I propose to take Questions Nos. 56 and 152 together.
I take it that the reference ‘tractor diesel’ in Parliamentary Question number 36319/19 is referring to Marked Gas Oil, commonly known as MGO or green diesel. MGO is diesel that has been marked with fiscal markers to indicate that it has been released for consumption at a reduced rate of taxation. Council Directive 95/60/EC on the fiscal marking of gas oil and kerosene sets out the legal framework for the use of a common fiscal marker across the EU. It obliges all Member States to ensure that fuel released for consumption at a reduced rate of taxation is marked with the appropriate Euromarker and that controls are in place to ensure that such marked fuel is not used improperly, i.e. for non-relieved purposes.
MGO that is used for a relieved purpose, such as in an agricultural tractor, is subject to Mineral Oil Tax (MOT) at a reduced rate of €102.28 per 1,000 litres. Diesel that is used as a fuel in road vehicles is subject to MOT at the standard rate of €479.02 per 1,000 litres. A full relief from MOT for fuel used in commercial sea navigation is provided for in Section 100(2)(a) of Finance Act 1999. This exemption from taxation for fuel used for commercial navigation is mandatorily prescribed in Council Directive 2003/96/EC on the taxation of energy products and electricity (the Energy Tax Directive).
Commercial sea navigation includes commercial sea-fishing, the carriage of goods or passengers or the supply of services for a consideration, and navigation for public authority purposes. As fuel used for commercial navigation is exempt from taxation, MGO may legitimately be used for this purpose. Where the reduced rate of taxation of €102.28 per 1,000 litres has been paid, the entity using the fuel for commercial navigation may apply to Revenue for a repayment.
Fuel used for navigation for non-commercial purposes (defined in EU and national legislation as private pleasure navigation) is subject to MOT at the standard rate of €479.02 per 1,000 litres. I am taking it that the Deputy’s reference to ‘boats used for personal use’ in Parliamentary Question 36319/19 means private pleasure navigation. Section 97A of Finance Act 1999 allows the use of MGO for private pleasure navigation subject to the owner of the craft submitting an annual return to Revenue and paying the difference between the MGO reduced rate of MOT and the standard rate that applies to private pleasure navigation. This means that where MGO is used for private pleasure navigation the owner must pay €376.74 per 1,000 litres of fuel used, €376.74 being the difference between €479.02 (the standard rate of MOT that applies to private pleasure navigation) and €102.28 (the reduced rate for MGO used for relieved purposes).
In 2013 the European Commission raised certain questions in relation to the arrangements provided for in Section 97A of Finance Act 1999. The Commission questioned whether the arrangements constituted a proper implementation of the Energy Tax Directive and whether they adhered to the requirements of Directive 95/60 on fiscal marking of gas oils and kerosene. In 2014 the Commission formally requested Ireland, by way of reasoned opinion, to amend its national legislation to ensure that MGO could no longer be used in private pleasure craft. In the absence of a satisfactory response the matters were referred to the Court of Justice of the European Union (CJEU). In October 2018 the CJEU declared that Ireland had not applied the minimum level of taxation for motor fuels and was in breach of the Energy Tax Directive. The Court further declared that as the use of marked fuel in private pleasure craft had been permitted, where there is no entitlement to an exemption or reduction, Ireland had breached Directive 95/60 on the fiscal marking of gas oils and kerosene.
Ireland has notified the Commission that it accepts the judgement of the Court and has undertaken to amend the relevant provisions of excise law. On this basis, I intend to bring forward amending legislation in Finance Bill 2019, to the effect that the use of MGO for private pleasure navigation in the State will no longer be permissible. Fuel used for private pleasure navigation will continue to be subject to the standard rate of MOT. It is important to note that the use of MGO for commercial navigation will continue to be permitted and there will be no change to the exemption from MOT for fuel used for commercial navigation.