TB4369 GS/GK 08-12-1999
Country Report Estonia
Road Transport Charges
Final
On behalf of: Phare Multi-Country Transport Programme
NEI Transport, December 1999 GK/Tb4369r18 Table of contents
Pages
Summary i
1 Background RTC in Estonia 1 1.1 Road Transport Policy 1 1.2 Road Transport Legislation 2 1.3 Accession process 3
2 Database 4 2.1 Road Network 4 2.2 Traffic 5 2.3 Fleet 6 2.4 Fuel consumption 6
3 Actual and planned RTC systems 8 3.1 Tax on fuel 8 3.2 Motor vehicle tax 8 3.3 Other taxation 9 3.4 Future perspective 9
4 Revenues 10 4.1 Revenues allocated to the road sector 10 4.2 Revenues generated by the road sector 11
5 Allocation mechanism 13
6 Expenditures and infrastructure cost 14 6.1 Expenditures on roads 14 6.2 Normative road costs 15
7 Cost recovery ratios 16
8 EU Compliance 17
9 Recommendations 19
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Summary
Country characteristics Road fiscal policy Cost recovery There is no general motor vehicle tax in Estonia, but an annual tax (5 EEK (0,3 Euro) per kW of the vehicle) is collected in Tallinn and the Alajoe District. Excise duty is collected on petrol and gas oil (diesel). The rate for leaded and unleaded petrol is the same. Although the rate of 140 increase has somewhat slowed down, it is 120 expected that fuel excise duties will reach 100 the EU minima in the coming years. Ratio80 Actual/Normative maintenance: other21% 60 fuel Remarks40 invest ment 20 Capital investment costs are based overheadon TINA 0 estimates. m aintenance revenues costs External cost estimates are based on air pollution ratios per vehicle km.
Institutional and legal setting Financing of the implementation of the transport policy in Estonia is made through the State Budget and through loans from IFIs and grants. Establishment of a Road Fund has been under discussion in Parliament, so far without success. Earmarking 75 percent of revenues from excise tax on fuel is on the agenda, however, the date of realisation has been postponed. A percentage of 55 percent is aimed for by the beginning of 2001, 65 percent by the beginning of 2002 and 75 percent by the beginning of 2003. Most relevant issues are laid down in the Road Law of the Republic of Estonia, the New Road and the Motor Fuel Excise Act.
EU Comparison Excise tax on fuel (Heavy) vehicle taxation
Fuel Tax Ve hicle Tax 800 0,40
600 0,30 r r a e e t i y / l
/ 400
0,20 o o r r u u E E 0,10 200
0,00 0 Estonia EU Estonia EU Petrol Unleaded Petrol Leaded Diesel Rigid light trucks * Rigid medium trucks * Rigid heavy trucks * Articulated trucks *
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Remark: Currently there is no national vehicle tax in place. Direction of move Introduction of a national vehicle tax is under discussion. A draft Act regarding national vehicle taxation has been discussed in Parliament three times, so far without success. Similar to the EU principles, emphasis will be put on usage related taxes (excise tax on fuel and annual vehicle tax), instead of purchase and ownership related taxes. The establishment of an EURO vignette is still under discussion.
Bottlenecks and constraints The Estonian Parliament seems to be a bottleneck regarding acceptance of road charges related amendments (national annual vehicle tax, Road Fund). Envisaged increases in excise tax on fuel and percentage of revenues from excise tax on fuel allocated to the road sector have been delayed. As a result the available road budget remains (too) limited and roads continue to deteriorate.
Impacts Market prices for fuel have gone up by 30 percent over the most recent period. The new Government takes the position that the tax burden cannot be further increased for the moment. The opportunities to increase excise taxes on fuel are limited.
Conclusions and recommendations Road Transport Charges It is recommended to introduce (and develop) a vehicle tax in accordance with EU Directive 99/62, as regards structure (based on axle weight and suspension) and minimum levels. The introduction of a road user charge in the form of a (Baltic) Vignette should be considered this in accordance with the principles of EU Directive 99/62, i.a. differentiating according to emission standards of the vehicles. It is recommended to continue to increase the levels of excise taxes on fuel towards EU minima. In addition a differentiation of the levels for leaded and unleaded petrol in accordance with the EU legislation is recommended.
Road sector revenues A Road Fund could be an option to secure a stable and sufficient flow of revenues to the road sector. Nevertheless, if through the General Budget 75 percent of revenues from excise taxes on fuel will be earmarked, there is no problem either. Efforts should be made to safeguard this 75 percent in the future.
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1 Background RTC in Estonia
1.1 Road Transport Policy
Core of Road Transport Policy In the development plan of the Estonian road maintenance up to the year 2005, compiled in 1995, priorities for the road sector has been worked out in order to: a) minimise backwardness; b) develop network, in case of better financing. The first priority includes maintenance activities on main roads, supply of traffic control devices and rehabilitation of pavement to ensure passableness. According to possibilities we continue the construction works that have already been started.
The second priority, in case of better financing, includes standard rehabilitation of pavement, developing and restructuring of road network and paving of gravel roads (where needed) according to regional policies and economic and traffic studies.
The biggest problem of the Estonian road maintenance is financing. In 1996, priorities of road financing were set up based on the idea that road users should cover the costs of road maintenance as directly as possible. Still the Estonian government has not succeeded in avoiding prevailing shortage of money. However, a solid step in the right direction has been set by the Estonian Government by passing the new Road Act in Estonia, which earmarks 75 percent of excise tax on fuel and the automobile excise tax for road maintenance purposes (see below).
Road Fiscal Policy The road fiscal policy foresees the following measures up to the year 20021: The gradual increase of the excise according to the Motor Fuel Excise Act in the period 1997-2001 for petrol (72 percent) and diesel (173 percent) in order for Estonia to reach minimum EU levels. Laying down a common motor vehicle tax system for the whole of Estonia in 1999.
In parrallel to the EU principles, Estonian emphasis in taxation is put on user charges and taxes (excise taxes on fuel and road user charges), limiting the taxes on acquisiation and ownership of a vehicle (excise tax on vehicles, annual vehicle tax). The latter type of charges only totals 10-15 p[ercent of total transport taxes.
The Roads Act stipulates the principles of the system of single proposed financing of road keeping from the State Budget. The following road user related charges are aimed for: 75 percent of revenues from excise taxes on fuel. 100 percent of excise taxes on vehicles, motor vehicle tax and state duties for the operations of registration and the penalties on road use and protection.
1 According to a paper on Transport taxes and fiscal policy in Estonia, handed out by MOTC.
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The distribution of financial resources for the budget of road keeping to maintain state roads, municipal roads and streets and for the structure of resources is being adopted by the Government op proposal of the Minister of Transport and Communications.
1.2 Road Transport Legislation
1. Motor Fuel Excise Act This Law and related amendments set the level of excise tax in fuel for the coming years including the gradual increase (1997-2001) and the percentage that is transferred to the road sector. Recent amendment have postponed the process of increase with some years.
2. Road Law of the Republic of Estonia 19.12.91 RT 92,1,1. Road Law regulates relations of road maintenance, use and protection between road’s owner or administrator and road users. Law lies as a basis for other acts of legislation dealing with roads.
3. New Road Act The law includes the principles of the system of single proposed financing of road keeping from the state budget, through motor fuel excise (future: 75 percent) and motor vehicle tax ( to be raised at the state level). The intention to allocate 75 percent of revenues from excise taxes on fuel to the road sector is still in place, however, recent amendments have postponed the allocation of this share. According to the most recent amendment, 55 percent should be available to the road sector by the end of 2001, while the 75 percent should be available by the end of 2003.
4. Traffic Law of the Republic of Estonia 23.03.92, RT I 95,2/3,76-78, 1345 Law enacts basic rules and requirements of traffic management on the roads. The Government of Estonia is responsible of elaborating the traffic safety policy, guaranteeing the safety of participators in traffic and traffic safety situation. The Ministry of Roads and Communications is responsible of realising the national traffic safety policy.
5. Enactment of the Ministry of Roads and Communications 20.10.94 No 58: Confirmation of Instruction of large scale and/or extra heavy automobile transport. RTL 94,55,P.1859,96,8,51. Instruction enacts rules of large scale and/or extra heavy automobile transport as well as rules and conditions to get licence for this.
1.3 Accession process
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Estonia is within the ‘first wave’ of countries to join the EU. Economic performance has been strong since 1993. Bolstered by a widespread national desire to reintegrate into Western Europe, Estonia has adhered to disciplined fiscal and financial policies and has led the FSU countries in pursuing economic reform. Estonia has successfully reoriented its trade toward the West, two-thirds of exports now going to Western markets. Estonia's free trade policies were the cornerstone of its negotiations with the European Union, and led to the signing of an association agreement in June 1995. Estonia was the only Baltic State not to have a transition period imposed by the EU prior to its implementation of a free trade agreement.
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2 Database
2.1 Road Network
The roads classification in Estonia consists of five categories: Public Roads. Main Roads Basic Roads Local Roads Ramps & Connectors. Other Roads.
The following table indicates the distribution of the network constituents amongst these different categories
2.1 Length of different road types in kilometres. 1998%
Type of roads (classification used in Estonia) km Public Roads Main Roads 1.359 Basic Roads 2.473 Local Roads 12.568 Ramps & Connectors 38 Other Roads 25.096 Total 41.534 Source: ERA
2.2. Percentage of different types of roads that is in good, fair, poor condition 1998%
Type of roads (classification used in Estonia) Good Fair Poor Main Roads 25% 67% 8% 100% Basic Roads 35% 56% 10% 100% Local Roads 10% 71% 19% 100% Total 25% 63% 12% 100% Source: ERA
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2.2 Traffic
2.3 Average Annual Daily Traffic (AADT) for key types of roads AADT.
1994 1995 1996 1997 1998 Main Roads 2.490 2.635 2.610 2.811 Basic Roads 1.008 1.092 1.054 1.187 Local Roads 269 293 299 254 Other (e.g. agriculture, forest etc.) 55 70 75 68 Source: ERA
2.4. Average Annual Daily Traffic (AADT) counts for key types of roads per vehicle category AADT, 1998
Type of Roads Passenger Buses Rigid Rigid Rigid Articulated Others** (classification used in cars light medium heavy trucks* Estonia) trucks trucks trucks Main Roads 2.018 99 694 Basic Roads 872 34 281 Local Roads 178 6 70 Source: Technical University
2.5 Number of vehicle kilometres over last five years x1000.000 Vehicle kilometres
Year 1994 1995 1996 1997 1998 Vehicle km’s by road 3.738 4.136 4.313 Source: TTU
2.6 Number of vehicle kilometres on the main core network per x 1000.000 Vehicle vehicle category kilometres, 1998
Pass.cars Busses All trucks Vehicle 3.025 106 1.182 Source:km’s TTU by
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2.3 Fleet
2.7 Total numbers of vehicles over the last 5 years numbers
1994 1995 1996 1997 1998 Passenger 372.156 383.444 406.598 427.678 450.954 Vanscars & BusesUtilities 6.918 7.009 6.829 6.457 6.306 Trucks 61.124 65.598 71.304 76.605 80.617 Others Total 440.198 456.051 484.731 510.740 537.877 Source: EVRC
The overall fleet increase between 1994 and 1998 is 22.2%
2.8 Passenger car ownership per 1000 inhabitants per over the last 5 years numbers
1994 1995 1996 1997 1998 Passenger cars 246 257 275 291 307 Source: NEI computations
2.4 Fuel consumption
2.9 Country fuel totals over the last 5 years Current prices, 1.000.000 EEK 1996 1997 Petrol Production Imports 722,8 960,3 Exports 142,1 294,7 Total 580,7 665,6 Diesel 508,1 714,8 Production 146,9 230,1 Imports Exports Total 146,9 230,1
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2.10 Domestic consumption (1) 1998%
consumed by: Transport sector Other Petrol 81% 19% 100% Diesel 59% 41% 100% Source: Oil Union
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3 Actual and planned RTC systems
3.1 Tax on fuel
Excise duty is collected on petrol and gas oil (diesel). The rate for leaded and unleaded petrol is the same. The key legislation is the Motor Fuel Excise Act which foresees a gradual increase of the excise duties in order to reach EU minimum levels.
Similar to the principle applied in EU countries the main emphasis in Estonia in direct and indirect taxation is put on user charges and taxes (e.g.motor fuel excise duty as regards road transport) limiting the taxes for the procurement and owning of motor vehicles (motor vehicle excise, annual fee of the motor vehicle) to 10-15 % of the total transport charges.
The Roads Act stipulates the principles of the financing of roads. The Estonian Parliament has on 17 November 1999 imposed a change in the Roads Act through which up to 75 % (55 % in 2001, 65 % in 2002, 75 % in 2003) of the excise tax on fuel is earmarked for the financing of the roads.
According to the fiscal road transport policy of Estonia the fuel excise duties will increase in the period 1999-2002 as presented in table 3.1.
Table 3.1 Fuel excise taxes
Oil product Leaded petrol Unleaded petrol Gas oil Rate per 1999 190 190 120 Rate per 2000 222 222 158 Rate per 2001 253 253 192 Rate per 2002 272 272 228 EU-minimum 337 287 245
3.2 Motor vehicle tax
There is no general motor vehicle tax in Estonia, but an annual tax (5 EEK (0,3 Euro) per kW of the vehicle) is collected in Tallinn and the Alajoe District.
According to the fiscal road transport policy of the Government, however, Estonia foresees to have a common motor vehicle tax introduced for the whole of Estonia in the near future.
Furthermore, it is planned to have 100 % of a future vehicle tax (as well as of the motor vehicle excise, state duties for the operations of registration and the penalties for infraction of rules for road use and protection) allocated from the State Budget for the financing of roads.
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3.3 Other taxation
Estonia has a motor vehicle excise duty as well as a vehicle registration fee. In addition, Estonia has a charge for overweight road haulage.
3.4 Future perspective
Estonia has no toll roads. Estonia has no road user charges either. Furthermore, there is no legislation concerning road concessions. However, several initiatives are under preparation (or in the process), e.g. a law on vehicle tax.
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4 Revenues
In this section the following revenue types are presented: The revenues that are allocated to the road sector. This is the annual budget of the Estonian Road Administration and the funds allocated to the road sector through foreign loans and credits. The revenues generated by the road sector through excise taxes on fuel. The Analytical Tool calculates total revenues from excise taxes on fuel based on vehicle kilometres.
4.1 Revenues allocated to the road sector
In 1992 available funds for the road sector fell drastically. Ever since revenues allocated to the road sector have steadily increased. The funds available for roadkeeping purposes are presented in table 4.1.
Table4.1 Available funds for roadkeeping (in million EEK)
Year State Budget WB loan and Phare national programme Total 1992 99 - 99 1993 190 - 190 1994 269 20 (WB) 289 1995 365 87 (WB) 452 1996 450 48 (WB) 498 1997 559 16 (both) 575 1998 650 15 (both) 665 Source: Estonian National Road Administration, annual publication (1998)
In figure 4.1 the development of the revenues allocated to the road sector are presented graphically.
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Figure 4.1 Available funds for roadkeeping (in million EEK)
700 600 500 400 loans and grants 300 State Budget 200 100 0 2 3 4 5 6 7 8 9 9 9 9 9 9 9 9 9 9 9 9 9 9 1 1 1 1 1 1 1
Available funds are expected to increase once the road sector will receive an earmarked percentage of the revenues from excise tax on fuel. The original plan was to allocate 75 percent of revenues from excise tax on fuel to the road sector. This idea is for the moment postponed until the beginning of 2001 in which 55 percent will be allocated to the road sector. With an annual increase of 10 percent it is expected that by the beginning of 2003 75 percent will be allocated to the road sector.
An overview of revenues from road transport taxes, duties and fees in 1998 is presented in table 4.2.
Table 4.2 Revenues from road taxes in 1998 (in million EEK)
Type of road tax, duty or fee Revenues Excise tax on fuel 1,385 Exsie tax on vehicles 107 Motor vehicle tax 29 Registration fee and other duties 64 Total 1,585
As can be seen from the previous tables only slightly over 40 percent of the revenues generated by the road sector is made available for roadkeeping purposes.
4.2 Revenues generated by the road sector
The Analytical Tool calculates (among others) total revenues from excise taxes on fuel. This calculation is based on vehicle kilometres in Estonia. In table 4.3 an overview is presented of the revenues from excise taxes on fuel in 1998.
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Table 4.3 Total revenues from excise taxes on fuel based on Analytical tool (million EEK)
Vehicle type Passenger cars Busses Trucks Total Revenues 1,228 117 892 2,237
Table 4.3 presents substantially higher revenue figure than table 4.2. It should be noted that the Analytical Tool does not take into consideration any tax exemptions or evasion. The outcome might be an indication of a black market for fuel.
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5 Allocation mechanism
Financing mechanism Although the establishment of a Road Fund has been under discussion in Estonia for quite some time now, a Road Fund has not been established. Financing of the implementation of the transport policy in Estonia is made through the following sources: State Budget. Loans and/or grants from IFIs.
A new plan has been launched to earmark 75 percent of the revenues from excise tax on fuel to the road sector. The procedure in which Customs is collecting revenues and passes this through the State Treasury to the General Budget and the road sector is graphically presented in figure 5.1.
Figure 5.1 Routing of excise tax on fuel
Customs
100 % of collected revenues
State Treasury
25 % 75 % earmarked
General Road Budget Sector
As a result of recent developments, such as the newly elected Government and its desire to not further increase the tax burden, the plans to earmark 75 percent to the road sector have been postponed. In an amendment to Parliament regarding next year’s budget a delay is proposed. The ‘new’ time path is aimed at having a 55 percent earmarked share by the beginning of 2001 and have the full 75 percent share by the beginning of 2003.
Annual vehicle tax is currently only levied in Tallinn and another small municipality. Municipalities are free to decide how to calculate the vehicle tax. Tallinn charges based on engine power (5 EEK per KW). It is expected that a national charging system, based on EU standards, will be applied in the near future.
External financing It should be noted that the Estonian Government is rather conservative towards international loans. An overview of loans and grants is presented in table 4.1.
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6 Expenditures and infrastructure cost
In this section the expenditures on state roads and the normative infrastructure costs as calculated in the Analytical Tool are presented.
6.1 Expenditures on roads
In this section a number of overviews on road expenditures is presented. The first two tables are based on figures from the Estonian National Road Administration (tables 6.1 and 6.2). In table 6.3 total road costs, consisting of infrastructure and esternal costs, is presented.
Table 6.1 Expenditures on roads (million EEK)
Type of roads 1994 1995 1996 1997 1998 Construction of roads 26 15 55 56 102 (Re)construction of bridges 3 7 5 13 57 Repairs of roads 51 137 169 148 137 Repairs of bridges 6 11 4 8 6 Road maintenance 72 93 114 157 175 Total 158 263 347 381 477 Source: Estonian national Road Administration, Annual Publication (1998)
In table 6.2 a breakdown of expenditures for roadkeeping and investments by road offices in 1998 is presented.
Table 6.2 Breakdown of expenditures by road offices in 1998 (million EEK)
Type of expenditure Expenditure Indirect costs (salaries, administrative costs, etc.) 53 Road maintenance 138 Rehabilitation 86 Construction and reconstruction 17 Technical development 25 Debt servicing 9 Total 328 Source: Estonian national Road Administration, Annual Publication (1998)
Table 6.3 Actual road transport infrastructure and external costs in 1998 (million EEK)
Type of expenditure Expenditure State road infrastructure costs 653 Municipal road infrastructure costs 401 State and municipal support to public transport 455 Traffic police 280 Motor vehicle registration centre 51 Ecofund 15 Total 1.855 Source: Ministry of Transport and Communications
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6.2 Normative road costs
The Analytical Tool calculates normative maintenance costs based on general unit costs. The resulting normative costs are presented in table 6.4 and are indicative for the real maintenance costs.
Table 6.4 Normative maintenance costs based on Analytical Tool (million EEK)
Type or roads Routine maintenance Periodic maintenance Total Main Roads 45 120 165 Basic Roads 74 156 230 Local Roads 126 198 324 Other 47 71 118 Total 292 544 836
It should be noted that the calculated maintenance costs are significantly higher than the actual maintenance expenditures.
In the Analytical Tool the maintenance costs are ‘marked up’ in order to get an indication of total road infrastructure costs. Twenty percent of maintenance costs is calculated for administration costs. Furthermore, capital investments figures are added based on TINA estimates. Finally, based on existing external costs ratios, linking pollution costs to vehicle kilometres, an estimate is made of environmental costs. In table 6.5 an overview is presented of total build-up of road costs.
Table 6.5 Build-up of total road costs (million EEK)
Cost component Costs estimate Maintenance costs 836 Administration costs 167 Capital investment costs Total road infrastructure costs Environmental costs Total road costs
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7 Cost recovery ratios
The RTC Analytical Tool calculates a number of cost recovery ratios (CRRs). In figure 7.1 a graphical overview is presented of revenues (excise tax on fuel and annual vehicle tax) and expenditures, broken down in (normative) maintenance, overhead and capital investments (rehabilitation and (re) construction).
Figure 7.1 Revenues and expenditures (million Euro)
140 120 100
80 other 60 fuel 40 investment 20 overhead 0 maintenance revenues cost s
In table 7.1 an overview is presented of a number of CRRs in Estonia. A figure of 100 stands for equal revenues and costs. Figures below 100 demonstrate shortages of funds, while values above 100 reveal a surplus.
Table 7.1 CRRs in Estonia
Cost Recovery Ratio (%)
TOTAL Tool Revenues over Normative MAINTENANCE Costs 216% TOTAL Tool Revenues over Normative TOTAL Costs 139% Actual TOTAL Expenditures over Normative TOTAL Costs 37% Actual MAINTENANCE Expenditures over Normative MAINTENANCE Costs 21%
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8 EU Compliance
According to the transport policy oriented to market relations, the infrastructure users must by direct or indirect transport taxes, charges and fees cover all expenditures on transport infrastructure paid by the society, which comprise the development of road, rail and waterway networks and the organisation of maintenance and traffic services compensate social or external costs connected with transport (damage caused by traffic accidents and environment pollution, expenditures on promotion of environmentally friendly and safer types of transport (public transport, electric transport, combined transport, railway and inland waterway transport etc.).
All these expenditures must be objectively reflected in the cost price of transport, motivating the use of a transport mode, which is as sustainable as possible for society and at the same time excluding distortion of competition in the transport service market. The principles mentioned above are reflected in the EU fiscal policy by the concepts of "user pays" and "polluter pays". The objects of this policy are stipulated in the EU Regulations and Directives concerning transport taxation, coverage of expenditure on infrastructure etc.
Similar principles are presented in the guidelines for the National Transport Policy and Transport Development Plan for 1999-2006 approved by the Government. These guidelines foresee the application of a complete system for road transport taxation in conformity with the relevant EU rules.
During the period 1999-2002 one of the major issues is to harmonise the actual fiscal policy of transport with the main principles of market economy, guaranteeing the availability of adequate financial resources for development and maintenance of infrastructure equal conditions for fair competition of different modes of transport, methods to determine latent "donation" of certain transport modes, and a more reasonable and fair distribution of transport taxes between the owners of vehicles.
It is considered a prerequisite to carry through the above implementation to establish an accounting system on common bases for expenditure on infrastructure in each transport mode and to apply common methods for evaluating and counting of transport external costs and determination of the scope and sources to cover these costs.
In order to reach the objectives of the user-pays principle and cost recovery of the infrastructure, Estonia and the other Baltic States are considering a common road user charge, the so-called "Baltic Vignette". Due to different conditions and legal standards in the Baltic countries the introduction of this vignette is complicated and will not take place on the short term.
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The distribution of financial resources, and the structure of this, in order to maintain state roads, municipal roads and streets in towns, is subject to decision by the Government upon proposal from the Minister of Transport and Communications.
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9 Recommendations
The major policy objective is to implement EU principles like the user pays or the polluter pays principle as stated in the guidelines for the National Transport Policy and Transport Development Plan for 1999-2006. These principles are partly implemented. It is recommended to go on in this direction.
Estonia does not have a Road Fund but an earmarking of revenues could be an appropriate way of ensuring the necessary funds for the roads.
Vehicle Tax It is recommended to introduce (and develop) a vehicle tax in accordance with EU Directive 99/62, as regards structure (based on axle weight and suspension) and minimum levels.
Road User Charges Currently there is no road user charges in Estonia. A common user charging system for Estonia and the other Baltic States (the Baltic Vignette) is subject to discussion between the three Parties, but no decision has yet been made.
It is recommended to make a decision regarding the introduction of a road user charge. If such a charge is introduced, it should be in accordance with the principles of EU Directive 99/62, i.a. differentiating according to emission standards of the vehicles.
Fuel Excise Duties The fuel excise duties will, according to the Motor Fuel Excise Act and the fiscal policy of the Government, be increased gradually in order to reach the EU minimum levels (probably in 2003). It is recommended to continue in this direction, but to differentiate the levels for leaded and unleaded petrol in accordance with the EU legislation.
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