Commission refers GREECE to the Court of Justice over reduced rate of excise duty applied to "Tsipouro" and "Tsikoudià"
The European Commission is referring Greece to the Court of Justice of the EU for failing to apply the standard rate of excise duty to two specific alcoholic beverages "Tsipouro" and "Tsikoudià". According to EU law, the same excise duty rate should apply to ethyl alcohol used in the production of alcoholic beverages, unless exemptions or derogations apply. However, Greece does not have a derogation for the spirits Tsipouro or Tsikoudià and currently applies a reduced rate of excise duty (50%) to Tsipouro and Tsikoudià as well as super-reduced rate (around 6%) to the production of that same spirits by small producers, so-called 'two-day distillers'.
By applying these reduced rates, Greece is infringing EU rules since it favours spirits produced in its own country. This runs counter to the principle that prohibits internal taxation which affords indirect protection to domestic products or the imposition on the products of other Member States of any internal taxation in excess of that imposed on similar domestic products.
Furthermore, although small distilleries may benefit under certain conditions from a reduced rate of excise duty, this cannot be less than 50% of the standard national rate. By applying a super-reduced rate, the Greek scheme for two-day distillers does not respect these conditions.
"Tsipouro" and "Tsikoudià" are traditional alcoholic drinks which are produced in the north of Greece and in Crete. Both drinks have protected geographical indications.
The relevant press release may be found in this Link.
This decision shows the will of the Commission to fight for strict enforcement of the internal market and it is important because in the meantime, the legitimate spirits trade continues to suffer. Indeed, the excise tax rate on spirits in Greece more than doubled between 2009 and 2011, following which the legitimate market collapsed. Legal sales in 2016 were approximately half their 2009 levels; an enormous illicit market has evolved; and revenues from excise tax (despite the increased rates) are lower in real terms than in 2009. Sales of spirits from other EU Member States have fallen by over 2 million cases (around 25 million bottles); by contrast sales of bulk Tsipouro have exploded - officials estimate it is now as high as 24 million litres… If the drivers of illicit trade are not tackled, there is little chance of stamping out the practice.
The relevant press release may be found in this Link