Member States are allowed to grant a maximum 50% reduction of the normal excise duty rate to distillates made by small producers per year, if no more than 10 hectolitres of pure alcohol are produced. Currently, the Croatian authorities allow a reduced rate of excise duty to be applied to small producers who produce up to 20 litres of pure alcohol per household for their own consumption. A flat rate of excise duty is applied depending on the capacity of the boiler used for production (i.e. HRK 100 for a boiler capacity up to 100 litres and HRK 200 for any boiler larger than that). Because the reduced rate applied by Croatia is linked to the capacity of the boiler and paid on a flat rate basis, regardless of the actual amounts produced, it does not comply with EU rules. Croatia has two months to inform the Commission of the measures taken to remedy the situation; otherwise, the Commission may decide to refer the case to the Court of Justice of the EU.