If green diesel is found by the Revenue Commissioners in the fuel tank of a private pleasure craft during the early part of 2020, the owner of the craft may be liable for prosecution unless he or she can demonstrate clearly that the diesel is a residue from 2019, and that the boat has not been used in 2020 up to that point where the residue of MGO was detected.
It follows a situation in the marketplace this Spring where some resellers are reported to be continuing to sell green diesel to pleasure craft despite a ban in force since January 1.
As Afloat reported previously, In October 2019, the Department of Transport, Tourism and Sport informed the public of the Department of Finance's intention to change the law regarding the use of Marked Gas Oil for Private Pleasure Navigation from 1 January 2020.
Fuel used for private pleasure navigation has, since 2008, been liable to Mineral Oil Tax (MOT) at the standard rate for diesel used as a propellant (‘white diesel’). The reduced rate of MOT charged for green diesel (Marked Gas Oil/MGO) has not applied to fuel used for private pleasure navigation since a derogation under the Energy Tax Directive, allowing Ireland apply a reduced tax rate for fuel used for such purposes, came to an end in 2008.
When the derogation came to an end, arrangements were provided for in national legislation to permit owners of private pleasure craft to use MGO on condition that they made an annual declaration of usage to Revenue and submitted a balancing payment representing the difference between the MOT they would have paid had they have purchased the same quantity of white diesel and the MOT they actually paid when purchasing MGO. On 17 October 2018, these arrangements were found by the European Court of Justice to be in breach of the Fiscal Marking and Energy Tax Directives.
Ireland accepted the CJEU ruling and informed the Commission that the necessary legislative changes would be brought forward in the Finance Bill 2019. In October 2018 the Department of Finance informed the relevant State authorities of the ruling, its import and the timeline for its implementation so that they could consider what issues, if any, needed addressing from their perspective.
In December 2018, Waterways Ireland published Marine Notice 132 of 2018 informing owners of private pleasure craft of the import of the CJEU ruling and the implementation timeline set out by the Department.
In November 2019 the Department of Transport, Tourism and Sport published a further notice, Marine Notice 52 of 2019, informing the public of upcoming changes to the law regarding the use of Marked Gas Oil for private pleasure navigation from 1st January 2020.
Section 41 of the Finance Act 2019 came into legal effect from 1 January 2020. The net result of the legal changes made is that the special arrangements, permitting the use of MGO for private pleasure navigation on condition of submitting an annual return and payment of MOT due, came to an end.
The use of MGO is no longer permitted for private pleasure navigation and unmarked, duty paid diesel must be used for such purposes. In addition, the supply of MGO for use in private pleasure navigation is no longer permitted. Revenue’s website has been updated accordingly and more detailed information will be published over the coming weeks. It should be noted that the legislative changes do not impact on the operation of the relief from MOT for fuel used for commercial sea navigation, including commercial fishing.
Owners of private pleasure craft who purchased MGO for private pleasure navigation in 2019 are required to submit a return and pay any MOT due by 1 March 2020. In relation to MGO residue remaining in the fuel tanks of private pleasure craft, Revenue will, on an operational basis, allow owners to use MGO that was in a craft’s fuel tank before the end of 2019. It is anticipated that such residue will be used up very quickly.
Revenue says they will enforce the new arrangements on a risk basis. Private pleasure craft owners must ensure that they only purchase white diesel for private pleasure navigation from 1 January 2020 onwards. If MGO is found by Revenue in the fuel tank of a private pleasure craft during the early part of 2020, the owner of the craft may be liable for prosecution unless he or she can demonstrate clearly that the diesel is a residue from 2019, and that the boat has not been used in 2020 up to that point where the residue of MGO was detected.
