The European Parliament adopted by 672 votes to 7, with 8 abstentions, under a special legislative procedure (consultation), a legislative resolution on the proposal for a Council decision authorising Portugal to apply a reduced rate of excise duty on certain alcoholic products produced in the autonomous regions of Madeira and the Azores.

Parliament approved the Commission's proposal without amendment.

The purpose of the proposal is to adopt a new decision authorising Portugal to apply a reduced rate of excise duty in the autonomous regions of Madeira and the Azores. It allows the Portuguese State:

- to reduce excise duty by up to 75% compared with the standard national rate on locally produced rum, liqueur and brandy sold in Madeira and the Azores;

- to reduce the excise duty by a maximum of 50% compared to the standard national rate on rum, liqueur and brandy produced in Madeira and the Azores but sold in mainland Portugal.

The Committee on Regional Development adopted, under the consultation procedure, the report by Younous OMARJEE (GUE/NGL, FR) on the proposal for a Council decision authorising Portugal to apply a reduced rate of excise duty on certain alcoholic products produced in the autonomous regions of Madeira and the Azores.

The committee recommended that the European Parliament approve the proposed decision without amendment.

As a reminder, the current Council Decision No 376/2014/EU authorises Portugal to apply reduced rates of excise duty of up to 75% of the standard national rate to rum and liqueurs produced and consumed in Madeira and to liqueurs and eau-de-vie produced and consumed in the Azores.

The Commission proposes to adopt a new decision authorising Portugal to apply a reduced rate of excise duty in the autonomous regions of Madeira and the Azores.

The proposal:

- extends the current derogation by allowing the Portuguese state to reduce excise duty by up to 75% compared to the normal rate on locally produced rum, liqueurs and eaux-de-vie sold in Madeira and the Azores;

- introduces a new provision allowing the Portuguese state to reduce excise duty by up to 50% compared to the normal rate on rum, liqueur and eau-de-vie produced in Madeira and the Azores but sold in mainland Portugal.

This derogation from taxation rules is justified by its extremely limited scope and by the economic difficulties inherent to production in the outermost regions.

PURPOSE: to authorise Portugal to apply a reduced rate of excise duty on certain alcoholic products produced in the autonomous regions of Madeira and the Azores.

PROPOSED ACT: Council Decision.

ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion.

BACKGROUND: the current decision authorises Portugal to apply excise duty rates reduced by up to 75% of the standard Portuguese rates to rum and liqueurs produced and consumed in Madeira and liqueurs and eaux-de-vie produced and consumed in the Azores.

The objective of this measure is to compensate the producers of the Portuguese outermost regions for their competitive disadvantage triggered by the Portuguese outermost regions’ remoteness, insularity, small size, difficult topography and climate and economic dependence on a few products, which severely restrain their development.

In view of the fact that the current Decision expires on 31 December 2020, the Commission has launched an external study to evaluate the current regime. The study found that, compared to their counterparts on the mainland, producers in the outermost regions continue to bear higher production costs, which are currently offset by the reduction in the rate of excise duty.

The external study notes rum is now being produced in the Azores, but is not included in the current regime. However, the regime covers rum produced in Madeira, which leads to an uneven playing field amongst rum producers of the two outermost regions.

The study notes that further to the added rum production in the Azores, rum production in Madeira is increasing and due to the limited market in the outermost regions, not all rum can be sold locally.

For reasons of clarity, the Commission considers it necessary to renew the authorisation provided for in Decision No 376/2014/EU and to extend its scope.

CONTENT: the Commission proposes to adopt a new decision authorising Portugal to apply a reduced rate of excise duty in the autonomous regions of Madeira and the Azores.

This proposal entails renewing the derogation until 2027, extending it to cover sales on the Azores of locally produced rum with the rate of reduction maintained at 75%, and also extending it to provide a 50% reduction in the rate of excise duty on sales on the Portuguese mainland of all products covered.

In order to allow the Commission to assess whether the conditions justifying the authorisation continue to be fulfilled Portugal should submit to the Commission a monitoring report by 30 September 2025.