Information;Order — ECLI:EU:C:2019:984
Date: 2019-11-19
Language of the case: Finnish
Court formation: Tenth Chamber
Subject matter: State aids;Competition
Procedure: Reference for a preliminary ruling
Origin: Finland

Translation C-486/19 — 1 
Case C-486/19 
Request for a preliminary ruling 
Date lodged:  
25 June 2019 
Referring court:  
Korkein oikeus (Finland) 
Date of the decision to refer:  
20 June 2019 
Appellants:  
A 
B 
Respondents:  
Syyttäjä (public prosecution service) 
Tulli (customs authority) 
  
KORKEIN OIKEUS (SUPREME COURT) ORDER […] 
[…]        Date of order 
         20 June 2019 […] 
APPELLANTS 
A 
B 
RESPONDENTS 
Syttäjä (Public prosecution service) 
Tulli (Customs authority) 
EN 
REQUEST FOR A PRELIMINARY RULING OF 20.6.2019 — CASE C-486/19 
 
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SUBJECT MATTER 
Serious tax fraud 
DECISION OF THE KORKEIN OIKEUS 
Subject matter of the proceedings 
1. The case concerns the evasion of excise duties, of which the 
accused A and B are accused as serious tax fraud. The issue is the 
criminal liability of A and B when they imported ice-cream products, 
which were subject to excise duties under Finnish law, from another 
Member State of the European Union into Finland and failed to 
comply with their obligations linked to those duties. 
2. In order for the Supreme Court to be able to adjudicate on the 
matter, it requires a preliminary ruling on the significance to be 
attached to EU law, and in particular to Article 107(1) of the Treaty on 
the Functioning of the European Union (TFEU), with regard to the 
criminal liability of A and B.[Or. 2] 
More specifically, the question is whether EU law precludes the 
defendants from being sentenced to a criminal penalty for infringing 
national excise duty legislation if the latter was contrary to 
Article 107(1) TFEU. It is also unclear whether the national excise 
duty legislation was contrary to Article 107(1) TFEU. 
Relevant facts and criminal proceedings 
3. The company, which was represented by A and B, imported ice-
cream products from another Member State into Finland from March 
2013 to December 2014. At the time, ice-cream products were subject 
to excise duty under Finnish law. A and B failed to submit tax returns 
in respect of ice-cream products and failed to pay excise duty. 
4. The public prosecution service brought an action against A and B 
before the Pirkanmaan käräjäoikeus (District Court, Pirkanmaa) for 
serious tax fraud. The claimant authority responsible for the taxation, 
the customs authority, joined in the action. A and B opposed the 
action. 
5. In its judgment, the District Court considered that it had been 
established that A and B had failed to comply with their statutory tax 
obligations between 11 April and 27 October 2014 with the intention 
of evading taxes. In the course of the company’s activities, A and B 
had ordered and received ice-cream products subject to excise duty 
from another Member State. They [Or. 3] failed to a submit, in 
relation to all ice cream deliveries received by them, a tax return in 
SYYTTÄJÄ AND TULLI 
 
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relation to the receipt of each delivery of goods within four working 
days, and failed to pay excise duty within ten working days of 
receiving each delivery of goods. After A and B had been requested by 
the authority to submit a return by 16 May 2014 in relation to all the 
ice cream imports made by the company, they provided the authority 
with incorrect information about a circumstance affecting the tax 
assessment. On 14 May 2014, they declared in the company’s tax 
return that the company had received a total of 13 230 kg of ice-cream 
products subject to excise duty in 2013. Despite the request, they did 
not make any declaration whatsoever regarding ice-cream products 
subject to excise duty received by the company in 2013 — 
approximately 25 472 kg in total — and 2014 — approximately 
124 536 kg in total. The total amount of excise duty evaded was 
EUR 142 506.75. The District Court sentenced A and B to custodial 
sentences for serious tax fraud. 
6. A, B, the public prosecution service and the customs authority 
appealed against the judgment of the District Court to the Turun 
hovioikeus (Court of Appeal, Turku). In its judgment, the Court of 
Appeal ruled that A and B had acted in the manner described in the 
judgment of the District Court, but with the following differences. The 
offence was committed between 22 March 2013 and 27 October 2014. 
The total amount of excise duty evaded by the company was 
EUR 159 849, as the company had imported approximately 43 727 kg 
of ice-cream products in 2013 and approximately 124 536 kg in 2014. 
The Court of Appeal confirmed the custodial sentences imposed on A 
and B [Or. 4] by the District Court for serious tax evasion. 
7. The Supreme Court has granted leave to A to appeal against the 
judgment of the Court of Appeal. On the basis of the appeal brought by 
A, the question before the Supreme Court is whether EU law precludes 
A from being sentenced to a criminal penalty for his conduct. 
8. B has also requested leave to appeal against the judgment of the 
Court of Appeal be admitted. The Supreme Court has not yet decided 
whether to grant B leave to appeal. 
Applicable provisions 
National provisions 
9. The provisions on criminal liability are set out in the Rikoslaki 
(Criminal Code) (19.12.1889/39), the Valmisteverotuslaki (Law on 
excise duty) (19.3.2010/182) and the Laki makeisten, jäätelön ja 
virvoitusjuomien valmisteverosta (Law on excise duty on 
confectionery, ice cream and soft drinks, ‘Law on confectionery tax’) 
(17.12.2010/1127). 
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10. Paragraph 1, headed ‘Tax fraud’, of Chapter 29 of the Criminal 
Code (19.12.1997/1228) reads: 
‘Any person who 
1) by providing the tax authorities with incorrect information for tax 
purposes about a circumstance that affects the tax assessment, 
…[Or. 5] 
3) by failing to comply with statutory tax obligations which are 
relevant for tax assessment purposes, with the intention of evading 
taxes, or 
… 
causes or attempts to cause the imposition of no tax or too little tax or 
the undue repayment of tax shall be punished for tax fraud by a fine or 
imprisonment for a maximum of two years.’ 
11. Paragraph 2, headed ‘Serious tax fraud’, of Chapter 29 of the 
Criminal Code (24.8.1990/769) reads: 
‘If, in the case of tax fraud, 
1) a significant economic advantage is sought, or 
… 
and the tax fraud is also serious in an overall assessment, the 
perpetrator shall be punished for serious tax fraud by imprisonment for 
a minimum of four months and a maximum of four years.’ 
12. Paragraph 1, headed ‘Scope’, of the Law on confectionery tax 
(17.12.2010/1127) provided the following in the period during which 
the offence was committed: 
‘Excise duty shall be paid to the State in respect of confectionery, ice 
cream and soft drinks in accordance with the provisions of this law. 
…’ 
13. Paragraph 5, headed ‘Application of the Law on excise duty’, of 
the Law on confectionery tax (17.12.2010/1127) reads: [Or. 6] 
‘Unless otherwise specified in this law, the Law on excise duty 
(182/2010) shall apply. 
…’ 
SYYTTÄJÄ AND TULLI 
 
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14. Paragraph 7, ‘Chargeability of tax’, of the Law on excise duty 
(19.3.2010/182) reads as follows: 
‘Excise duty shall become chargeable when the goods subject to excise 
duty are released for consumption in Finland, unless otherwise 
specified in this law or in the relevant Law on excise duty.’ 
15. Tax liability is governed in Paragraph 75, headed ‘Holding for 
commercial purposes’, of the Law on excise duty (19.3.2010/182) as 
follows: 
‘… 
The person liable to pay the excise duty shall be the person who 
delivers the goods or holds the goods intended for delivery, or to 
whom the goods are delivered in Finland. 
Excise duty shall be levied pursuant to the provisions in force on the 
day on which the goods are delivered or the goods intended for 
delivery are held in Finland. 
…’ [Or. 7] 
16. At the time of the offence, the obligation to submit a tax return 
was laid down in Paragraph 31 (21.12.2012/964 and 27.6.2014/495) of 
the Law on excise duty, headed ‘Submission of a tax return’, as 
follows: 
‘… 
Persons liable to pay excise duty other than those referred to in 
subparagraph 1 shall submit the tax return to Customs within four 
working days (inclusive) of the goods being received or of 
chargeability arising in any other way. … 
…’ 
17. The obligation to pay the duty is laid down in Paragraph 46, 
headed ‘Time of payment of the duty’, of the Law on excise duty 
(19.3.2010/182) as follows: 
‘… 
A person liable to pay excise duty other than a person submitting a tax 
return for the tax period shall pay the duty within ten working days 
(inclusive) of the goods being received or of chargeability arising in 
any other way. … 
…’ 
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18. Paragraph 3, headed ‘Amount of duty’, of the Law on 
confectionery tax (17.12.2010/1127) read as follows during the period 
in which the offence was committed: [Or. 8] 
‘Excise duty shall be levied in accordance with the duty tables set out 
in the annex. The duty shall be calculated on the basis of the net 
weight of the goods, that is to say the weight of the goods without 
packaging and non-edible components. 
…’ 
19. Ice-cream products were governed as follows in Duty Table 1 in 
the annex to the Law on confectionery tax (16.12.2011/1318) in the 
period during which the offence was committed: 
‘Customs tariff number: 2105 
Product: Edible ices, water ices and similar frozen products, including 
those containing cocoa 
Product group: 4 
Tax amount: 95 cents/kg 
Customs tariff number: 1901 (partial) 
Product: Mixes intended for the production of ice cream 
Product group: 5 
Tax amount: 95 cents/kg’ 
EU law 
20. According to the case-law of the Court of Justice of the European 
Union, the national authorities should not impose penalties for 
disregard of a national provision which is incompatible with EU law 
(for example, judgment of 14 July 1977, Sagulo and Others, 8/77, 
EU:C:1977:131‚ paragraph 6, and judgment of 3 July 1980, Pieck, 
C-157/79, EU:C:1980:179‚ paragraph 16). 
21. Under Article 107(1) TFEU, save as otherwise provided in the 
Treaties, [Or. 9] any aid granted by a Member State or through State 
resources in any form whatsoever which distorts or threatens to distort 
competition by favouring certain undertakings or the production of 
certain goods is, in so far as it affects trade between Member States, 
incompatible with the internal market. 
SYYTTÄJÄ AND TULLI 
 
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22. According to settled case-law of the Court of Justice of the 
European Union, national tax measures can be classified as State aid 
within the meaning of Article 107(1) TFEU. 
The need for the preliminary ruling 
Starting points for the review under EU law 
23. As far as is known, the Court of Justice of the European Union 
has not delivered any decision in which it gave an opinion on whether 
EU law precludes a natural person acting on behalf of a taxable 
company from being sentenced to a penalty if the national tax 
legislation on which the criminal liability is substantively based is 
contrary to Article 107(1) TFEU. 
24. The Law on confectionery tax, on which the criminal liability of 
A and B is based, applied to excise duties on confectionery and ice 
cream from 1 January 2011 to 31 December 2016 and remains in force 
for soft drinks. Pursuant to the Law on confectionery tax, excise duty 
was levied on confectionery, confectionery-like products, chocolate, 
products containing cocoa, ice cream, water ices and non-alcoholic or 
low-alcohol beverages [Or. 10]. The products subject to excise duty 
were listed in product groups with reference being made to the 
corresponding EU customs tariff classification numbers. 
25. Excise duty was levied on all products of customs tariff 
classification number 2105 as ice cream and on those products of tariff 
classification number 1901 which were intended for the production of 
ice cream. The products of customs tariff classification numbers 1704 
and 1806 were taxed as confectionery. Furthermore, confectionery 
sweetened with sweetener were regarded as confectionery of tariff 
classification number 2106. Excise duty on soft drinks was levied on 
non-alcoholic beverages falling within heading 22 and tariff 
classification numbers 2009, 2106, 3302 and 3824 or on the products 
used in the production of those products. 
26. According to the Government’s legislative proposal, since excise 
duty on confectionery, ice cream and soft drinks was levied for the 
State budget, the excise duty was meant to target similar products as 
consistently and comprehensively as possible. Pursuant to Article 110 
TFEU, the neutrality of internal taxation between domestic and 
imported goods had to be ensured. The distinction between goods 
subject to duty and those not subject to duty was made on the basis of 
the customs tariff classification numbers. Existing product groups were 
selected as the subject matter of the duty, whereby the group of 
products that are subject to duty could be clearly delineated. Another 
aim of this determination was to make the system for collecting tax 
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simple and unambiguous, and predictable for companies (HE 148/2010 
vp pp. 3–10 and HE 137/2016 vp pp. 3–5 and 8–10). [Or. 11] 
27. The duty obligation in respect of confectionery and ice cream 
was abolished by legislative amendment 29.12.2016/1535. The 
legislation was not notified to the Commission pursuant to 
Article 108(3) TFEU, but Government Proposal 137/2016 vp made 
clear that the Commission had received two complaints about State aid 
in connection with the delimitation of the tax base in the Law on 
confectionery tax. Finland received and replied to the Commission’s 
request for information relating to the complaints. If, based on the 
preliminary assessment, the Commission found that there were doubts 
as to the compatibility of the tax system with the common market, it 
could have decided to initiate the formal investigation procedure in the 
case. No such decision has been made so far. Nor is there any case-law 
of the Court of Justice so far on the compatibility of a tax base serving 
the State budget with the provisions on State aid. However, the 
Commission had informally expressed its view that duty linked to 
customs tariff classification numbers and levied for budgetary reasons 
could display characteristics to be regarded as State aid. The 
Commission took the view that the duty did not treat similar products 
neutrally for tax purposes and could therefore contain a selective tax 
advantage, to be regarded as constituting State aid, for the products not 
subject to duty. The Commission took the view that changes to the tax 
base or tax purpose were necessary. 
28. It was also stated in the Government’s proposal that a distinction 
between products subject to duty and products not subject to duty had 
been drawn for the duty on confectionery and ice cream, for instance 
between frozen cakes and ice-cream cakes, between chocolate 
puddings and chocolate ice cream, and [Or. 12] between chocolate 
waffles and chocolate bars. A significant number of products that were 
assessed as being similar to products subject to duty, such as biscuits 
and sweet pastries comparable to confectionery, and puddings and 
yoghurt comparable to ice cream, were excluded from the duty. 
29. According to the information available to the Supreme Court, the 
aforementioned assessment of the complaints about State aid has been 
completed by the Commission. 
Background to the first question 
30. The case-law of the Court of Justice has already assessed the 
right of a taxpayer to be exempt from tax or to recover the tax he has 
paid in a situation in which the tax exemption for similar activities 
carried out by other undertakings is considered to be State aid within 
the meaning of Article 107(1) TFEU. According to settled case-law, 
SYYTTÄJÄ AND TULLI 
 
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those liable to pay a tax cannot rely on the argument that the 
exemption enjoyed by other undertakings constitutes State aid in order 
to avoid payment of that tax. Even if the exemption constitutes an aid 
measure within the meaning of Article 107(1) TFEU, the fact that the 
aid may be unlawful — in other words, incompatible with 
Article 108(3) TFEU — does not affect the legality of the tax itself. It 
would be otherwise if the tax and the envisaged exemption were an 
integral part of an aid measure. For a tax to be regarded as forming an 
integral part of an aid measure, it must be hypothecated to the aid 
measure under the relevant national rules [Or. 13], in the sense that the 
revenue from the tax is necessarily allocated for the financing of the 
aid and has a direct impact on the amount thereof and, consequently, 
on the assessment of the compatibility of that aid with the common 
market (for example, judgment of 15 June 2006, Air Liquide, Joined 
Cases C-393/04 and C-41/05, EU:C:2006:403, paragraphs 39-46). 
31. It is not clear from the case-law to date of the Court of Justice 
whether the representative of a taxpayer who was obliged to pay excise 
duty on goods and who failed to comply with the obligations linked 
with that duty may be released from the criminal penalty imposed for 
those failures on the basis that the tax exemption of similar products of 
other undertakings would have constituted State aid within the 
meaning of Article 107(1) TFEU. 
Background to the second question 
32. According to the settled case-law of the Court of Justice, 
classification of a national measure as State aid within the meaning of 
Article 107(1) TFEU requires all the following conditions to be 
fulfilled. First, there must be intervention by the State or through State 
resources. Second, the intervention must be liable to affect trade 
between Member States. Third, it must confer a selective advantage on 
the recipient. Fourth, it must distort, or threaten to distort, competition 
(for example, judgment [Or. 14] of 13 September 2017, ENEA, 
C-329/15, EU:C:2017:671, paragraph 17, and judgment of the Grand 
Chamber of 19 December 2018, A-Brauerei, C-374/17, 
EU:C:2018:1024, paragraph 19). 
33. The condition relating to selectivity is an essential element of the 
concept of State aid within the meaning of Article 107(1) TFEU. The 
Supreme Court takes the view that, in this case, a preliminary ruling by 
the Court of Justice is required in relation to this criterion for the 
assessment of State aid. It is apparent from the case-law of the Court of 
Justice that the assessment of this condition requires a determination, 
in the first place, of whether, under a given legal regime, a national 
measure is such as to favour ‘certain undertakings or the production of 
certain goods’ over other undertakings which, in the light of the 
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objective pursued by that regime, are in a comparable factual and legal 
situation and which accordingly suffer different treatment that can 
essentially be classified as discriminatory (judgment of the Grand 
Chamber of 19 December 2018, A-Brauerei, C-374/17, 
EU:C:2018:1024, paragraph 35 and the case-law cited). 
34. According to the case-law of the Court of Justice, in order to 
classify a national tax measure as ‘selective’, the Commission must 
begin by identifying the ordinary or ‘normal’ tax system applicable in 
the Member State concerned, and thereafter demonstrate that the tax 
measure at issue is a derogation from that ordinary system, in so far as 
it differentiates between operators who, in the light of the objective 
pursued by that ordinary tax system, are in a comparable factual and 
[Or. 15] legal situation (cf. judgment of the Grand Chamber of 
19 December 2018, A-Brauerei, C-374/17, EU:C:2018:1024, 
paragraph 36). A measure which, although conferring an advantage on 
its recipient, is justified by the nature or general scheme of the system 
of which it is part does not fulfil the condition of selectivity. Thus, a 
measure which constitutes an exception to the application of the 
general tax system may be justified if the Member State concerned can 
show that that measure results directly from the basic or guiding 
principles of its tax system (for example, judgment of 18 July 2013, P, 
C-6/12, EU:C:2013:525, paragraph 22). 
35. On the basis of the case-law of the Court of Justice to date, it is 
not clear whether a tax system such as the provisions of the Law on 
confectionery tax which related to ice-cream products and applied in 
Finland in the period during which the offence referred to in the 
judgment of the Court of Appeal constitutes State aid within the 
meaning of Article 107(1) TFEU. Interpretation is required in 
particular in relation to the question of whether the condition relating 
to the selectivity of the aid is fulfilled in a situation in which products 
subject to excise duty are determined, for reasons of precision of the 
scheme and administrative simplicity, on the basis of customs tariff 
classification numbers. 
Questions referred 
36. After giving the parties the opportunity to comment on the 
content of the request for a preliminary ruling, the Supreme Court has 
decided to stay the proceedings and refer the following questions to the 
Court of Justice of the European Union for a preliminary ruling: [Or. 
16] 
1. Is EU law to be interpreted as precluding a natural person acting 
on behalf of a company subject to tax who has failed to fulfil the 
obligations linked to the excise duty levied on ice-cream products from 
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being sentenced to a criminal penalty for those failures if a tax 
exemption for activities of other undertakings relating to similar 
products were to be regarded as aid within the meaning of 
Article 107(1) TFEU? 
2. If the first question is answered in the affirmative, did a national 
tax system for excise duties on ice-cream products such as that in force 
in the period during which the offence was committed meet the criterion 
of selectivity as a characteristic of the concept of State aid within the 
meaning of Article 107(1) TFEU? 
[Or. 17] 
[…]