How much do taxes affect fuel prices in Europe?

One of the worst enemies of European motorists for the last two years or so, fuel prices are now in a phase of decline that is finally giving wallets some breathing space. However, filling up the tank is still too expensive, not only because of the rise in international oil prices, but also because taxes continue to weigh heavily on wallets, particularly in certain countries.

Yes... but what impact does taxation have on petrol and diesel prices in Europe? The answer varies from country to country, but broadly speaking, taxes account for around half of the cost of filling up the tank. Let's take a closer look.

What are fuel prices made up of?

To begin with, let's look at how fuel prices are made up. There are four main components: excise duty, VAT, the industrial price and the gross margin. The first is made up of taxes introduced on certain products to finance certain emergencies, which have since become fixed. The second is the famous "value added tax". The third represents the cost of oil and its refining, and the fourth is distributors' profits. To sum up :

• excise duty
• VAT
• industrial price
• gross margin

Taxes are represented by the first two elements.

Excise duty on fuels in Europe

If we now play with the figures published by the European Commission, we see that excise duty on petrol in Europe (including the UK) averages around 55.5 cents per litre (cent/litre). The lowest and highest peaks are in Hungary (33.6 cent/litre) and the Netherlands (82.1 cent/litre). The UK ranks ninth (63.2 cent/litre).

All the other data is shown in the table below, where it can be seen that 13 countries are above the average and 15 below.

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As far as diesel is concerned, the average is more like 44.8 cent/l, with Hungary still at the bottom (30.9 cent/l) and the UK sadly in first place (63.2 cent/l), followed by Italy (61.7 cent/l) and France (60.9 cent/l). The Czech Republic is a curious case: there is no excise duty on diesel, only on green.

VAT on fuels in Europe

As far as VAT is concerned, all Member States adopt the same domestic taxation on petrol and diesel (with the exception, once again, of the Czech Republic). The lowest tax is levied in Luxembourg (17%), while the highest is in Hungary (27%). Roughly speaking, VAT in the EU and the UK averages 21.5%: the countries above and below this figure are 11 and 17 respectively. France applies a rate of 20%.

Fuel prices in Europe

What are the current fuel prices ? According to figures from the European Commission, petrol costs an average of €1.68 per litre (€/l), taking into account the 27 EU Member States, and 1.73 €/l, taking into account only the 19 countries in the euro zone. The country where petrol is most expensive is the Netherlands (€1.9/l), while the cheapest is Romania (€1.33/l). France is in fifth place (and above the two averages), with €1.79/l.

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And diesel? The averages for political Europe and the euro zone alone are 1.66 and 1.68 €/litre respectively, with Sweden (1.98 €/litre) and Malta (1.2 €/litre) at the top and bottom of the table. France is in fifth place at €1.74/litre.

N.B.: prices updated to 11 December 2023.

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