Pesticide Taxation

The 2006 EU thematic strategy on the sustainable use of pesticides says ‘’taxation should be investigated further in order to establish a ‘banded’ taxation system as a proxy for true externalities in the future’’. The implementation, through Directive 2009/128/EC ,The Sustainable Use Directive of Pesticides, highlights that ‘economic instruments can play a crucial role in the achievement of objectives relating to the sustainable use of pesticides. The use of such instruments at the appropriate level should therefore be encouraged while stressing that individual Member States can decide on their use without prejudice to the applicability of the State aid rules.’

Certain Member States within the European Union are still offering farmers a lower VAT level for the use of pesticides, despite their increased cost to public health and environment. Lower VAT rates for pesticides represent an environmentally harmful indirect subsidy. PAN Europe has created a database on best practice in pesticide taxation, providing an overview of different pesticide taxation schemes.

The Scandinavian countries have a long tradition in the taxation of pesticides. In July 2013, Denmark introduced a pesticide tax, where taxation is not linked to the nominal value of the insecticides, but linked to their environmental and health toxicity. Also Norway has a pesticide tax, while Sweden argues that they prefer banning active substances rather than taxing them, an argument difficult to contradict. A few other actors have decided to experiment with various forms of pesticide taxation:

The Danish pesticide tax

In 2013 the former Danish Government launched a campaign to reduce the pesticide load by 40% by 2015 from the 2011 load level. The plan has just been prolonged until the end of 2016. The main reasons for reducing pesticide use are to ensure a clean environment, good ecological conditions in nature, healthy food, better health and safety at work as well as more green workplaces. The goal is based on a new indicator, the Pesticide Load Indicator (PLI), as there is no target set for treatment frequency index (TFI) as earlier. Y

Where the TFI mainly reflects the intensity of pesticide use, the PLI is an indicator of the load on the environment and human health resulting from the actual use (sales) of pesticides. The main instrument is the pesticide tax, which in 2013 was increased and differentiated according the load indicator. The pesticides causing the highest load will thus be the most expensive, and will encourage users of pesticides to comply with the integrated pest management - IPM principles (Art 14, annex III Dir. 128/2009), to use fewer pesticides and to use the pesticides causing lowest load.

The tax is differentiated according to indicators of relative health and environmental impacts of the different pesticides. Effective from July 1 2013, the law is differentiating the tax on approved pesticides; the tax is paid on pesticides according to how large the impacts from the pesticides are on health, nature, and groundwater. More info here.


The existing pesticide tax in France has been reinforced by the law, voted in December 2018, by adding some pesticides to the list of products submitted to this tax, and by raising the rate of the tax. The pesticide tax is payed by pesticide buyers, collected by pesticides sellers, and goes to the "agences de l'eau" the water agencies. Providing water agencies more resources to encourage conversions to organic farming has been the main aim of this tax reinforcement.The enlargement and the modification of the rates must bring about 50 million additional euros.


 Initiative to introduce a risk-based pesticide tax is put off for the moment but it is not forgotten. 

PAN Europe member PAN Germany welcomed the initiative to introduce a risk based pesticide tax taken by Dr. Robert Habeck as Minister of Agriculture for Schleswig-Holstein in 2016 and still hopes, that the idea will not put on hold for too long. The rationale behind the introduction of a risk-based tax on pesticides is that pesticides should not only be more expensive to account for the harm they cause to the environment, but that the tax should be levied in such a way that products which constitute a higher health risk are more heavily taxed. This would mean that the least harmful products would become comparatively cheaper and thus more attractive and that harmful products would be replaced by less harmful alternatives. The tax revenue could then be used for specific purposes.

PAN Germany has been calling for the introduction of a pesticide tax in Germany for many years. Though the concept  published in 2016 is put off due to political changes, PAN Germany still hopes that such a concept will be further pursued, fleshed out and implemented to ensure that non-chemical methods of weed and pest control will be used more frequently and that pesticide producers and the biggest polluters, not the general public, bear the costs of pesticide use.

CAP and Pesticide Taxation

Frank Berendse, Emeritus professor at the University of Wageningen, suggests in his article in ‘Nature’ magazine to fundamentally reform the new Common agricultural Policy as from 2020 to be able to ensure the future of  European Agriculture and nature. He recommends a new progressive tax on artificial fertilizers, pesticides and imported fodder, charged per surface unit of land. Berendse suggests to include this taxes in a third pillar of the CAP. He further concludes that this will make the CAP more balanced, because farmers who provide societal services will be rewarded for their efforts (like cutting hedges) and the polluter will have to pay and also thi will lead to remarkable, price driven changes in the selling of sustainable products. Eventually, this will make healthy and ‘clean’ food available for every European.

Taxation or Rural Development Funding?

Many Member States are offering rural development funding to farmers to encourage them to introduce crop-specific integrated pest management, and as a result reduce pesticide use. So while some MS are taking a stick approach towards pesticides use reductions (applying pesticide taxations) others are taking a carrot approach (offering more EU funding through rural development).

PAN Europe has been discussing how to reduce pesticide-use through taxation. While PAN Europe’s members all agree on the need to eliminate reduced VAT levels, our members are divided as to whether pesticide taxation (the stick approach) or more funding on rural development (the carrot approach) is the way forward. Often it is members in the new MS where CAP support levels are still being phased in who are reluctant to introduce taxation.

As a result we – together with our members and other Brussels based NGOs– will work together so that the low VAT on pesticides is stopped, in some MS we will work for introduction of a pesticide tax, while in others working for development of solid rural development measures.

This conversation helps come closer to reaching the objectives from the Communication of the Roadmap to a Resource Efficient Europe: to reduce resource inputs in food production by 20% by 2020 (page 18), and sets specific targets on introduction of environmental taxes (page 11).

Application of VAT on Pesticides

PAN Europe is very concerned that a number of member states (among others Cyprus, Romania, Slovenia, Portugal and Poland) are according the EU's own official statistics applying artificially low levels of VAT for pesticides. PAN Europe urges that Member States:
1) stop applying artificially low VAT on products like pesticides and fertilisers which are harmful to the environment and public health, while not applying low levels of VAT on products which are beneficial for the environment (ex. organic products).
2) start considering applying taxes reflecting the 'pollutor pays' principle.

See for further information: PAN Europe Feedback to EC consultation on the EC's proposal for a directive on minimum VAT >>

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PAN Europe gratefully acknowledges the financial support from the European Union, European Commission, DG Environment, Life+ programme. Sole responsibility for this publication lies with the authors and the funders are not responsible for any use that may be made of the information contained herein.