Progressive_Beer_Duty
Progressive beer duty is a beer duty system that allows smaller breweries to pay less tax on their products. The idea originates from Bavaria in Germany, where such a system has underpinned the brewing industry and helped support local production. This idea encourages competition in quality and variety and supports diversity in local economies. It also encourages consumer interest and product pride which in turn helps promote cultural links.
This concept was adopted by the European Union in 2002 using EU Directive 92/83/EEC [1] as a derogated power so not all countries implemented the idea. The structure and its parameters provided by EU law allowed the creation of systems which suited the needs of individual states. There is, as some journalists have suggested, no "European system" as such. EU law allows for a maximum discount of 50% of beer tax on production levels up to 20 million litres with the provision for a stepped structure. Each country can choose the percentage and level/s of production. Germany, for instance, adopted the full 20 million L level which is appropriate considering the many different sizes of breweries within the country. The UK, on the other hand, limited the discount to 3 million L, creating a tightly targeted tax benefit. The interesting aspect of the UK system is that it not only provides a discount on beer tax, but also a limit to which individual companies can benefit, unlike the German version, where companies gain greater total monetary discounts on shrinking percentages as they grow, thus, in theory, disadvantaging smaller companies.
In 2020 the EU changed the excise duties directives and amongst other things requires each country to have an option to extend the application of lower tax rates for small producers.[2] Council Directive 2020/1151 states that beer with an alcoholic content less than 0.5% abv. is not a beer and is not subject to excise duty in the EU.[3]
In 2022 30 out of 38 OECD countries apply a reduce rate of tax on beer from small breweries, with a progressive increase in the tax rate according to their annual production in many cases. [3]