Ireland’s excise duty treatment of fuel is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). ETD provisions on liquid fuels are transposed into national law in Finance Act 1999 (as amended) which provides for the application of excise duty, in the form of Mineral Oil Tax (MOT), to liquid fuels.
The ETD prescribes that in addition to adhering to minimum rates, the excise duty rate on a particular fuel type used for propellant purposes must be consistent across all propellant uses for that fuel. This means that the same MOT rate must apply to heavy oil, whether it is used as a propellant in motor vehicles, in aircraft or in waterborne vessels. Ireland has no discretion in this regard and a change to the MOT rate on auto-diesel must also be applied to the MOT rate on heavy oil used in aircraft (jet fuel). As a result of the recent rate cuts, auto-diesel and jet fuel are now both subject to an MOT rate of €371.85 per 1,000 litres. I am advised by Revenue that current and historical MOT rates are published on Revenue’s website at www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/energy-excise-duty-rates.pdf
Under the ETD, heavy oil used for non-propellant purposes may be taxed at reduced rate of excise. Use of diesel in stationary motors, in construction machinery, in off-road vehicles, or for heating, are all examples of non-propellant uses to which Member States may apply a reduced rate of excise. Heavy oil used in an agricultural tractor, which has been designed or constructed primarily for use for agricultural purposes, also falls within the category of non-propellant uses to which Member States may apply a reduced rate of excise. Heavy oil used as a fuel in road vehicles (auto-diesel), in aircraft (jet fuel) or in watercraft, must be taxed at a standard rate of excise, i.e. such usage does not qualify for a reduced rate.
In line with the ETD, Ireland applies a reduced rate of MOT to heavy oil used for non-propellant purposes. Such fuel must be marked with prescribed markers, and it is generally referred to as Marked Gas Oil (MGO) or farm/agri/green diesel.
