Proposal for a Council Decision authorising France to apply a reduced rate of certain indirect taxes on ‘traditional’ rum produced in Guadeloupe, French Guiana, Martinique and Réunion and amending Decision 2007/659/EC

Council Decision 2007/659/EC of 9 October 2007, as amended by Council Decision 896/2011/EU of 19 December 2011, authorises France to apply to 'traditional' rum produced in its overseas departments and sold on the French mainland a reduced rate of excise duty which may be lower than the minimum rate of excise duty set by Directive 92/84/EEC but not more than 50% lower than the standard national excise duty on alcohol. The reduction in excise duty is limited to an annual quota of 120,000 hl of pure alcohol. The derogation expired on 31 December 2013.

The purpose of this measure is to compensate the producers from the French Overseas Departments (FOD) for their competitive disadvantage triggered by their remoteness, insularity, small size, difficult topography and climate, economic dependence on a few products, notably the sugar-cane-rum value chain, the permanence and combination of which severely restrain their development.

On 12 March 2013, the French authorities asked the Commission to submit a proposal for a Council Decision extending Council Decision 2007/659/EC under the same conditions, for a further seven years until 31 December 2020. This request was supplemented and modified on 3 July and 2 August 2013.

In particular, the French authorities asked the Commission to extend the scope of the Council Decision so as to apply also to the “cotisation sur les boissons alcooliques” (also known as the “Vignette Sécurité Sociale (VSS)), a contribution levied for the National Sickness Insurance Fund on alcoholic beverages to counter the health risks involved in immoderate use of this product, and to amend Council Decision 2007/695/EC retroactively, i.e. as of 1 January 2012 by extending it to cover the VSS so that a lower rate can be applied to ‘traditional’ rum produced in the four French outermost regions listed in Council Decision 2007/659/EC.

For the period 2014 to 2020 it is therefore proposed that France should be allowed to apply a reduced rate of excise duty and VSS of up to 50% of the respective standard rates but that the cumulative reduction in both excise duty and VSS should not be higher than 50% of the full rate for alcohol set in application of Article 3 of Directive 92/84/EEC.

It is also proposed that France should draw up a mid-term report addressed to the European Commission by no later than 31 July 2017 so that it can be assessed whether the reasons which justify the granting of the tax derogation still apply and whether the fiscal advantage granted by France remains proportionate and sufficient to support a competitive cane-sugar-rum value chain in Guadeloupe, French Guiana, Martinique and Réunion.

EUR-Lex: COM(2013)839: Follow the progress of this proposal through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2013:839:FIN

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