Library / Updates / European Court of Justice ruling on excise duties  


European Court of Justice ruling on excise duties

Luxembourg, 23 November. The European Court of justice has ruled that only products acquired by private individuals for their own use and transported personally by the private individual that purchased them are exempt from excise duty in the member state of importation.

A ruling in a different direction would have meant that private individuals from countries with high excise duties could via internet or telephone buy cheap alcoholic beverages in other EU states and have them delivered to their door while only the duty levied in the country of purchase is paid.

Judgment of the Court of Justice in Case C-5/05: Staatssecretaris van Financiën v. B.F. Joustra.

The Supreme Court of the Netherlands sought from the Court of Justice of the EC an interpretation of certain provisions in the directive on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products [1].

The Directive establishes that in the case of products subject to excise duty that are held for commercial purposes the excise duty shall be levied in the Member State where the products are released for consumption. However, if the products are “acquired by private individuals for their own use and transported by them” the principle governing the internal market lays down that excise duty shall be charged in the Member State in which they where acquired.

The Case:

In the present case, some 70 private individuals formed a group called the ‘Cercle des Amis du Vin'. Each year, on behalf of the circle, Mr Joustra orders wine in France for his own use and that of the other members of the group. On his instructions, that wine is then collected by a Netherlands transport company which transports it to the Netherlands and delivers it to Mr Joustra's home. The wine is stored there for a few days before being delivered to the other members of the circle. Mr Joustra pays for the wine and the transport and each member of the group then reimburses him for the cost of the quantity of wine delivered to that member and a share of the transport costs calculated in proportion to that quantity. Mr Joustra does not engage in that activity on a commercial basis or with a view to making a profit.

The wine ordered by Mr Joustra was released for consumption in France and excise duty was paid in that Member State. The quantity of wine delivered to each member of the circle did not exceed the maximum quantities laid down by the Directive as a guideline for determining whether the products are intended for commercial purposes, namely 90 litres of wine, of which no more than 60 litres may be sparkling wine.

The Netherlands tax authorities levied excise duty of EUR 906.20 on that wine. Mr Joustra disputes liability for that excise duty. In his opinion, the words ‘transported by them' in the Directive do not prevent it from being interpreted as meaning that the charging of excise duty in the Member State of destination is precluded where a private individual himself purchases, in another Member State, products subject to excise duty and arranges for those products to be transported, under his instructions and on his account, to the Member State of destination by a third party.

The ruling of the EU Court of Justice establishes 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. 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.

In that connection, the Court was not convinced by the Commission's argument that such an interpretation would be a retrograde step for the citizens of the European Union as against the situation which prevailed before the Directive entered into force in so far as, inter alia, small consignments which were not of a commercial nature from one private individual to another were exempt from excise duty in the State of importation. If the Directive contains a lacuna in this regard, it is for the Community legislature to remedy it, if necessary. 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, inter alia, of extending the benefit of the exemption to products transported on behalf of private individuals.

The Court of Justice also points out that the Directive is based on the idea that products which are not held for private purposes must necessarily be regarded as being held for commercial purposes. Where excise duty is levied in the Member State in which the products are being held for commercial purposes, although they have already been released for consumption in another Member State, the excise duty paid in that other Member State is to be reimbursed.

The full text of the judgment may be found on the Court's internet site

Court of Justice Press release

[1] Council Directive 92/12/EEC of 25 February 1992 as amended by Council Directive 92/108/EEC of 14 December 1992: