Paying excise duties
Affected by Brexit?
EU rules explain which products are subject to excise duties and how the duties must be applied to them.
EU law also stipulates the minimum excise duty rates to be applied, although each EU country (In this case, the 28 EU member states + Iceland, Norway and Liechtenstein.) can set their tax rates higher if they choose. The tax payable is usually based on quantity such as per kilogram, hectolitre (hl) or degree alcohol.
When do you need to pay excise duties?
There is an important difference between the moment a product becomes subject to excise duty and the moment when this duty has to be paid. Most excise goods become subject to excise duty as soon as they are produced, or imported into the EU. This duty can be suspended, meaning it doesn't have to be paid until the product is released for consumption.
If excise products are destroyed or lost due to unforeseeable reasons or natural disasters before they are released for consumption, no excise duties have to be paid.
Who has to pay excise duties?
This depends on who you're selling to. Excise duties may be paid by:
- the person or business who is the authorised warehouse-keeper of the place where excise products are produced, processed, stored, dispatched or received
- the sender, recipient, transporter or 3rd party providing a movement guarantee - who caused the goods to leave the duty-suspension arrangement (A temporary exclusion from paying excise duties allowed by a taxing authority, under certain conditions.)
- the person importing the goods, if they are imported without being put under the duty-suspension arrangement
The producer is not always responsible for paying excise duty
Emily's company sells wine in Ireland which is dispatched from France. The French company produce the wine and keep it in an authorised warehouse until they ship it to Ireland under what is known as duty-suspension. This means the French company doesn't need to pay the excise duty in their country. When Emily's company receives the shipment the wine is released for consumption, and therefore the duty-suspension is lifted. Emily's company must then pay the excise duty based on the rate in Ireland.
Check a business partner's excise number
An excise number is issued by the competent authority in the country where a business is established and identifies its registered traders, authorised warehouse-keepers and tax warehouses.
If you want to find out whether an excise authorisation number is valid or not, you can use the SEED excise authorisation system.
If your partner has a valid number, SEED will show you a list of products they are authorised to trade.
Cross-border sales - in which EU country should excise duties be paid?
Several factors are used to determine in which country you should pay excise duties, including when the products were produced or imported into the EU, when they were released for consumption, and if they were transported cross-border.
Find out where excise duties should be paid.
I am selling to
- another business and I have already paid excise duties in an EU country
- another business and I haven't paid any excise duties yet
- a consumer
In this case, you will still need to pay excise duties in the country of destination. However, you can request a refund from the authorities in the country where the excise products were first released for consumption.
To be eligible for a refund you must provide your own authority with:
- details of the shipment (including the destination country)
- evidence that you paid duty on the goods in the destination country
It is possible to transport goods and only pay excise duties in the country of destination. In this case, the duty will be paid by the buyer in the country of destination according to that country's rates. If you use this method, you must maintain the suspension of excise duties.
An EU-wide guarantee that covers transport risks must be provided to the authorities in the EU country the goods are dispatched from. This guarantee can be provided by the:
- registered consignor
- transport company
The EU country of dispatch can waive this requirement if the goods are only transported within its borders.
Similarly, no guarantee is needed for movements of energy products within the EU as long as they are transported by sea or by fixed pipeline, and if there is an agreement between the EU countries concerned.
Using an electronic administrative document (e-AD)
As well as the guarantee, you must also send an electronic administrative document (e-AD) to your responsible excise authority using the Excise movement & control system (EMCS).
The authority will then:
- check the validity of the data in the e-AD (e.g. Excise authorisation number of the seller and buyer) and provide you with a reference code
- forward the e-AD to its counterpart authority in the buyer's EU country (who will forward it to the buyer)
Before transporting any products, you must print out the e-AD with its administrative reference code and pass it on to the transport company or include the reference code on a commercial shipping document, such as a CMR.
At any time before transport begins, you can cancel the e-AD. During transport, you can also change the destination using the EMCS system.
If the EMCS system is not available, you can still transport the goods without paying excise duty if:
- they are accompanied by a paper document containing the same data as the e-AD
- you notify the responsible authority in the country of dispatch about this. Some countries insist on the trader being given permission before being allowed to leave.
Confirming receipt of the goods
The buyer has 5 working days to confirm receipt of the goods in the EMCS system, after this the responsible authority in the EU destination country:
- checks the validity of the confirmation
- registers a report of receipt and forwards this to its counterpart authority in the country of dispatch - who forwards it to you, the seller
After you receive this report, you can ask for your guarantee to be released.
Pay careful attention to the quantity indicated in the report of receipt — it is only for this confirmed quantity that you do not have to pay excise duty.
Lost or damaged goods
If any products were lost or damaged during transport — and this is confirmed by the authorities in the country where the loss or damage occurred or was detected — you can change the received and confirmed quantity on the documentation accordingly.
If you sell excise goods online or by distance selling to a consumer in another EU country, excise duty is paid in the country of purchase (where you ship the goods to).
You are responsible for paying any excise duties owed. So, even if you have already paid the duties in your own country, you must also pay in the country of destination.
Getting duty reimbursed
You can request a refund from the authorities in the EU country where the excise duties were first released for consumption. To be eligible for a refund you must provide your own authority with:
- details of the shipment, (including the destination country)
- evidence that you paid duty on the goods in the destination country
You will usually have to appoint a tax representative in the EU country where you sell the excise goods. You should also check national excise procedures before dispatching goods to consumers.
Before you ship your goods you must:
- inform the destination country's responsible authority of the delivery
- provide a guarantee that the excise duties will be paid
Most EU countries don't allow you to make cross-border distance sales of tobacco products to consumers; for the countries that do allow this you must:
- use the destination country's tax stamps or other fiscal markings to show that the excise duty was paid there
- provide health warnings in the language(s) of the destination country
- register in the both the EU country of the buyer as well as your own EU country
Territories associated with EU countries
The EU rules on excise duties do not apply in the following territories.
|EU country||Associated territory|
|Denmark||Faroe Islands, Greenland|
|Finland||The Åland Islands|
|France||French overseas territories, Guadeloupe, French Guiana, Martinique, Réunion, Mayotte, Saint-Martin|
|Germany||The Island of Heligoland, The territory of Büsingen|
|Italy||Livigno, Campione d'Italia, The Italian waters of Lake Lugano|
|Spain||Ceuta, Melilla, Canary Islands|
|United Kingdom||Channel Islands|
In some cases, excise duties paid are based on those from another country.
- Monaco businesses must pay French excise rates.
- United Kingdom Sovereign Base Areas of Akrotiri and Dhekelia must pay Cypriot excise rates.
- The Isle of Man must pay UK excise rates.