Explanatory note

This Order, which comes into force on 1st January 2011, revokes and replaces the Value Added Tax (Imported Gas and Electricity) Relief Order 2004 (“the revoked order”).

Council Directive 2006/112/EC (OJ No L 347, 11.12.06, p1) (“the Principal VAT Directive”) establishes a common system of value added tax applicable throughout the European Union.

Article 143(1)(l) of the Principal VAT Directive was amended by Council Directive 2009/162/EU (OJ No L 10, 15.01.10, p14) with effect from 15th January 2010. Member states are required to transpose the amendment with effect from 1st January 2011.

Prior to the amendment Article 143(1)(l) exempted the importation of gas and electricity from a place outside the EU from the charge to VAT which would otherwise arise under Article 2(1)(d) of that Directive. The importation of gas was described as being through the natural gas distribution system. Following amendment the importation of gas is described as being through a natural gas system or any network connected to it, or fed in from a vessel transporting gas into a natural gas system or any upstream pipeline network. In addition Article 143(1)(l) now also exempts the importation of heat or cooling through a network. The description relating to the importation of electricity has not been materially changed.

The revoked order relieves VAT on importations from outside the EU of gas through the natural gas distribution network and of electricity.

This Order revokes and replaces the revoked order and relieves from VAT importations from outside the EU of the following: gas through a natural gas system or any network connected to it, or fed in from a vessel transporting natural gas into a natural gas system or any upstream pipeline network, electricity and heat or cooling supplied through a network.

A full regulatory impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.