Member States shall apply an excise duty to ethyl alcohol in accordance with this Directive.

Member States shall fix their rates in accordance with Directive 92/84/EEC.

Member States may apply reduced rates of excise duty to ethyl alcohol produced by small distilleries within the following limits:

• the reduced rates, which may fall below the minimum rate, shall not be applied to undertakings producing more than 10 hectolitres of pure alcohol per year. However, Member States which applied reduced rates on 1 January 1992 to undertakings producing between 10 hectolitres and 20 hectolitres of pure alcohol per year may continue to do so,

• the reduced rates shall not be set more than 50 % below the standard national rate of excise duty.

For the purposes of the reduced rates, the term ‘small distillery’ shall mean a distillery which is legally and economically independent of any other distillery and which does not operate under licence.

Member States shall ensure that any reduced rate they may introduce applies equally to ethyl alcohol delivered into their territory from independent small producers situated in other Member States.

Member States may lay down provisions whereby the alcohol produced by small producers shall be released for free circulation as soon as it is obtained (provided the producers have not themselves carried out any intra-Community transactions) without being subjected to the tax warehousing arrangements, and be taxed definitively on a flat-rate basis.

Member States may apply reduced rates of duty to products falling within CN code 2208 which have an actual alcohol strength by volume not exceeding 10 % vol.

Bulgaria and the Czech Republic may apply a reduced rate of excise duty, of not less than 50 % of the standard national rate of excise duty on ethyl alcohol, to ethyl alcohol produced by fruit growers' distilleries producing, on an annual basis, more than 10 hectolitres of ethyl alcohol from fruit supplied to them by fruit growers' households. The application of the reduced rate shall be limited to 30 litres of fruit spirits per producing fruit growers' household per year, destined exclusively for their personal consumption.

Hungary, Romania and Slovakia may apply a reduced rate of excise duty, of not less than 50 % of the standard national rate of excise duty on ethyl alcohol, to ethyl alcohol produced by fruit growers' distilleries producing, on an annual basis, more than 10 hectolitres of ethyl alcohol from fruit supplied to them by fruit growers' households. The application of the reduced rate shall be limited to 50 litres of fruit spirits per producing fruit growers' household per year, destined exclusively for their personal consumption. The Commission will review this arrangement in 2015 and report to the Council on possible modifications.