EU alcohol duties system works

11 August, 2016

The EU Commission has set out the initial findings and possible revision of the alcohol excise duty structure.

The review of Directive 92/83/EEC was carried out by external business consultants Ramboll.

Specialist excise duties consultant Alan Powell said: “The significance is that, despite the Brexit referendum result, the UK is still subject to the EU rules and may be even if the UK leaves the EU, depending on trade agreements reached.

“The findings are that the system works pretty well and little change is really needed.  The Alcohol Directive has remained unchanged for more than 24 years and questions have been raised as to whether it is still fit for purpose in an EU market that has evolved over the years."

Powell goes on: “The clear findings of the review are that the directive allows intra-community trade to take place free of significant trade barriers or competitive disruptions.

“As expected, the few areas that remain contentious are in relation to minor classification matters where certain member states claim – wrongly - there are competitive distortions and loss of revenue. Products affected include ready-to-drink cocktails (RTDs) and other flavoured beverages where the UK is so innovative,” explained Powell.

He points out that: “In reality, there isn’t any need for much change to the directive if all member states were to follow the rules correctly, but they don’t and unfortunately the EU Commission hasn’t reined them back as it ought.”

The review also finds that member states are unable to apply reduced rates to small producers for all categories of alcoholic beverages, unnecessarily limiting their ability to correct potential market imbalances.  Powell observes that with the growth of craft distillers and rectifiers in the UK, there is urgent need to re-evaluate the lack of effective provision in EU law for reduced rates for small spirits producers.

Powell concluded: “The next steps will be to for the EU Commission to publish a working policy document and submit a report to the council to give the member states the opportunity to discuss and agree if they feel change is appropriate.”

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