Judgment of the Court (Seventh Chamber) of 11 July 2019. European Commission v Hellenic Republic. Failure of a Member State to fulfil obligations — Excise duties on alcohol and alcoholic beverages — Article 110 TFEU — Directive 92/83/EEC — Directive 92/84/EEC — Regulation (EC) No 110/2008 — Application of a lower rate of duty to the manufacture of national products ‘tsipouro’ and ‘tsikoudia’. Case C-91/18.

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Document number

  • ECLI identifier: ECLI:EU:C:2019:600

  • Celex-Nr.: 62018CJ0091

Authentic language

  • Authentic language: Greek

Dates

  • Date of document: 11/07/2019

  • Date lodged: 08/02/2018

Classifications

Miscellaneous information

  • Author: Court of Justice

  • Country or organisation from which the decision originates: Greece

  • Form: Judgment

Procedure

  • Type of procedure: Action for failure to fulfil obligations - successful

  • Applicant: Commission

  • Defendant: Greece

  • Judge-Rapportuer: Kumin

  • Advocate General: Sharpston

Legal doctrine

1. Rigaux, Anne: Accises, Europe 2019 Mois Comm. nº 10 p.36-37 (FR)

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Document text

Provisional text

JUDGMENT OF THE COURT (Seventh Chamber)

11 July 2019 (*)

(Failure of a Member State to fulfil obligations — Excise duties on alcohol and alcoholic beverages — Article 110 TFEU — Directive 92/83/EEC — Directive 92/84/EEC — Regulation (EC) No 110/2008 — Application of a lower rate of duty to the manufacture of national products ‘tsipouro’ and ‘tsikoudia’)

In Case C‑91/18,

ACTION for failure to fulfil obligations under Article 258 TFEU, brought on 8 February 2018,
European Commission, represented by A. Kyratsou and F. Tomat, acting as Agents,

applicant,

v

Hellenic Republic, represented by M. Tassopoulou and D. Tsagkaraki, acting as Agents,

defendant,

THE COURT (Seventh Chamber),

composed of T. von Danwitz, President of the Chamber, C. Vajda and A. Kumin (Rapporteur), Judges,

Advocate General: E. Sharpston,

Registrar: A. Calot Escobar,

having regard to the written procedure,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment
1

By its application, the European Commission requests the Court to declare that

– by adopting and maintaining in force legislation which applies a rate of excise duty 50% below the standard national rate to tsipouro and tsikoudia manufactured by ‘systematic distilleries’, whereas alcoholic beverages imported from other Member States are subject to the standard rate of excise duty, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in conjunction with Article 23(2) of Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages (OJ 1992 L 316, p. 21), and under Article 110 TFEU, and

– by adopting and maintaining in force legislation which applies, on conditions laid down by that legislation, a much reduced rate of excise duty to tsipouro and tsikoudia manufactured by small ‘occasional distilleries’, whereas alcoholic beverages imported from other Member States are subject to the standard rate of excise duty, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in conjunction with Article 22(1) of Directive 92/83 and with Article 3(1) of Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise duty on alcohol and alcoholic beverages (OJ 1992 L 316, p. 29), and under Article 110 TFEU.

Legal context
EU law
2

The 16th, 17th and 20th recitals of Directive 92/83 read as follows:

‘Whereas it is possible to permit Member States to apply reduced rates or exemptions for certain products of a regional and traditional nature;

Whereas, in the cases where Member States are permitted to apply reduced rates, such reduced rates should not cause distortion of competition within the internal market;

Whereas, however, it is possible to permit Member States an option to apply exemptions tied to end-uses within their territory’.

‘1. Member States shall apply an excise duty to ethyl alcohol in accordance with this Directive.

2. Member States shall fix their rates in accordance with Directive 92/84/EEC.
4

Article 20 of that directive provides:

‘For the purposes of this Directive the term “ethyl alcohol” covers:

– all products with an actual alcoholic strength by volume exceeding 1.2% volume which fall within CN codes 2207 and 2208, even when those products form part of a product which falls within another chapter of the CN,

…’

5

Article 21 of that directive provides:

‘The excise duty on ethyl alcohol shall be fixed per hectolitre of pure alcohol at 20 °C, and shall be calculated by reference to the number of hectolitres of pure alcohol. Subject to the provisions of Article 22, Member States shall charge the same rate of duty on all products chargeable with the duty on ethyl alcohol.’

6

Article 22 of that directive provides:

‘1. Member States may apply reduced rates of excise duty to ethyl alcohol produced by small distilleries within the following limits:

– the reduced rates, which may fall below the minimum rate, shall not be applied to undertakings producing more than 10 hectolitres of pure alcohol per year. However, Member States which applied reduced rates on 1 January 1992 to undertakings producing between 10 hectolitres and 20 hectolitres of pure alcohol per year may continue to do so,

– the reduced rates shall not be set more than 50% below the standard national rate of excise duty.

2. For the purposes of the reduced rates, the term “small distillery” shall mean a distillery which is legally and economically independent of any other distillery and which does not operate under licence.

4. Member States may lay down provisions whereby the alcohol produced by small producers shall be released for free circulation as soon as it is obtained (provided the producers have not themselves carried out any intra-Community transactions) without being subjected to the tax warehousing arrangements, and be taxed definitively on a flat-rate basis.

…’

7

Article 23 of that directive provides:

‘The following Member States may apply a reduced rate, which may fall below the minimum rate but not be set more than 50% below the standard national rate of duty on ethyl alcohol, to the following products:

2. the Hellenic Republic, in respect of those aniseed flavoured spirit drinks defined in [Council] Regulation (EEC) No 1576/89 [of 29 May 1989 laying down general rules on the definition, description and presentation of spirit drinks (OJ 1989 L 160, p. 1)] which are colourless and have a sugar content of 50 grams or less per litre, and in which at least 20% of the alcoholic strength of the final product is composed of alcohol flavoured by distillation in traditional discontinuous copper stills with a capacity of 1 000 litres or less.’

8

Regulation No 1576/89 was repealed and replaced by Regulation (EC) No 110/2008 of the European Parliament and of the Council of 15 January 2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks and repealing Council Regulation (EEC) No 1576/89 (OJ 2008 L 39, p. 16).

‘Spirit drinks shall be classified into categories according to the definitions laid down in Annex II.’

10

In accordance with Annex II to that regulation:

‘…

6. Grape marc spirit or grape marc

(a) Grape marc spirit or grape marc is a spirit drink which meets the following conditions:

(i) it is produced exclusively from grape marc fermented and distilled either directly by water vapour or after water has been added;

(ii) a quantity of lees may be added to the grape marc that does not exceed 25 kg of lees per 100 kg of grape marc used;

(iii) the quantity of alcohol derived from the lees shall not exceed 35% of the total quantity of alcohol in the finished product;

(iv) the distillation shall be carried out in the presence of the marc itself at less than 86% vol.;

(v) redistillation at the same alcoholic strength is authorised;

(vi) it contains a quantity of volatile substances equal to or exceeding 140 grams per hectolitre of 100% vol. alcohol and has a maximum methanol content of 1 000 grams per hectolitre of 100% vol. alcohol.

(b) The minimum alcoholic strength by volume of grape marc spirit or grape marc shall be 37.5%.

(c) No addition of alcohol as defined in Annex I(5), diluted or not, shall take place.

(d) Grape marc spirit or grape marc shall not be flavoured. This shall not exclude traditional production methods.

(e) Grape marc spirit or grape marc may only contain added caramel as a means to adapt colour.

28. Anis

(a) Anis is an aniseed-flavoured spirit drink whose characteristic flavour is derived exclusively from anise (Pimpinella anisum L.) and/or star anise (Illicium verum Hook f.) and/or fennel (Foeniculum vulgare Mill.).

(b) The minimum alcoholic strength by volume of anis shall be 35%.

(c) Only natural flavouring substances and preparations as defined in Article 1(2)(b)(i) and Article 1(2)(c) of Directive 88/388/EEC may be used in the preparation of anis.

29. Distilled anis

(a) Distilled anis is anis which contains alcohol distilled in the presence of the seeds referred to in category 28(a), and in the case of geographical indications mastic and other aromatic seeds, plants or fruits, provided such alcohol constitutes at least 20% of the alcoholic strength of the distilled anis.

(b) The minimum alcoholic strength by volume of distilled anis shall be 35%.

(c) Only natural flavouring substances and preparations as defined in Article 1(2)(b)(i) and Article 1(2)(c) of Directive 88/388/EEC may be used in the preparation of distilled anis.

…’

11

Under Article 15(2) of that regulation, geographical indications of spirit drinks are registered in Annex III to that regulation. Points 6 and 29 of that annex read as follows:

Product category

Geographical indication

Country of origin (the precise geographical origin is described in the technical file)

6. Grape marc spirit

Marc de Champagne/Eau-de-vie de marc de Champagne

France

Aguardente Bagaceira Bairrada

Portugal

Orujo de Galicia

Spain

Grappa

Italy

Τσικουδιά/Tsikoudia

Greece

Τσικουδιά Κρήτης/Tsikoudia  of Crete

Greece

Τσίπουρο/Tsipouro

Greece

Τσίπουρο Μακεδονίας/Tsipouro of Macedonia

Greece

Τσίπουρο Θεσσαλίας/Tsipouro of Thessaly

Greece

Τσίπουρο Τυρνάβου/Tsipouro of Tyrnavos

Greece

Eau-de-vie de marc de marque nationale luxembourgeoise

Luxembourg

Ζιβανία/Τζιβανία/Ζιβάνα/Zivania

Cyprus

Törkölypálinka

Hungary

29. Distilled Anis
Ouzo/Oύζο

Cyprus, Greece

Ούζο Μυτιλήνης/Ouzo of Mitilene

Greece

Ούζο Πλωμαρίου/Ouzo  of Plomari

Greece

Ούζο Καλαμάτας/Ouzo of Kalamata

Greece

Ούζο Θράκης/Ouzo of Thrace

Greece

Ούζο Μακεδονίας/Ouzo of Macedonia

Greece

‘As from 1 January 1993, the minimum rate of excise duty on alcohol … shall be fixed at [EUR] 550 per hectolitre of pure alcohol.’

Greek law

13

Article 4(3)(b) of Law 3845/2010 (FEK A’65/6.5.2010) provides:

‘Excise duty on ethyl alcohol shall be applied at a reduced rate of fifty per cent (50%) compared to the standard rate in force to ethyl alcohol intended for the manufacture of ouzo or contained in tsipouro or tsikoudia. The reduced rate shall be fixed at one thousand two hundred and twenty-five euros (EUR 1 225) per hectolitre of anhydrous ethyl alcohol.’

14

Article 82 of Law 2960/2001 (FEK A’265/22.11.2001), as amended by Law 2969/2001 (FEK A’281/18.12.2001), headed ‘Taxation of tsipouro or tsikoudia from “occasional” distillers of the first category’, is worded as follows:

‘1. Tsipouro and tsikoudia manufactured from grape marc spirit and other authorised substances by small (occasional) distillers in accordance with Article 7(E) of Law 2969/2001 shall be taxed at a flat rate of fifty-nine euro cents (EUR 0.59) per kilogram of the finished product.

2. The tax shall be paid on the issue of the authorisation to distil, on the basis of the grantee’s declaration of the quantity of grape marc or other authorised substances he intends to use and the quantity of tsipouro or tsikoudia he will produce.

3. The aforesaid product shall be released for consumption without restrictions as to place or time, subject to the issue of the tax documents provided for by law.’

15

Article 7(E)(1), (3) and (8) of Law 2629/2001 provides:

‘(1) Wine growers and producers of the other substances referred to in paragraph 2 shall be authorised to distil the raw materials of their production … during a period of 2 months defined between 1 August of each year and 31 July of the following year for each municipality or municipal unit or community by the head of the customs region concerned. …

(3) For distilling, an authorisation is required, issued by the customs office in whose district the still which will be used for distilling is installed. The duration may not exceed a maximum of 8 periods of 24 hours, successive or separated, for each producer and shall depend on the quantity of raw materials intended to be distilled. …

(8) The finished product shall be released for consumption by the producers themselves or by purchasers, with the tax documents provided for by the Code of books and registers, in bulk, in glass receptacles with no form of standardisation. If the producer distributes the product himself, it shall be accompanied by the authorisation to distil and the receipt for payment of excise duty.’

Pre-litigation procedure
16

A complaint was made to the Commission about the rates of excise duty applicable under the Greek legislation to the alcoholic beverages tsipouro and tsikoudia. After examining the complaint, the Commission on 28 October 2011 sent the Hellenic Republic a letter of formal notice stating that it had failed to fulfil its obligations under Directives 92/83 and 92/84 and under Article 110 TFEU.

17

The Hellenic Republic replied by letter of 11 April 2012, informing the Commission inter alia that it intended to amend the national legislation concerning small distillers.

18

In the absence of information on the legislative amendments announced, requested by letter of 20 June 2012 addressed to the Hellenic Republic, the Commission on 27 September 2013 sent a supplementary letter of formal notice, to which the Hellenic Republic replied on 11 April 2014.

19

Since it did not consider the Hellenic Republic’s reply satisfactory, the Commission sent the Hellenic Republic a reasoned opinion on 25 September 2015, in which it maintained the criticisms set out in its letter and supplementary letter of formal notice. It called on the Hellenic Republic to take the measures necessary to comply with the reasoned opinion within 2 months from receipt of that opinion.

20

In its reply of 21 January 2016 the Hellenic Republic expressed its intention to amend the existing national legislation, first by extending the rate of excise duty reduced by 50% compared to the standard national rate for tsipouro and tsikoudia to other grape marc spirits from other Member States, and second, as regards the manufacture of tsipouro and tsikoudia by small distillers, by applying that rate of excise duty reduced by 50% with a limitation of production to 120 kilograms a year per producer for private consumption alone with all commercial sales being prohibited.

21

On 11 February 2016 the Commission stated to the Hellenic Republic that that legislative project could not comply with its obligations under Directives 92/83 and 92/84 and under Article 110 TFEU.

22

Having received no additional information from the Hellenic Republic, the Commission brought the present action.

The action
23

In support of its action, the Commission puts forward two heads of claim, alleging, first, infringement of Articles 19 and 21 in conjunction with Article 23(2) of Directive 92/83 and of Article 110 TFEU and, second, infringement of Articles 19 and 21 in conjunction with Article 22(1) of Directive 92/83 and with Article 3(1) of Directive 92/84 and of Article 110 TFEU.

First head of claim: infringement of Articles 19 and 21 in conjunction with Article 23(2) of Directive 92/83, and of Article 110 TFEU
Arguments of the parties
24

The Commission’s first head of claim consists of two parts.

25

By the first part of this head of claim, the Commission submits that the Greek excise duty legislation applicable to tsipouro and tsikoudia made by distillery undertakings known as ‘systematic distilleries’ is not compatible with Articles 19 and 21 in conjunction with Article 23(2) of Directive 92/83.

26

The Commission submits that, under Articles 19 and 21 of Directive 92/83, the Hellenic Republic is required to apply the standard rate of excise duty to tsipouro and tsikoudia, not a rate reduced by 50% compared to that rate. No exception to that principle may be allowed unless it is expressly provided for by EU law. Article 23 of that directive allows exceptions only for two products, neither of which is tsipouro or tsikoudia.

27

An extensive interpretation of Article 23 of Directive 92/83, which is a derogating provision, is ruled out. In accordance with Regulation No 1576/89, which was replaced by Regulation No 110/2008, tsipouro and tsikoudia belong to a category of spirit drinks completely different from that to which ouzo belongs, referred to in Article 23(2) of Directive 92/83. If the Hellenic Republic takes the view that, having regard to the similarity of the products concerned, tsipouro and tsikoudia ought to be included in the derogating provision constituted by Article 23 of that directive on the same basis as ouzo, it should take the necessary steps to that end at legislative level.

28

In this context, the Commission further observes that, according to the Court’s case-law, the EU legislature had no intention of allowing the Member States to establish, at their discretion, schemes derogating from those laid down by Directive 92/83 (judgment of 10 April 2014, Commission v Hungary, C‑115/13, not published, EU:C:2014:253, paragraph 35).

29

In the second part of the first head of claim, the Commission complains that the Hellenic Republic has failed to fulfil its obligations both under the first paragraph of Article 110 TFEU and under the second paragraph of Article 110 TFEU.

30

As regards the first paragraph of Article 110 TFEU, which provides that ‘no Member State shall impose, directly or indirectly, on the products of other Member States any … taxation … in excess of that imposed directly or indirectly on similar domestic products’, the Commission argues that the concept of similarity must be given an extensive interpretation.

31

In this respect, the Commission submits that, in order to assess the similarity of two products, their objective characteristics must be examined in particular. The characteristics listed in point 6 of Annex II to Regulation No 110/2008 relating to grape marc spirit or grape marc are those to which tsipouro and tsikoudia also correspond. Those two products are thus similar at least to all the imported spirit drinks which form part of the category of ‘grape marc spirit or grape marc’ within the meaning of Regulation No 110/2008.

32

In this connection, the Commission states that in its view the way in which a drink is consumed cannot be regarded as a criterion for distinguishing between two drinks, since the habits of consumers vary and do not therefore display the quality of an immutable criterion.

33

As regards the second paragraph of Article 110 TFEU, under which ‘no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products’, the Commission considers that that provision prohibits all forms of indirect fiscal protectionism in the case of imported products which, although not similar to national products, are nonetheless in a relation of even partial, indirect or potential competition with some of them.

34

The Commission observes in this respect that tsipouro and tsikoudia may be in competition with spirit drinks such as whisky, gin and vodka.

35

Finally, the Commission states that, in its view, sales of imported spirit drinks in Greece have declined since 2010 compared to sales of spirit drinks of national production, which demonstrates the protective effect of the Greek excise duty legislation which is the subject of the present action.

36

The Hellenic Republic accepts, first, as regards the Commission’s claim that the Greek excise duty legislation applicable to tsipouro and tsikoudia manufactured by ‘systematic distilleries’ is not compatible with Articles 19 and 21 in conjunction with Article 23(2) of Directive 92/83, that ouzo and tsipouro and tsikoudia belong to different categories of alcoholic beverages under Regulation No 110/2008, with ouzo in the category ‘distilled anis’ and tsipouro and tsikoudia in the category ‘grape marc spirit or grape marc’.

37

According to the Hellenic Republic, that does not necessarily mean, however, that those spirit drinks possess different characteristics or qualities. Application of the same rate of excise duty reduced by 50% to tsipouro and tsikoudia and to ouzo could thus be based on Article 23(2) of Directive 92/83 despite the fact that that provision must be interpreted strictly.

38

In support of its approach, the Hellenic Republic argues that Article 23(2) of Directive 92/83 must be interpreted in the light of the requirements of higher-ranking rules of law, in this case the requirements of Article 110 TFEU. The aim of that provision of primary law is to prohibit all tax discrimination.

39

Dismissing the Commission’s argument that Article 110 TFEU aims to protect products from other Member States whereas the product to which the Hellenic Republic refers in its consideration of Article 23(2) of Directive 92/83 is ouzo, of domestic production, the Hellenic Republic also rejects the Commission’s complaint of failure to fulfil its obligations under Article 110 TFEU.

40

Thus the Hellenic Republic submits, second, that the first paragraph of Article 110 TFEU, prohibiting the Member States from imposing on the products of other Member States any taxation in excess of that imposed on similar domestic products, is not infringed by the Greek excise duty legislation at issue. According to the Hellenic Republic, tsipouro and tsikoudia, whether or not flavoured, differ from other imported spirit drinks not only such as whisky, gin or vodka but also such as grappa or zivania and, in general, spirit drinks belonging to the category of grape marc spirit.

41

In this connection the Hellenic Republic observes that the conditions laid down in point 6 of Annex II to Regulation No 110/2008, with which grape marc spirit must comply, are drafted in very general terms and do not describe the essential characteristic qualities of the product. Thus no account is taken, for example, of the raw material used, marc, or of the method of distillation used, both of which have a decisive influence on the organoleptic characteristics of the spirit obtained.

42

Third, in connection with the second paragraph of Article 110 TFEU, prohibiting the Member States from imposing on the products of other Member States internal taxation of such a nature as to afford indirect protection to other products, the Hellenic Republic again contests the existence of a competitive relationship between tsipouro and tsikoudia on the one hand and other spirit drinks, such as whisky, gin or vodka and those belonging to the category of grape marc spirit, on the other.

43

In this connection the Hellenic Republic rejects, last, the Commission’s claims concerning the decline in consumption of imported spirit drinks. It observes that the period from 2010 to 2012 was a period of crisis and could not therefore be taken into account for drawing reliable conclusions as to the consumption of the various categories of spirit drinks. The protective nature of the Greek tax legislation for tsipouro and tsikoudia, alleged by the Commission, has not therefore been proved.

Findings of the Court
44

As a preliminary point, it must be noted that where a particular matter has been exhaustively harmonised at EU level, national measures relating to that matter must be assessed in the light of the provisions of the harmonising measure and not those of the FEU Treaty (see, to that effect, judgments of 14 March 2013, Commission v France, C‑216/11, EU:C:2013:162paragraph 27 and the case-law cited, and of 10 April 2014, Commission v Hungary, C‑115/13, not published, EU:C:2014:253, paragraph 38).

45

Directive 92/83 exhaustively harmonised the structures of excise duties on alcohol and alcoholic beverages within the European Union. Thus, under Articles 19 and 21 of that directive, Member States are to fix, in accordance with Directive 92/84, in principle, the same rate of excise duty for all products chargeable with the duty on ethyl alcohol, with the exceptions, allowing Member States on certain conditions to fix that rate at a level below the minimum rate, being set out precisely in Articles 22 and 23 of Directive 92/83 (see, to that effect, judgment of 10 April 2014, Commission v Hungary, C‑115/13, not published, EU:C:2014:253, paragraphs 38 and 39).

46

It follows that, in its assessment of the complaints put forward by the Commission, the Court must confine itself to the interpretation of Directives 92/83 and 92/84.

47

In the present case, the national legislation at issue applies a reduced rate of excise duty 50% lower than the standard national rate to tsipouro and tsikoudia manufactured by ‘systematic’ distilleries, while alcoholic beverages imported from other Member States are subject to the standard rate of duty.

48

As regards the exception to the principle, deriving from Articles 19 and 21 of Directive 92/83, of the application of the same rate of excise duty to all products chargeable to the duty on ethyl alcohol, laid down in Article 23 of that directive, that derogation unequivocally relates, as far as the Hellenic Republic is concerned, exclusively to one ‘aniseed flavoured spirit drink’, namely ouzo.

49

As a derogating provision creating an exception to the general principle of fixing excise duty rates, Article 23(2) of Directive 92/83 must be interpreted strictly.

50

With reference to exemptions from or reductions of the specific rates of excise duty laid down by Directive 92/83 for certain categories of beverages, the Court has previously held that, having regard to the objectives of that directive and the wording of its 17th recital referring to the prohibition of distortion of competition in the internal market, the EU legislature did not intend to allow the Member States to introduce, at their discretion, schemes derogating from those laid down by Directive 92/83 (judgment of 10 April 2014, Commission v Hungary, C‑115/13, not published, EU:C:2014:253, paragraph 35).

51

While it follows from the above that Articles 19 and 21 in conjunction with Article 23(2) of Directive 92/83 must be interpreted as meaning that, since tsipouro and tsikoudia, in the present state of EU legislation, are not among the products referred to by the derogating scheme in Article 23(2) of that directive, they are subject to the same rate of excise duty as all ethyl alcohol products falling within the scope of the directive, it must nonetheless be ascertained whether that interpretation is ruled out by an assessment of those provisions in the light of Article 110 TFEU. The Hellenic Republic submits that, following that approach, Article 23(2) of Directive 92/83 should be interpreted broadly, including tsipouro and tsikoudia within its scope.

52

It must be recalled that, according to settled case-law, the aim of Article 110 TFEU is to ensure free movement of goods between the Member States in normal conditions of competition. To that end, Article 110 intends to eliminate all forms of protection which may result from the application of internal taxation that discriminates against products from other Member States (see, to that effect, judgment of 7 April 2014, TatuC‑402/09, EU:C:2011:219, paragraph 34 and the case-law cited).

53

In this context, the Court has held that the first paragraph of Article 110 TFEU seeks to guarantee the complete neutrality of internal taxation as regards competition between products already on the domestic market and imported products (see, to that effect, judgment of 7 April 2014, TatuC‑402/09, EU:C:2011:219, paragraph 35 and the case-law cited).

54

It thus follows clearly from the wording of Article 110 TFEU that the principle of fiscal neutrality relied on by the Hellenic Republic refers solely to equal treatment of domestic products and imported products. The products to which the Hellenic Republic refers in connection with Article 23(2) of Directive 92/83, in this case ouzo and tsipouro and tsikoudia, are products of domestic production.

55

That being so, it must be recalled that, although the Court has acknowledged that the principle of fiscal neutrality may reflect, in a different context, the principle of equal treatment (see, to that effect, judgment of 10 November 2011, The Rank GroupC‑259/10 and C‑260/10, EU:C:2011:719, paragraph 61 and the case-law cited), it explained that the principle of fiscal neutrality does not in itself allow the scope of an exemption to be extended. That principle is not a rule of primary law but a principle of interpretation, to be applied concurrently with the principle that exemptions must be interpreted strictly (see, to that effect, judgment of 19 July 2012, Deutsche Bank, C‑44/11, EU:C:2012:484, paragraph 45).

56

As stated in paragraph 48 above, Article 23(2) of Directive 92/83 is a derogating provision that is clear and precise.

57

The Hellenic Republic’s approach aiming at a broad interpretation, in the light of Article 110 TFEU, of that provision to include tsipouro and tsikoudia must therefore be rejected.

58

In those circumstances, the first head of claim must be upheld.

Second head of claim: infringement of Articles 19 and 21 in conjunction with Article 22(1) of Directive 92/83 and with Article 3(1) of Directive 92/84, and of Article 110 TFEU
Arguments of the parties
59

The Commission’s second head of claim consists of two parts.

60

By the first part of this head of claim, the Commission submits that the Greek excise duty legislation applicable to tsipouro and tsikoudia manufactured by small ‘occasional distillers’ is not compatible with Articles 19 and 21 in conjunction with Article 23(2) of Directive 92/83 and with Article 3(1) of Directive 92/84.

61

The Commission observes that, under Articles 19 and 21 of Directive 92/83, the Hellenic Republic is required in principle to apply the same rate of excise duty, fixed in accordance with Directive 92/84, to all products chargeable to the duty on ethyl alcohol. Only exceptionally, and within the limits set by Article 22 of that directive, can Member States apply reduced rates of excise duty to that alcohol where it is produced by small distilleries.

62

The Commission states that, under the Greek excise duty legislation at issue, first, tsipouro and tsikoudia produced by small distillers are taxed at EUR 0.59 per kilogram, which corresponds to EUR 59 per hectolitre. That tax is clearly lower than the 50% reduction allowed by Article 22(1) of Directive 92/83 from the minimum standard national rate of excise duty fixed, in accordance with Article 3(1) of Directive 92/84, at EUR 550 per hectolitre of pure alcohol.

63

Second, according to the Commission, the Greek legislation does not, for small ‘occasional’ distilleries, provide for a production ceiling within the limits determined in Article 22(1) of Directive 92/83, in this case a production of less than 10 hectolitres of pure alcohol a year.

64

In the second part of the second head of claim, the Commission complains that the Hellenic Republic did not comply, as regards its excise duty legislation applicable to tsipouro and tsikoudia manufactured by small ‘occasional’ distillers, either with its obligations under the first paragraph of Article 110 TFEU or with those under the second paragraph of Article 110 TFEU. The Commission refers in this respect to its arguments set out in paragraphs 29 to 35 above.

65

The Hellenic Republic observes that small ‘occasional’ distillers of tsipouro and tsikoudia operate in a specific national category which takes account of a long-standing traditional practice. Sales of the tsipouro and tsikoudia produced on very simple equipment take place only in bulk, between private individuals, and have never been the subject of intra-Community transactions.

66

As regards the one-off flat rate duty applied, as provided for in Article 22(4) of Directive 92/83, it is symbolic in nature, its purpose being primarily to monitor compliance with the very strict system within which small ‘occasional’ distillers have to operate.

67

In this connection, the Hellenic Republic refers also to the minutes of the ‘Ecofin’ Council of 19 October 1992, according to which the Member States which traditionally exempt the production of small quantities of alcohol for private consumption may continue to apply those exemptions.

Findings of the Court
68

As noted in paragraph 45 above, the structures of excise duties on alcohol and alcoholic beverages are harmonised within the European Union, in particular as regards the conditions on which Member States may fix the rate of duty at a level lower than the minimum rate. Consequently, the second head of claim must be considered only with respect to the provisions of Directives 92/83 and 92/84 that are the subject of its first part.

69

The Commission submits that the Greek excise duty legislation provides, for tsipouro and tsikoudia manufactured by small ‘occasional’ distillers, for tax of EUR 59 per hectolitre, which is clearly below the 50% reduction allowed under Article 22(1) of Directive 92/83 compared to the minimum standard national rate of duty fixed, in accordance with Article 3(1) of Directive 92/84, at EUR 550 per hectolitre of pure alcohol.

70

On this point, it should be noted, first, that it is common ground that the minimum rates of excise duty on ethyl alcohol, laid down in Articles 19 and 21 of Directive 92/83 in conjunction with Article 3 of Directive 92/84, are not complied with by the Greek excise duty legislation relating to tsipouro and tsikoudia manufactured by small ‘occasional’ distillers.

71

It must be observed, next, that Directive 92/83 indeed provides for exemptions from or reductions of specific rates of excise duty with respect to certain categories of beverages or certain Member States. However, in view of the objectives of that directive and the wording of its 17th recital stating that any reduced rates should not cause distortion of competition within the internal market, it must be concluded that the EU legislature did not intend to allow the Member States to establish, at their discretion, schemes derogating from those laid down by Directive 92/83.

72

Thus, according to settled case-law of the Court, as regards the effects on the internal market of exemptions of small quantities of ethyl alcohol, where a matter is harmonised at EU level, national measures relating to that matter must be assessed in the light of the provisions of the harmonising measure (see, to that effect, judgment of 10 April 2014, Commission v HungaryC‑115/13, not published, EU:C:2014:253, paragraph 38 and the case-law cited).

73

In that context, Directives 92/83 and 92/84 determine the minimum rates of excise duty on ethyl alcohol without making their application conditional on the effect that the production and private consumption of that alcohol could have on the market. Consequently, the Hellenic Republic’s argument that the sale of tsipouro and tsikoudia between private individuals was never the subject of intra-Community transactions is of no relevance.

74

As regards, finally, the Hellenic Republic’s argument that small ‘occasional’ distillers of tsipouro and tsikoudia operate in a specific national context which takes account of a long-standing traditional practice, it must be stressed that, although the 20th recital of Directive 92/83 states that the Member States are allowed to apply reduced rates of excise duty or exemptions for certain products of a regional and traditional nature, that does not mean that a national tradition can in itself release Member States from their obligations under EU law (see, to that effect, judgment of 10 April 2014, Commission v HungaryC‑115/13, not published, EU:C:2014:253, paragraph 44 and the case-law cited).

75

For the sake of completeness, it should also be pointed out that a statement in the minutes of an ‘Ecofin’ Council cannot call into question the analysis in paragraphs 71 to 74 above. According to settled case-law, declarations formulated in the course of preparatory work leading to the adoption of a directive cannot be used for the purpose of interpreting that directive where no reference is made to the content of the declarations in the wording of the provision in question, and they therefore have no legal significance (judgment of 10 April 2014, Commission v HungaryC‑115/13, not published, EU:C:2014:253, paragraph 36 and the case-law cited).

76

It follows from the above that, by adopting and applying legislation under which, on the conditions defined by it, the production of tsipouro and tsikoudia by small ‘occasional’ distillers is subject to a rate of excise duty of EUR 59 per hectolitre, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in conjunction with Article 22(1) of Directive 92/83 and with Article 3(1) of Directive 92/84.

77

Accordingly, the second head of claim must be upheld.

78

In the light of all the above considerations, it must be held that

– by adopting and maintaining in force legislation which applies a rate of excise duty 50% below the standard national rate to tsipouro and tsikoudia manufactured by ‘systematic distilleries’, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in conjunction with Article 23(2) of Directive 92/83, and

– by adopting and maintaining in force legislation which applies, on conditions laid down by that legislation, a much reduced rate of excise duty to tsipouro and tsikoudia manufactured by small ‘occasional’ distillers, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in conjunction with Article 22(1) of Directive 92/83 and with Article 3(1) of Directive 92/84.

Costs
79

Under Article 138(1) of the Rules of Procedure of the Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the Hellenic Republic has been unsuccessful in its submissions, the Hellenic Republic must be ordered to pay the costs.

On those grounds, the Court (Seventh Chamber) hereby:

1. Declares that
– by adopting and maintaining in force legislation which applies a rate of excise duty 50% below the standard national rate to tsipouro and tsikoudia manufactured by ‘systematic distilleries’, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in conjunction with Article 23(2) of Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages, and
– by adopting and maintaining in force legislation which applies, on conditions laid down by that legislation, a much reduced rate of excise duty to tsipouro and tsikoudia manufactured by small ‘occasional’ distillers, the Hellenic Republic has failed to fulfil its obligations under Articles 19 and 21 in conjunction with Article 22(1) of Directive 92/83 and with Article 3(1) of Council Directive 92/84/EEC of 19 October 1992on the approximation of the rates of excise duty on alcohol and alcoholic beverages;
2. Orders the Hellenic Republic to pay the costs.

[Signatures]

* Language of the case: Greek.

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