WRITTEN QUESTION E-3461/01

by Rosa Miguélez Ramos (PSE) to the Commission

(4 January 2002)

Subject: British customs restrictions on the free movement of goods

A number of Spanish companies in the e-commerce sector regularly encounter problems with the British customs. These firms sell Spanish products (wine, jewellery, gifts, etc) and tobacco products (cigarettes, cigars and loose tobacco). According to the current legislation, for sales within the European Community, the companies may sell a maximum of four cartons of cigarettes and ten litres of alcoholic beverages per person for personal use.

However, despite being in a single market, the British customs confiscates a large quantity of these consignments addressed to customers of these companies, saying that they must pay tax in the United Kingdom, although the tax has already been paid in Spain. The firms consider this to be an infringement of the principle of free movement of goods sanctioned in the Treaty.

The United Kingdom Statutory Instrument 3155/1992 inaccurately transposes Council Directive 92/12/EEC(1) of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products. Article 8 of the Directive states As regards products 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 are acquired. Since the customer himself pays separately to have the goods transported (the invoice sent includes the despatching costs as a separate item) the legal requirements laid down in Article 8 of the Directive are fulfilled.

Does the Commission consider that the British Government respects the principle of the free movement of goods?

Does the Commission consider that the charging, for a second time, of excise duty by the British Government constitutes an infringement of the Directive on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products?

Does the Commission not consider that it is in actual fact a hidden customs duty, prohibited by Article 25 of the Treaty?

What steps will the Commission take vis-à-vis the British Government to ensure respect for the single market?

(1) OJ L 76, 23.3.1992, p. 1.

Answer given by Mr Bolkestein on behalf of the Commission

(15 February 2002)

It is accurate that Article 8 of Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products stipulates that in the case of goods purchased by private individuals for their own use, the excise duties are due in the Member State of purchase. However, for Article 8 to apply, the products must be transported by the individuals themselves. If a carrier acting for the buyer transports the goods, Article 8 is not applicable.

There are specific excise duty rules for distance sales between Member States in Article 10 of the Directive. The principle is that products which are released for consumption in one Member State, and which are transported or dispatched directly or indirectly by the vendor or on his behalf, shall bear excise duties in the Member State of destination.

Article 10 of the Directive must be interpreted in the light of the Court of Justice's ruling in case C-296/95(1). The Court has made a wide interpretation of the ambit of Article 10, stating (as concerns the requirement that the products shall be transported by the vendor or on his behalf) that the formula used in that provision clearly indicates that the Community legislature is more concerned with the objective nature of the transaction than with its legal form (point 46 of the judgement) and that Article 10 should cover all cases of dispatch on behalf of the vendor.

In the Commission's experience, most e-commerce sites of the kind referred to by the Honourable Member offer to facilitate the transport or dispatch of the goods in such a way that they should be considered as covered by the wording of Article 10. However, it can not be excluded that in some cases, the circumstances may be such that the transport or dispatch of the goods are clearly organised by the buyer, not the vendor. The Commission considers that, in light of the structure of the harmonised excise system and the reasoning behind the Court's judgement in case C-296/95, such cases must also be covered by Article 10 of Directive 92/12/EEC.

Hence, the Commission would like to reply to the questions of the Honourable Member as follows:

(a) In the Commission's view, the measures taken by the British authorities, as described by the Honourable Member, seem to be in conformity with the rules of the harmonised excise duty system, which are expressly designed to put into practice the principle of free movement of goods for products subject to excise duty.

(b) As explained above, the Commission considers that Article 10 of Directive 92/12/EEC applies to distance sales. In these cases, Article 10 provides for a procedure for the refund of the excise duty paid in the Member State of departure by the vendor. Through this procedure, double taxation is avoided.

(c) The Commission does not consider that the levy of an excise duty by a Member State in accordance with the harmonised excise duty rules of Directive 92/12/EEC can constitute a customs duty (as prohibited by Article 25 of the EC Treaty).

(d) In the light of the above, there seems to be no ground for the Commission to take action against the United Kingdom.

(1) Judgment of the Court of 2 April 1998, The Queen v. Commissioners of Customs and Excise, ex parte EMU Tabac SARL, The Man in Black Ltd, John Cunningham, ECR 1998 I-1605.