Trade in Ethyl Alcohol within the European Union: Regulations and Procedures

The trade in ethyl alcohol within the European Union (EU) is subject to detailed regulatory provisions designed to ensure transparency and legality in the movement of excise goods. The main rules are set out in:

• Directive 2008/118/EC on the general arrangements for excise duty;
• Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages;
• The relevant national legislation of the Member States, governing the licensing, storage, and transport of ethyl alcohol.

A key element in this process is the use of the Excise Movement and Control System (EMCS) and the System for Exchange of Excise Data (SEED), which enable electronic tracking and control of every movement of ethyl alcohol between Member States.

I. Registered Economic Operators in the EU

To participate in cross-border trade of ethyl alcohol, businesses must be registered or authorised under the EU excise duty system. The main categories of operators involved in the excise movement of ethyl alcohol are:

1. Authorised Warehousekeeper

• A natural or legal person authorised to produce, process, store, receive, or dispatch ethyl alcohol under a duty suspension arrangement within a tax warehouse. This status allows businesses to handle excise goods without immediately paying excise duty, provided they comply with strict reporting and control measures.

2. Tax Warehouse

• A licensed facility where ethyl alcohol can be produced, processed, stored, received, or dispatched under a duty suspension arrangement. Tax warehouses play a crucial role in the bulk storage and distribution of ethyl alcohol, allowing businesses to defer excise duty payments until the alcohol is released for consumption.

Key Requirements for Tax Warehouses Handling Ethyl Alcohol:

• Must be approved by the competent excise authorities in each Member State.
• Must operate under strict record-keeping and control measures to ensure compliance with duty suspension regulations.
• Ethyl alcohol movements must be monitored through the EMCS system to prevent tax evasion and fraud.

3. Certified Consignor

• An operator authorised to dispatch ethyl alcohol that has already been released for consumption in one Member State to another Member State, ensuring excise compliance at both ends of the transaction.

4. Certified Consignee

• A business entitled to receive ethyl alcohol that has already been released for consumption in another Member State. Certified consignees must comply with excise duty requirements in their home country.

General Registration Requirements

Under EU legislation, certified consignors and consignees must meet several key conditions:

1. Registration in the SEED Database

• Operators are registered by the national customs authorities and receive a unique excise number, which enables their identification within the EU.
   

2. Provision of an Excise Guarantee (when operating under a duty suspension arrangement – RОRA)

• If goods are moving under suspension of excise duty, the operator must provide a financial guarantee covering the amount of the excise duty due.
   

3. Use of the Electronic Administrative Document (e-AD)

• Movements of excise goods between Member States must be accompanied by an e-AD, generated and managed through EMCS. This document contains detailed information about the consignor, consignee, type, and quantity of the goods.
   

4. Compliance with Specific National Regulations

• Member States may impose additional requirements regarding licensing, storage conditions, record-keeping, and control in the trade of ethyl alcohol.
   

II. Denaturing of Ethyl Alcohol and Excise Exemption

To be exempt from excise duty, ethyl alcohol not intended for human consumption must be denatured in accordance with the requirements of:

• Directive 92/83/EEC (Article 27);
• Directive 2008/118/EC;
• National provisions defining specific methods and control mechanisms for denaturing.

Main Types of Denaturing
 

1. Completely Denatured Alcohol (CDA) – Article 27(1)(a)

A “European” formula is generally applied for completely denatured alcohol, typically comprising (per 100 liters of absolute alcohol):

• 1 liter of methyl ethyl ketone (MEK) – serving as a smelling agent;
• 1 liter of isopropyl alcohol – serving as a chemical marker;
• 1 gram of denatonium benzoate (Bitrex) – serving as a bittering agent.

When completely denatured alcohol is moved within the EU, it is generally accompanied by a Simplified Accompanying Document (SAD), in accordance with Commission Regulation (EEC) No 3649/92.
 

2. Partially Denatured Alcohol (PDA) – Article 27(1)(b)

• Each Member State is entitled to define its own methods for partial denaturing.
• This type of denaturing is used for alcohol intended for industrial, cosmetic, or pharmaceutical products that are not meant for direct human consumption, but do not fall under the scope of completely denatured products.

III. Transport and Storage of Ethyl Alcohol

1. Transport under Duty Suspension (RОRA)

• When ethyl alcohol is transported between licensed warehouses (in different Member States) and excise duty has not yet been paid, the movement must be monitored via EMCS.
• Each shipment is accompanied by an e-AD, enabling customs authorities to control and track the goods in real time.

2. Transport of Denatured Alcohol

• Completely denatured alcohol (CDA) is typically transported with a Simplified Accompanying Document (SAD).
• Partially denatured alcohol (PDA) may be subject to various national procedures, including the requirement for an e-AD or another type of accompanying document, depending on the legislation of the respective Member State.

3. Storage

• Before ethanol (ethyl alcohol) is released for final use, it is often stored in licensed tax warehouses, operated by entities holding the relevant registration and permits.
• Requirements for technical equipment, security systems, and record-keeping are detailed in national legislation and are subject to regular inspections by competent authorities to prevent misuse or unauthorized use.

IV. Documentation and Electronic Control Systems

1. Electronic Administrative Document (e-AD)

• The main tool for movements under duty suspension.
• Contains detailed information about origin, destination, quantity, and type of excise goods.

2. EMCS (Excise Movement and Control System)

• A centralized platform through which Member States exchange real-time information on the movement of excise goods.
• Enables automated checks, discrepancy records, and tracking of each transport’s completion.

3. SEED (System for Exchange of Excise Data)

• Maintained by the customs authorities of Member States.
• Contains a list of all registered economic operators (licensed warehouse keepers, certified consignors, and certified consignees), along with details of their excise status.

The trade in ethyl alcohol within the EU is tightly controlled and subject to numerous regulatory requirements. The aim of this system is to ensure:

• Fiscal and financial security – through efficient collection of excise duties and prevention of fraud;
• Transparency – via electronic tools for traceability and verification of every transaction;
• Protection of public health and interest – particularly in the denaturing of alcohol, which makes it unfit for human consumption.

Any economic operator intending to engage in import, export, or intra-Community movement of ethyl alcohol must be familiar with both EU and national legislation. Accurate documentation, use of the e-AD, and inclusion in SEED are critical components for the successful and lawful conduct of these activities.

Additional Legislative Documents

• Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages – eur-lex.europa.eu
• Directive 2008/118/EC on the general arrangements for excise duty – eur-lex.europa.eu
• Commission Regulation (EEC) No 3649/92 on the simplified accompanying document – eur-lex.europa.eu
• Regulation (EU) 2018/1672 on controls on the movement of excise goods – eur-lex.europa.eu