Spain: Excise duty on hydrocarbons infringes EU Directive for taxation of energy products and electricity
A CJEU judgment regarding whether excise duty on hydrocarbons infringes EU Directive for taxation of energy products and electricity.
Excise duty on hydrocarbons infringes EU Directive for taxation of energy products
The Court of Justice of the European Union (CJEU) on May 30, 2024, issued a judgment regarding the compatibility of the regional tranche of the excise duty on hydrocarbons effective in Spain between 2013 and 2018 with harmonized legislation on excise duties, in particular, with the principle of a single level of taxation arising from Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity.
The matter at issue was essentially whether the Directive allows differentiated rates of taxation to coexist within the territory of the same EU member state for the same product subject to the excise duty on hydrocarbons (IEH) and the same use, depending on the part of the national territory in which that product is intended to be consumed.
Specifically, in recent years in Spain the state-wide rate of IEH, common to all territories, has been coexisting with an additional regional tranche upon which each autonomous region was free to decide.
The CJEU has now declared that the Directive precludes the existence of this regional differentiation in the tax, even where the minimum taxation thresholds required under the Directive are exceeded.
Read a May 2024 report prepared by the KPMG member firm in Spain
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