The EU framework for energy product taxation is defined by Council Directive 2003/96/EC of 27 October 2003, which was enacted into French legislation by the 2007 Supplementary Budget Act.
The Domestic Consumption Tax on Energy Products (TICPE)
The domestic consumption tax on energy products (TICPE) is the primary levy on oil products. It concerns a number of products, all of which appear on a list shared by every EU Member State.
This list was enacted into French law in Tables B and C of Article 265 of the French Customs Code; it states that these products are only taxed when they are used for vehicle fuel or for heating.
The tax becomes payable at the time of « release for consumption », a concept that is defined in Article 7 of Council Directive 2008/118/EC concerning the general arrangements for excise duty, which covers:
- The importation of excise goods, including irregular departure, unless the excise goods are placed, immediately upon importation, under a duty suspension arrangement
- The production of excise goods, including irregular production, outside a duty suspension arrangement
- The departure of excise goods, including irregular departure, from a duty suspension arrangement
For products already released for consumption in another EU Member State, the tax is payable upon their arrival in France.
The TICPE is also levied on:
- Any product which is sold, used or intended for use as fuel for engines, as an additive or for the purpose of expanding the final volume of fuel for engines
- Any hydrocarbon which is sold, used or intended for use for heating, with the exception of solid hydrocarbons such as coal, peat and brown coal, except for natural gas
The rates, which are set by Parliament, may be adjusted upwards or downwards during the year, based on fluctuations in oil prices.
The TICPE is important for the central government budget, since it brings in an average of €25 billion each year. It is also important in terms of informing energy policy and – increasingly – for environmental reasons, as the rates have an influence on the choice of product.
- Article 265 of the French Customs Code
- Article 2 of Council Directive 2003/96/EC of 19 October 1992
The Domestic Consumption Tax on Natural Gas (TICGN)
Natural gas is not subject to the TICPE, but rather to a similar levy known as the domestic consumption tax on natural gas (TICGN), as provided for under Article 266 quinquies of the French Customs Code.
The TICGN is levied on natural gas that is used as fuel. It is paid by the natural gas supplier on deliveries made to end consumers in France, or by end consumers when they themselves have imported or produced the natural gas that they use.
Domestic consumption tax on coal, brown coal and coke, known as the "Carbon Tax" (TICC)
Coal, brown coal and coke as defined in CN Codes 2701, 2702 and 2704 are subject to the TICC, a domestic consumption tax provided for under Article 266 quinquies B of the French Customs Code.
The TICC applies to coal, brown coal and coke when used as fuel. It is paid by the coal supplier on deliveries made to end consumers in France, or by end consumers when they themselves have imported or produced the coal that they use.
The TICC is paid by liable persons on a quarterly basis, before the 20th of the month following the quarter in question, in accordance with Decree 2007-856 of 14 May 2007.
Several types of exemptions may be granted for:
- Coal used for other purposes than fuel
- Dual use of coal
- Coal used as part of a process to produce non-metal mineral products
- Coal used within establishments producing energy products for the production of such products
- Coal used for electricity generation
- Coal used for the purposes of its own extraction or production
- Coal used by businesses involved in converting biomass to energy, provided that they are governed by the greenhouse gas emission allowance scheme or are applying voluntary greenhouse gas reduction agreements
To take advantage of the above-mentioned exemptions, end consumers of coal should, prior to delivery, provide their suppliers with a certificate stating the quantities of coal that will be used for non-taxable purposes. Private individuals are not subject to this obligation.
- Article 266 quinquies B of the French Customs Code
- Decree 2007-856 of 14 May 2007 setting out the procedures for controlling the destination and use of coal, brown coal and coke not subject to the domestic consumption tax provided for under Article 266 quinquies B of the French Customs Code
The special consumption tax in overseas departements
The TICPE is not applicable in France's overseas départements.
In these départements, a special consumption tax (TSC) is levied on petrol, premium-grade petrol, diesel and diesel emulsions.
The tax is fed into the budget of the Regional Councils, which set the rates and determine exemptions for these products. In any case, the TSC rate set by the Regional Councils for a given product may not exceed the domestic consumption tax (TIC) rate listed in Table B of Article 265 of the French Customs Code that has been set for the same product in mainland France.
- Article 266 quater of the French Customs Code
VAT on oil products
The VAT on oil products as set out in Table B of Article 265 of the French Customs Code is in line with the specific rules established by Article 298 of the French General Tax Code.
It is collected by French Customs when declarations concerning products being "released for consumption" are filed, normally when such products leave tax warehouses and refineries.
The rate of the VAT is 20% in mainland France and 13 % in Corsica. For most products, the tax base consists of a flat rate set every four months by the Director General of Customs and Excise based on a proposal by the Directorate General for Energy and Climate, for the TICPE and, where applicable, for customs duties and the Professional Commission for Strategic Oil Reserves (CPSSP) levy.
Other taxes on oil products collected by Customs
The Act of 31 December 1992 reforming the oil regime stipulates that oil operators other than authorised warehouse-keepers must comply with a requirement to constitute oil reserves via the payment of compensation to the CPSSP.
These minor taxes, which are applicable in mainland France, are collected under conditions similar to the TICPE.
An element of the general tax on polluting activities (TGAP) provided for under Article 266 sexies of the French Customs Code concerns lubricants, oils and lubricating preparations.