25 Cze 2019 - 25 Lut 2020

Study contributing to an impact assessment concerning a possible legislative proposal authorising Portugal to apply a educed excise duty rate on rum, liqueurs and eaux-de-vie produced in specific Outermost Regions.

Project description:

The Article 349 of the Treaty on the Functioning of the European Union notes the necessity of adopting specific measure to support the Outermost Regions (OR) economies. In 2002, Portugal have introduced reduced rate of excise duty for locally produced and consumed spirits of the two autonomous Portuguese regions of Azores and Madeira.

This decision have been taken to support locally produced alcohol industry and due to numerous high costs  factors (remoteness, insularity, small size, topography and climate) that the two outermost regions have to face. It have been considered at that time that only reduced rate of excise duty would allow these two region to continue producing and compete vis-à-vis the other products imported or supplied from other parts of Community. This exceptional measure has since been extended several times. On 8 February 2019, the Portuguese authorities have requested the renewal  of the application of a reduced rate of excise duty.


The aims of the study is to evaluate and understand the reason of the current situation of reduced rate of excise duty and to assess if the fiscal advantage is still proportionate and sufficient to overcome the competitive disadvantages of the regions. It will also identify and describe possible alternative measure to a tax derogation system. In particular it will analyse the possibility to introduced a reduced excise duty rate for rum products only.  Through an impact assessment an analysis of the advantage and disadvantages of alternative policy option identified will be undertaken. The study will considers this special regime in regards with its interactions with EU policies in various key domains (competition, agricultural policy, regional development…).

The project has the following objectives:

  • Identification of drivers, problems and objectives following the Better Regulation guidelines. A review of legal provisions surrounding the derogation on excise rate, comparison with French experience on OR derogation and evidence gathered through key stakeholder consultations
  • Conducting economic analysis and modelling. Understand the value chain impact of reduced excise products. Study the direct impact (jobs, value added, output, key suppliers) of the production of these products. Assessment of fiscal cost.
  • Prospective and impact assessment. Study the potential results of both continuing with the current system, altering or ending it.


Project funding:  European Commission, Directorate General for Taxation and Customs

Union (DG TAXUD)

Project partners: PwC UK, CASE, HIS (Institute for Advanced Studies)