In a surprise move the ECJ has said that alcohol and cigarettes
which are delivered will still be taxed where they are consumed as
well as where they are bought. The court was ruling on a test case
brought by a Dutch man who imports wine for his wine club.
"This is an odd interpretation of the legislation," said Ian
Hyde, a specialist in tax law at Pinsent Masons, the law firm
behind OUT-LAW.COM. "I think the court had in mind two things:
firstly if it had allowed it, it could have made fraud easier; and
secondly, it was mindful that the Commission is processing an
amendment to the legislation anyway."
Online retailers were said to have been gearing up to start
buying and reselling cigarettes and alcohol all over Europe
following a ruling which was expected to go the other way.
An EU Directive on excise duty allows for the importing of
significant amounts of alcohol and tobacco for personal use, a
change to a previous system where limits were much tighter. This
case tested the terms of import and what constituted personal
use.
The Dutch man, Bob Joustra, orders wine in France on behalf of
himself and a group of friends in an informal wine club. That wine
is then delivered to him. The other members of the club then pick
the wine up from him and pay him the cost of the wine and their
share of the delivery, and Joustra only covers his costs, making no
profit.
Joustra objected to being charged excise duty when the wine was
delivered to The Netherlands and took a case claiming that the
Directive allowed excise-free importing for personal use products
which that person transported across borders.
Joustra argued that even though his wine was physically moved by
a third party, it was on his order, on his account and to his
address, and so the wine should be considered to have been
transported by him.
The court said that not only did a person have to physically
transport the goods themselves to qualify, but that Joustra's
ordering wine for friends did not constitute 'personal use'.
"The Court points out that, in order for products to be exempt
from excise duty in the State of importation, the Directive
requires that those products be intended for the personal use of
the private individual who has acquired them and that it therefore
excludes products acquired by a private individual for the use of
other private individuals," said an ECJ statement.
"Furthermore, the products in question must be transported
personally by the private individual who purchased them. Were this
not so, the effect, for the competent authorities of the Member
States, would be an increased risk of fraud as the transport of
products covered by the exemption requires no documentation," it
said.
Hyde said that this fraud concern was very real. "As you can
imagine it could result in whole shipping units coming in, or
articulated lorries, and the drivers just saying 'it's all for
personal use' and there is no documentation needed," he said. "It
is much easier to control Ford Focus estates."
The Commission is planning a revision to the Directive which
would allow for delivery of goods for personal use, something to
which the judgement alluded.
"If the Directive contains a lacuna in this regard, it is for
the Community legislature to remedy it, if necessary," said the ECJ
statement. "This is confirmed by the fact that a proposed amendment
to the Directive has in fact been submitted by the Commission to
the Council of the European Union for the purpose of extending the
benefit of the exemption to products transported on behalf of
private individuals."
