Energy tax on unlisted products by reference to nearest substitute by use or properties

Energy excise duty on substitute products follows primarily the intended use. If however, there is doubt as to whether the comparative product could be used for the intended purpose, it may be appropriate to classify the product by “its properties and intended use”.

Two companies – in joined cases – used toluene and white spirit (multi-refined petrol for test and cleaning purposes) respectively as heating agents in a chemical process. Neither of these two products is listed specifically in the Energy Tax Directive or in the Energy Tax Act of German law. The directive seeks to allocate unlisted products according to whether they are used for heating, or as propellants. The German act taxes them “as the energy products to which they are closest in terms of their properties and intended use”. In the disputes at issue, both taxpayers claimed that they should be taxed as heating oils. The customs office claimed taxation at the considerably higher rate applicable to petrol on the basis of closer chemical affinity. The ECJ initially saw the use as decisive, until it emerged at the hearing that the heating oils in the directive could not be substituted for toluene or white spirit as they would not bring the reagents to the required temperature. Hence the somewhat ambivalent “either or” finding.


The ECJ case references are C-43/13 Kronos Titan (toluene) and C-44/13 Rhein-Ruhr (white spirit) joined judgments of April 3, 2014

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