Taxes on Alcohol and Alcoholic Beverages
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Criteria to determine the status of an alcoholic beverage manufacturing establishment that meets the requirements of "small" and "independent" in accordance with Directive 92/83/EEC
Council Directive 92/83/EEC of 19 October 1992 on the harmonization of excise duty structures on alcohol and alcoholic beverages allows Member States to provide in their national legislation for reduced tax rates applicable to alcoholic beverages that are put up for consumption in its territorial area, requiring, as a requirement for its application, that alcoholic beverages be manufactured by authorized establishments that meet the requirements to be considered “small” and “independent.”
The requirements that the manufacturer of the alcoholic beverage must meet to be considered “small” or “independent” are included in articles 4, 9 bis, 13 bis, 18 bis and 22 of Directive 92/83/EEC, and refer to to the volume of production and the physical, legal and economic independence of alcoholic beverage producers.
To interpret the requirement referring to the company's production volume we must understand that:
It is applied independently for each alcoholic beverage category.
It refers to the total annual production of the previous year. In the case of a newly created producer, it refers to the estimated total annual production.
Directive 92/83/EEC requires a production volume limit so that Member States that recognize a reduced rate in their national legislation may require a production volume equal to or lower than said limit.
In the case of wine, the production volume requirement that must be met and accredited refers to the average annual production for at least three consecutive wine seasons.
To interpret the requirement referring to the legal and economic independence of the alcoholic beverage producer we must understand that:
Two producers of alcoholic beverages are legally and economically independent of each other when one does not influence the commercial decision-making (pricing or purchasing policy, for example) of the other.
Two producers of alcoholic beverages are legally and economically independent of each other when the company to which one belongs does not participate in more than 50% of the share capital of the company to which the other belongs.
Two producers of alcoholic beverages are legally and economically independent of each other when the company to which one belongs does not participate in the company to which the other belongs or, if it participates, does not control the majority of the voting rights.
To interpret the requirement referring to the use by the producer of facilities physically separate from those of any other producer, we must understand that:
Facilities are understood to be the rooms or areas used by the producer where the technical equipment required for the production of alcoholic beverages is located. Cropland is not considered part of the facility.
This requirement is applicable between producers that produce the same type of alcoholic beverage.
This requirement is not applicable to small independent distilleries.
This requirement includes facilities rented by the producer, the property not being required.
This requirement is deemed to be met if different producers share the same facilities as long as they do not use them at the same time (for example, a producer who uses the facilities only for the first six months of the year and another producer who uses them for the following 6 months).
To interpret the requirement that the producer of alcoholic beverages not produce under license we must understand that:
This requirement is required for each category of alcoholic beverage separately.
The production of alcoholic beverages is done under license when it is subject to any form of authorization that makes the production not completely independent of the third party that has granted the authorization. Such is the case of the authorization granted to exploit a patent, a trademark or a production process that belongs to that third party.
If only part of the manufactured beverage is produced under license, the producer is not entitled to apply the reduced rate to any quantity of the same type of alcoholic beverage.
To interpret the exception that allows two or more small producers to cooperate and be considered as a small independent producer we must understand that:
Cooperating producers can be legally and legally dependent on each other, but must be legally and legally independent of third parties.
Cooperating producers can produce under license among themselves, but not under license from third parties.
Cooperating producers can share the same premises at the same time with each other, but not with third parties with whom they must be physically separated.