Mineral Oil Tax on heavy oil (diesel) used for private pleasure navigation

Overview

This is relevant to all owners of diesel-propelled craft that are used for private pleasure navigation. This includes owners who hire out craft and people who hire them for that purpose.

Since 1 November 2008 diesel used for private pleasure navigation is subject to Mineral Oil Tax (MOT) at the rate that applies to auto diesel rather than the reduced rate that applies to Marked Gas Oil (MGO).

In 2008, excise law was amended to allow MGO purchased at a reduced rate of MOT to be used for private pleasure navigation. This arrangement was subject to craft owners filing an annual return for MGO purchased and paying the balance between the MGO rate and the auto diesel rate.

The law regarding the use of MGO for private pleasure navigation will change on 1 January 2020. From this date, the use of MGO will be prohibited and private pleasure craft owners should only purchase and use auto diesel as fuel for private pleasure navigation.

The background to this change is a ruling (C-504/17) made by the Court of Justice of the European Union (CJEU). In October 2018 the CJEU found that Ireland’s current arrangements breached both the Energy Tax Directive and the Fuel Marking Directive. As a result, amendments to excise law have been introduced in Finance Bill 2019.

Once these legislative changes are enacted the use of MGO for private pleasure navigation will no longer be permitted from 1 January 2020.  Detailed guidance on the new arrangements will be published on Revenue’s website in January 2020. It is important to note that up to the end of 2019 the current arrangements remain in place.

Next: What is private pleasure navigation?