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Ref. Ares(2019)797238 - 11/02/2019
EUROPEAN COMMISSION 
DIRECTORATE-GENERAL  
TAXATION AND CUSTOMS UNION 
 
  Indirect Taxation and Tax administration 
Indirect taxes other than VAT 
 
 
Brussels, 31 May 2018 
taxud.c.2(2018)4068098 

 
 
 
 
 
 
 
 
 
 
 
CED nr 907 
Orig.: EN  
Poetry: TAXUD (2018) 432 

 
WORKING PAPER 
FOR INTERNAL USE 

 
 
 
Excise Contact Group of 31/05/2018 
 
 
Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2) 299 11 11 

1.  ADOPTION OF THE AGENDA 
 
 
2.  PLANNING OF UPCOMING MEETINGS AND EVENTS OF RELEVANCE TO TRADERS 
 
 
 
3. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
                                                 
 
 
 
 
 
 
 
 
 of Europe 


4. 
 
 
 
 
 
 
 
 
 
 
 
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5.  Treatment of processed raw tobacco 
A Trade Federation Delegation 14  presented the diverging interpretations of Eko-Tabak 
judgement and the concerns of Member States (available on CIRCABC). The Delegation 
stated the key issues and briefly explained each one of them: 
1.  Eko-Tabak judgement 
a.  Background information 
b.  Examples of unmanufactured tobacco (raw tobacco) 
c.  Examples of smoking tobacco 
d.  Diverging interpretation in EU Member States & Impact 
2.  Smoking test 
a.  Background information 
b.  Practical case 
3.  Conclusion 
4.  CECCM’s suggestions 
The Trade Federation Delegation15 concluded by underlying the following points: 
•  They argued that the smoking tests should not be applied for excise classification, 
and referred to Advocate General Kokott who maintained that the excise 
classification should be performed on the basis of the Excise Directive and not the 
Combined Nomenclature 
•  They acknowledged that there is a major issue with the movement of illegal tobacco 
in the EU and are willing to collaborate with the Commission and the Member 
States to find a practical and efficient solution as they consider EMCS to be 
ineffective for this issue 
•  They proposed to reconsider the distinction of the application of customs rules and 
excise rules for treatment of excisable goods 
•  Regarding to Eko-Tabak, they recognised that the system was abused by fraudulent 
traders and suggested to consider applying targeted measures to tackle that issue. 
One solution would be to review the Tobacco Excise Directive to include clearer 
definitions. Since this option is time consuming, a more immediate solution would 
be to impose rules through a system of licensing and a system of control of 
movement (EMCS) 
A Trade Federation Delegation 16  highlighted that any broadened interpretation of the 
smoking tobacco definition that includes processed raw tobacco as excise goods, will pose 
considerable threat to their business and their members, including the livelihood of 
thousands of tobacco farmers and farm workers. They added that recent interpretations of 
the smoking tobacco definition have led some customers to request that they operate via 
EMCS which is not feasible as they do not have Tax Warehouses, and that caused a lot of 
                                                 
14 Confederation of European Community Cigarette Manufacturers (CECCM) 
15 CECCM 
16 CELCAA 


consternation to their members. The same Trade Federation Delegation requested that the 
Commission and the Member States try to understand how their business works, and to 
craft the legislation so as to not put their products under excise tax, otherwise their business 
will be less competitive with the tobacco growers and processors outside the EU.  
They emphasised that they ship cartons of 40-200 kilograms which contain products not 
intended for retail sale. Another Trade Federation Delegation17 shared the same concerns as 
CECCM and CELCAA, and explained that the disputed interpretation has created 
substantial obstacles to the free circulation of goods with obvious economic impact to 
European smaller companies. They supported that unmanufactured tobacco should not be 
excisable and subjected to EMCS, and that EMCS can work only if harmonization through 
the Union is ensured. A third Trade Federation Delegation18 fully supported the point of 
view and arguments of CECCM.  
A Member State Delegation19 was of the opinion that this subject could only be addressed 
at the European level by a joint approach, and that steps taken individually by Member 
States present a risk of fragmentation and would cause problems in the EMCS for economic 
operators. Another Member State Delegation20 stated that they will provide their position at 
the appropriate meeting or forum. A Trade Federation Delegation21 concurred with the 
European joint approach that was proposed earlier, and that the current forum is not the 
appropriate one to discuss policy measures, and suggested that a Fiscalis PG would be more 
ideal.  
A Trade Federation Delegation22 from the wine industry argued that the companies in their 
industry are mainly small family businesses and use the EMCS without any issues. The 
Chairman
 underlined that the problem is not EMCS but the requirement to have Tax 
Warehouses, and assured that all the proposed suggestions will be taken on board by the 
Commission. In addition, the Chairman identified two aspects of the issue especially 
regarding illicit trade: (a) the classification issue between raw and smoking tobacco, (b) the 
use of EMCS without involving Tax Warehouses which should be possible within the next 
two years. A Member State Delegation23 noted that it is very difficult to register and track 
the raw tobacco producers in EMCS. In our Member State, the row tobacco producers and 
the producers of partially processed tobacco are registered in a national register.  A Trade 
Federation Delegation24 clarified that the tobacco industry is not questioning the efficiency 
of EMCS in general and also not the cost. Rather the delegation noted that there is a much 
larger number of illegal traders in tobacco compared to the wine industry. 
                                                 
17 European Smoking Tobacco Association (ESTA) 
18  European Cigar Manufacturers Association (ECMA) 
19 MS-DE 
20 MS-ES 
21 CECCM 
22 ETRC 
23 MS-RO 
24 CECCM 


Having encountered problems with other Member States concerning the definition of raw 
and smoking tobacco, a Member State Delegation25 explained that the main issue is the 
definition and not the classification; for example, according to CECCM, tobacco refuse is 
considered raw tobacco, whereas according to the excise definition in Article 5, it is 
considered manufactured tobacco. Therefore, the Member State Delegation supported that 
the nature of the product must be taken into account, and acknowledged that it is a very thin 
line between raw and manufactured tobacco. Nevertheless, further discussions should be 
initiated in order to come to a harmonised conclusion.  
COM pointed out that the Commission cannot provide final interpretation of the legal text 
as this is conducted only by the Court of Justice. COM noted that this item will be added to 
the next ITEG meeting in November 2018 in order to further discuss the Eko-Tabak 
judgement, the possibilities to reduce illegal trade, and the increase of monitoring and 
control. A Fiscalis PG will be also planned for the discussion with the trader federations. 
On the longer term, the Commission is looking into the Tobacco Directive with possible 
revisions concerning the rates, structures, e-cigarettes, and heated tobacco products. COM 
reminded that a questionnaire was sent to the Member States where they can disclose their 
views including their views on the definition of Article 5 of the Tobacco Directive.  
6.