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Red Diesel: a game of two halves 

This article dates from 2012 and was originally published on 31 January 2012.

A complex issue of semantics and EU law.

Many of you visited the RYA stand during the Tullet Prebon London International Boat Show [2012] to find out more about the position of the Belgian authorities regarding the use of marked ‘red’ diesel in private pleasure craft. Unfortunately, this issue is not straightforward and turns on the differing interpretations of the requirements of the EU Directives and the manner in which they are enforced by member states.

The RYA has represented recreational boating interests robustly and continues to work hard with HM Revenue & Customs (the appropriate UK Government department) to resolve the issue. Read more.

The two principal components of the issue of using of marked ‘red’ diesel in Belgium might be summarised as follows:-

1.Whether the continued availability of marked ‘red’ diesel in the UK for use in private pleasure craft complies with the EU Energy Products Directive and the EU Marking Directive and,

2.Whether it is lawful for member states to penalise individual yachtsmen for having marked diesel in their yachts’ fuel tanks.

Compliance

The RYA sought specialist taxation law advice and was advised that the availability of marked diesel in the UK for use in private pleasure craft does not infringe either the EU Energy Products Directive or the EU Marking Directive.

The EU Energy Products Directive requires member states to make fuel used for propelling private pleasure craft subject to the prescribed minimum level of duty but it contains nothing to prevent the use of duty-paid marked fuel in private pleasure craft.

The EU Marking Directive requires that “Member States shall take the necessary steps to ensure that improper use of the marked products is avoided”. However, while the Directive goes on to suggest that the use of marked fuel for “combustion in the engine of a road-going motor vehicle” is to be regarded as “improper use”, no mention is made of use in private pleasure craft. 

Improper Use?

The key question is therefore whether the use of duty-paid marked diesel for propelling private pleasure craft amounts to “improper use” for the purposes of the Directive.

The UK and the Irish Governments take the view that the use of duty-paid marked diesel for propelling private pleasure craft does not amount to “improper use” (and there is no jurisprudence to the contrary) whereas the Belgian Government takes the view that it does.

In addition, the RYA has recently received confirmation from the Dutch authorities that they accept that private pleasure craft might legitimately have marked ‘red’ diesel in their main fuel tanks and they will not fine boaters provided that proof of purchase and duty payment can be produced. This is consistent with the letter we received from the European Commission in September 2008.

Lawful Enforcement?

Shortly after the Belgian derogation from the Energy Products Directive expired in December 2006, the Belgian Government made it illegal to use marked diesel in private pleasure craft in Belgian waters However, there are a number of circumstances under EU law (including the Energy Products Directive itself) and international law (such as the 1990 Istanbul Convention on Temporary Admission) in which the main fuel tanks of a private pleasure craft navigating in Community waters might legitimately contain marked diesel.

Again, specialist legal advice has confirmed that the penalisation of individual yachtsmen for the mere presence of marked fuel in a pleasure craft's fuel tanks is contrary to the basic principles of EU law. 

To Conclude

We continue to lobby the Directorate for Taxation and Customs (the appropriate European Commission department) and the Belgian Government, both directly and through the European Boating Association. We are also working with our colleagues in the Royal Belgian Yachting Federation, who are also lobbying their Government on behalf of their members who take on marked diesel perfectly legitimately outside the EU, such as in the US, the Channel Islands or Norway.

To keep up to date with this issue go to Current Affairs.

Gus Lewis, Head of Government Affairs

Article originally published 31 January 2012.

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