In September 2015, following a complaint from the EU spirits industry, the Commission opened infringements proceedings against Greece and finally this week decided to refer Greece to the Court of Justice of the EU for failing to apply the standard rate of excise duty to two specific alcoholic beverages: Tsipouro and Tsikoudià. In the press statement, the Commission recalls that according to EU law, the same excise duty rate should apply to ethyl alcohol used in the production of alcoholic beverages, unless exemptions or derogations apply. However, Greece does not have a derogation for the spirits Tsipouro or Tsikoudià and currently applies a reduced rate of excise duty (50%) to Tsipouro and Tsikoudià as well as super-reduced rate (around 6%) to the production of those same spirits by small producers, so-called “two-day distillers”. The Commission concludes by saying that applying these reduced rates, Greece is infringing EU rules since it favours spirits produced in its own country.
This decision shows the will of the Commission to fight for strict enforcement of the internal market and it is important because in the meantime, the legitimate spirits trade continues to suffer. Indeed, the excise tax rate on spirits in Greece more than doubled between 2009 and 2011, following which the legitimate market collapsed. Legal sales in 2016 were approximately half their 2009 levels; an enormous illicit market has evolved; and revenues from excise tax (despite the increased rates) are lower in real terms than in 2009. Sales of spirits from other EU Member States have fallen by over 2 million cases (around 25 million bottles); by contrast sales of bulk Tsipouro have exploded - officials estimate it is now as high as 24 million litres… If the drivers of illicit trade are not tackled, there is little chance of stamping out the practice.
