Solid Fuel Carbon Tax (SFCT)

Taxable solid fuels and liability

What solid fuel is taxable?

SFCT applies to coal and peat, as defined in section 77 of the Finance Act 2010 as amended.

" 'Coal' means:

(a) except where paragraph (b) applies, any fuel in solid form manufactured from coal falling within CN Code 2701 or from lignite falling within CN Code 2702

(b) any energy product within the meaning of Article 2.1 of the Directive, in solid form, for use as a fuel."

" 'Peat' means peat falling within CN Code 2703 and includes any fuel in solid form manufactured from peat or manufactured from a combination of peat and any other product other than coal falling within CN Code 2701 or lignite falling within CN Code 2702".

Article 2.1 of the Directive 2003/96/EC contains a list of the energy products to which the tax applies when in solid form.

Combined Nomenclature (CN) codes are categories defined by the European Union (EU), used by customs and tax authorities to identify products. Manufacturers, processors and importers must declare what CN code applies to their products.

A list of the energy products to which tax applied when in solid form. 

Solid Fuel Carbon Tax liability

A liability to SFCT arises on the first supply of a quantity of solid fuel in Ireland by a supplier. The supplier is accountable for, and must pay the tax to Revenue.

What is First Supply?

First supply means a quantity of solid fuel supplied in Ireland that had not previously been supplied in Ireland.

What is Supply in Ireland?

For SFCT purposes, supply in Ireland means a supply from one supplier established in Ireland to another supplier established in Ireland, or from a supplier established in Ireland to a consumer in Ireland. This applies also in situations where suppliers supply solid fuel to themselves for their own use. See also treatment of supplies of solid fuel for manufacturing.

Who is an accountable person?

A supplier is an accountable person under the Value Added Tax (VAT) Acts (that is, registered for VAT in Ireland) or a taxable person carrying on business in Ireland below the threshold for VAT registration.

Any person who is VAT-registered or a taxable person in Ireland and who makes a first supply of solid fuel in Ireland is an accountable person for the tax and must register with the Revenue Commissioners for the purpose of SFCT.

In practice, only those suppliers who are bringing solid fuel into Ireland, or producing it within Ireland, for onward supply (to other traders or direct to the public) should register for the tax with Revenue. A person trading in fuel who receives all their fuel from main suppliers based in Ireland will receive their fuel tax paid by that main supplier and will not need to register with Revenue.

However, if that person receives some or all of their solid fuel supplies from a supplier based in another member state, for example a supplier based in Newry, they will be accountable for the tax when they supply that fuel onward to their own customers. In such cases, the person must register for the tax with Revenue and pay the tax on the supply of that fuel in any accounting period.

A tax liability does not arise where an individual personally purchases and brings into Ireland solid fuel from a supplier in another Member State, provided the fuel is for their own private use and they accompany the fuel into Ireland.

If that individual, instead of using it for their own use, supplies another person in Ireland with that fuel, they will have made a first supply of solid fuel in Ireland as a supplier. They will then be liable to pay SFCT on that supply and must register with Revenue accordingly.

How is SFCT collected?

The tax is collected on a self-assessed basis. This means that the person liable to pay the tax must assess the tax liability and make a tax return and tax payment to Revenue on that basis. The return will be subject to audit and compliance check by Revenue.

What is the tax treatment of a First Supply of Solid Fuel outside Ireland?

Where a first supply of solid fuel is made to a person or business located outside Ireland, that supply is not liable to SFCT. Supplies that have been tax paid correctly, having been first supplied in Ireland, are not entitled to exemption on later supply outside Ireland.

What is the tax treatment for solid fuel produced in Ireland?

Where solid fuel is first supplied for use as a raw material in the manufacture of a solid fuel product in Ireland and that solid fuel product, in accordance with section 79 of the Finance Act 2010 as amended, has characteristics that are distinct from the solid fuel from which it is produced, SFCT is not chargeable on that supply. In such cases, the supplier must obtain a properly completed Declaration Form the manufacturer confirming that the fuel will be used in manufacturing solid fuel products before they make any tax-free supply to that manufacturer.

The manufacturer must maintain adequate records of the receipt and use of such tax-free supplies, including information on the manufacturing process for each solid fuel product and its effect on the characteristics of the solid fuel from which it is produced, together with a copy of the declaration provided to the supplier.

The tax becomes due when the manufactured solid fuel product is itself first supplied in Ireland by the manufacturer. The rate of duty is the rate applying to the finished product. The supplier who makes the first supply in Ireland of that manufactured product is accountable for and liable to pay the tax charged.

SFCT is applicable to peat extracted for supply in Ireland. The tax is chargeable on the tonnage weight at first supply. Persons involved in extracting peat for supply and who are making first supplies of the peat are accountable for SFCT. Accordingly, they must register with Revenue for SFCT purposes. Persons extracting peat for their own use and not for supply are not liable to SFCT tax and are not required to register with Revenue.

What does "manufacture" mean?

Manufacture in relation to a solid fuel product means the reconstituting or processing of a solid fuel to produce a solid fuel that has characteristics that are distinct from the solid fuel from which it is produced, and includes the production of compressed nuggets and briquettes, and similar products of a regular shape and size, but does not include extraction, washing, drying, breaking or grinding.

What rate of SFCT will apply to manufactured solid fuel products which include coal and or peat?

If a manufactured solid fuel product contains an ingredient which comes within the definition of coal, it is liable to SFCT at the rate applicable to coal.

Where a manufactured product has components which include both coal and peat, it is liable at the rate applicable to coal. Any manufactured solid fuel with a peat component, but not containing coal, is liable to SFCT at the rate applicable to peat. There is no provision for charging SFCT on a pro-rata basis where a manufactured solid fuel product contains both coal and peat.

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