Excise duty

What it means

Excise duty is charged on selected goods: mineral oils, alcohol, tobacco, electricity, coal and gas. It becomes due on release for consumption, not on every sale.

It forms part of the base for VAT, so VAT is charged on a price that already includes excise. A change in it therefore moves the final price more than it seems.

Unlike VAT, excise duty on an ordinary purchase is not deductible. A VAT payer claims input VAT deduction on an invoice for diesel or electricity, but the excise duty built into the price stays with them as part of the cost. It also differs from customs duty in that it is due not only on imports from third countries but also on goods produced at home.

How it works in practice

Companies trading such goods need authorisations and often tax warehouse status. The record-keeping is strict and supervised by customs rather than the tax office.

For an ordinary company excise mostly shows up inside fuel and energy prices. In the books it goes into acquisition cost or straight to expenses.

In distance sales of excise goods to customers in another member state, the duty is payable in the customer’s country and the seller usually needs a representative there. E-shop clients thinking about selling alcohol or tobacco products abroad hear this from us before they send the first parcel.

What to watch out for

On importing excise goods, duty and VAT are joined by excise itself. A selling price calculated without it is out by tens of percent.

Goods bought exempt from excise duty, for instance for a specific industrial purpose, must not be used for anything else. A change of use triggers the duty, and the customs office as tax administrator will collect it with a penalty in an audit, where the record of use is often the only evidence the company has.