What are special excise duties?

Special excise duties are taxes levied directly or indirectly on the consumption of excise goods. Special excise duties are indirect taxes. Excise goods include:

• Energy products and electricity

• Tobacco products and tobacco substitutes

• Alcohol and alcoholic beverages (sparkling wine and intermediate products)

• Beer

• Alcopops

• Coffee

Depending on the taxable event, the tax debtor is usually the manufacturer, the importer of the goods or the tax warehouse keeper. They generally pass on the tax they pay to the final consumer.

Purpose of special excise duties

The purpose of special excise duties is to tax the consumption of goods at the place where they are intended for final consumption (the so-called destination principle). Taxation according to the so-called country of origin principle is the exception.

Excise duties in an international context: EU harmonisation vs. national peculiarities

Harmonisation of excise duties in the EU

Most types of excise duties are harmonised within the European Union and are based on a common system. The same legal framework applies to these harmonised excise duties in all Member States of the European Union. The most important set of rules is the Excise Duty Directive on the general excise duty system (Directive 2020/262/EU). It sets out the general system for all types of excise duties and defines the goods subject to excise duty. 

In addition, there are specific special regulations for each type of tax (energy tax, tobacco tax and alcohol tax), known as structural directives and tax rate directives. Member States are obliged to fully transpose the directives into national law, and this must be done on time, in terms of the directives’ content and aim. However, they are free to choose the form and means of implementation. In Germany, implementation is carried out through individual excise duty laws and regulations. Therefore, in addition to the European regulations, a large number of individual national excise duty laws must also be observed.

National excise duties in Germany

Only national regulations apply to so-called non-harmonised excise duties. Germany levies the alcopop tax, the coffee tax and the tobacco tax on tobacco substitutes as national excise duties.

In addition to the harmonised tobacco tax, Germany levies a national surtax on heated tobacco and water pipe tobacco. Although heated tobacco and water pipe tobacco are tax items harmonised under EU law, the Excise Duty Directive allows Member States to levy other indirect taxes for specific purposes under strict conditions.

Taxable goods, tax base and tax rates

EU law defines taxable goods either by means of a precise description (e.g. tobacco products) or by reference to the Combined Nomenclature (e.g. alcohol, energy products, electricity).

The taxable amount is the value of the taxable item expressed in monetary terms or a technical characteristic such as number of items, weight, volume or megawatts. However, the taxable amount may also be a combination of a specific and a value-related tax component (e.g. in the case of tobacco tax).

The tax rate is calculated by multiplying the (specific) tax base by the applicable tax rate. The tax rate applies regardless of the taxable event and is generally proportional, regardless of the total quantity subject to tax. Exceptions to this are the so-called graduated tax rate in beer tax law and the alcohol tax relief for small producers.

Taxation and tax supervision in the case of excise duties

Even if excise duty is intended to tax the use or consumption of goods, the tax does not generally arise at the time of consumption itself, but rather when the goods enter into free circulation in the excise duty area. The payment of the tax is not decisive for the taxation. Goods are released for consumption if they are not subject to a duty suspension procedure or a special customs procedure.

In the duty suspension procedure, the goods are untaxed and subject to so-called tax supervision. Companies must therefore meet strict requirements in order to take advantage of this procedure. If the goods are subject to a special customs procedure, customs supervision also ensures excise duty supervision. In some cases, however, the goods remain under tax supervision and are subject to monitoring measures by the tax authorities, even after they have been released for consumption.

In the area of harmonised excise duties, EU law specifically defines the cases that trigger a release for consumption. One example is the removal of goods from the tax suspension procedure without a subsequent tax exemption procedure. The movement of goods released for consumption from other Member States for commercial purposes and distance selling are also strictly regulated. Special provisions apply to the import of goods subject to excise duty from countries outside the European Union (so-called third countries). For certain uses, tax concessions in the form of tax exemptions and tax relief are also available.

Special aspects of tobacco tax law

A special aspect of tobacco tax law is the so-called tax stamp system, which requires the use of tax markings with a visibility effect.