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61996J0213 European Court reports 1998 Page I-01777 1
Judgment of the Court
of 2 April 1998
Outokumpu Oy.
Reference for a preliminary ruling: Uudenmaan Lääninoikeus - Finland.
Excise duty on electricity - Rates of duty varying according to the method of producing electricity of
domestic origin - Flat rate for imported electricity.
Case C-213/96.
1 Tax provisions - Internal taxation - Excise duty on electricity - System of taxation applying rates
varying according to the method of production to electricity of domestic origin and a flat rate to imported
electricity - Classified as internal taxation and not as a charge having equivalent effect to a customs duty
(EC Treaty, Arts 9, 12 and 95)
2 Tax provisions - Internal taxation - Differentiated system of taxation - Permissible - Conditions -
Differentiated system of taxation on electricity - Rate applicable varying according to the method of
production - Differentiation based on considerations of protection of the environment - Permissible
(EC Treaty, Art. 95)
3 Tax provisions - Internal taxation - Excise duty on electricity - System of taxation applying rates
varying according to the method of production to electricity of domestic origin and a flat rate to imported
electricity - Not permissible
(EC Treaty, Art. 95)
4 An excise duty which is charged on electricity of domestic origin at rates which vary according to its
method of production, while being levied on imported electricity at a flat rate which is higher than the
lowest rate but lower than the highest rate applicable to electricity of domestic origin, constitutes internal
taxation within the meaning of Article 95 of the Treaty, not a charge having equivalent effect to a customs
duty within the meaning of Articles 9 and 12, where it forms part of a general system of taxation which
is levied not only on electrical energy as such but also on several primary energy sources, and where both
imported electricity and electricity of domestic origin form part of the same tax system and the duty is
levied by the same authorities under the same procedures, whatever the origin of the electricity.
The fact that imported electricity is taxed at the moment of import and electricity of domestic origin at the
moment of production makes no difference for the classification of such a duty, since in view of the
characteristics of electricity those two moments correspond to the same marketing stage, namely that when
the electricity enters the national distribution network.
5 Community law does not, at its present stage of development, restrict the freedom of each Member State
to establish a tax system which differentiates between certain products, even products which are similar
within the meaning of the first paragraph of Article 95 of the Treaty, on the basis of objective criteria,
such as the nature of the raw materials used or the production processes employed. Such differentiation is
compatible with Community law, however, only if it pursues objectives which are themselves compatible
with the requirements of the Treaty and its secondary legislation, and if the detailed rules are such as to
avoid any form of discrimination, direct or indirect, against imports from other Member States or any form
of protection of competing domestic products.
Article 95 of the Treaty therefore does not preclude the rate of an internal duty on electricity from varying
according to the manner in which the electricity is produced and the raw materials used, in so far as that
differentiation is based on environmental considerations. Protection of the environment constitutes one of
the essential objectives of the Community. The Community's task includes the promotion of sustainable
and non-inflationary growth respecting the environment
© An extract from a JUSTIS database
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