been reviewed since 2003, and needs updating if the European Commission is serious about deploying its

European Green Deal The European Green Deal, approved in 2020, is a set of policy initiatives by the European Commission with the overarching aim of making the European Union (EU) climate neutral in 2050. The plan is to review each existing law on its climate meri ...

.' It is said to be revised in 2021.ETC revision in 2021
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References

External links

Council Directive 2003/96/EC of 27 October 2003, restructuring the Community framework for the taxation of energy products and electricity
* {{DEFAULTSORT:Energy Taxation Directive 2003 in law European Union energy law European Union transport law Energy in the European Union Energy policy in Europe European Union directives European Union tax law European Green Deal

Purpose and scope

Development

See also

References

External links