28th Jan 2023

EU court blocks internet alcohol tax loophole

The EU's highest court has said that citizens buying alcohol and tobacco over the internet cannot avail of cheaper excise duties in other member states and have to pay the taxes of their home country. Some national governments are relieved by the verdict which averts multi-billion tax income losses.

A common practise today sees millions of EU citizens crossing the border to a neighbouring country – like Poles to Slovakia, French people to Spain or Danes to Germany – to purchase alcohol and tobacco at cheaper prices because those countries' customs duties are lower than in their home countries.

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An 1992 EU law says excise duty is in general paid in the EU member state of the final destination, but there is an exception for products "acquired by private individuals for their own use and transported by them."

But the European Court of Justice (ECJ) in a landmark decision on Thursday (23 November) ruled that this exception is not valid when the goods are delivered to their home by a third party.

This is a blow to people who order alcohol and cigarettes online from countries with cheaper duties and get the goods delivered to their door.

Only personal transport

The Luxembourg-based court ruled that only products acquired and transported personally by private individuals - not those delivered by transport companies - are exempt from excise duty in the member state of importation.

The decision goes against the opinion of an adviser to the court, advocate-general Francis Jacobs, who in December last year recommended that individuals importing wine for their personal use should only pay the duty of the country where it was bought.

Thursday's preliminary judgement came after the Dutch supreme court asked the ECJ to interpret the EU law on the internal market of the free movement of goods and people.

In the supreme court, a Dutch citizen is in a court battle with his government for charging him excise duties because he bought wine online in France and imported it for personal use via a transporting company.

That way the customs duty was paid in France and not in the higher-tax Netherlands.

EU members states are relieved

UK conservative MEP Richard Ashworth said the ECJ ruling is a disappointment for consumers and called on the EU to finally remove the guidelines on purchases made in the single market.

"It is wrong that innocent consumers are treated like criminals just for exercising their single market rights," he said.

"Consumers should be able to exercise their rights in the single market without the inference they are acting illegally."

For its part, the European Commission criticised the ruling saying that it was too "restrictive."

It would like to see a change in the 1992 law on the subject, but EU governments - who have to decide on tax matters unanimously – have so far ignored a 2004 proposal to revise the law.

Some EU member states will be relieved by the outcome of Thursday's ruling as it saves them from potentially losing millions and maybe billions in excise duties revenues as more and more people order wine via the internet in EU countries that have no customs duty on wine.

Austria, Cyprus, Czech Republic, Germany, Greece, Hungary, Italy Malta, Portugal, Slovakia, Slovenia and Spain have no excise duties on wine.

Ireland, Finland, the UK, Sweden, Denmark and Belgium, on the other hand, have the highest duties on wine.

One EU diplomat told EUobserver his government was relieved by the outcome of the ECJ interpretation as it otherwise would have meant great financial consequences for his country, which has high excise duties.

Excise duties are only applied to alcohol, tobacco and mineral oil - such as heating oil.

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The EU's highest court has ruled that Sweden has no right to ban its citizens from importing alcohol into the country, saying it restricts the EU principle of the free movement of goods.


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