Commission notice concerning the VAT and excise rules to be applied from 1 July 1999 by suppliers of goods sold on board ferries and aircraft or in airports to passengers travelling within the European Union
Date: 1999-04-10
Institutions: European Commission
Subjects: VAT, aircraft, airport, duty-free sale, excise duty, ferryboat

C 99/20

EN

Official Journal of the European Communities

10.4.1999

Commission notice concerning the VAT and excise rules to be applied from 1 July 1999 by
suppliers of goods sold on board ferries and aircraft or in airports to passengers travelling
within the European Union

(1999/C 99/08)

Goods sold during or prior to an intra-Community voyage

Goods sold on board ferries and aircraft other than for
immediate consumption

The legal bases governing the VAT and excise treatment of
goods sold during or prior to an intra-Community voyage,
which are not for immediate consumption, are contained in
the general provisions of Council Directive 77/388/EEC of 17
May 1977 (1) and Council Directive 92/12/EEC of 12 February
1992 (2) respectively. Until 30 June 1999, Member States may,
as a derogative measure under Article 28k of Directive
77/388/EEC and Article 28 of Directive 92/12/EEC, exempt
such supplies from VAT and excise duties, subject to certain
conditions in terms of value and quantity.

Concept of intra-Community voyage

An intra-Community voyage is one between two Community
ports or airports without any intermediate call or stopover in
third countries or territories outside the European Community
fiscal territory (see Article 28k of Directive 77/388/EEC and
Article 28 of Directive 92/12/EEC in association with Article 2
of Council Regulation (EEC) No 3925/91 of 19 December
1991 (3). This basic rule applies even in cases where inter-
national waters or airspace have to be crossed.

third country. Goods other

If a ferry or an aircraft makes an intermediate call or a
stopover in a third country or a territory outside the fiscal
territory of the European Community, in order for passengers
it will be treated as going to and
to embark or disembark,
coming from a
than for
consumption bought by passengers on board the ferry or the
aircraft will be treated as third country goods unless these
to Community VAT and
goods have already been subject
exicse duty. At
from a
traveller’s allowance the value and quantitative limits of
which are set out in Articles 1 and 4 of Directive 69/169/EEC
of 28 May 1969 (4). However, this does not apply if the stay in
the third country is of a purely token nature and does not de
facto provide the passengers with an opportunity of making
purchases on land. When the passengers coming from a
third country enter or re-enter Community territory, appro-
priate controls will have to be applied, mainly in respect of
the fiscal status of the goods carried by the passenger.

the passenger may benefit

import,

According to existing Community VAT legislation as set out in
Article 8(1)(c) of Directive 77/388/EEC, goods supplied on
board ferries and aircraft during an intra-Community voyage
other than for immediate consumption shall be taxed under the
to the VAT rate applicable in the
conditions and subject
Member States of departure. This will apply irrespective of
whether
the goods are sold in the territorial waters or
airspace of the Member State of departure or of the Member
State of arrival or in international waters or airspace. Thus, for
example, ferry operators or airlines working between Germany
and Denmark would have to register and account for German
VAT for sales of goods during journeys from Germany to
Denmark and register and account
for Danish VAT for
journeys from Denmark to Germany.

With regard to excisable goods
intended to be sold for
purposes other than immediate consumption during intra-
ferry operators and airlines will no
Community voyages,
longer be able to carry these goods in an untaxed state since
they will no longer be eligible for exemption. Pursuant to the
provisions of Directive 92/12/EEC,
these goods will be
considered to have left the suspension system when they are
taken on board and there is no possibility to install tax ware-
houses on board ferries or aeroplanes.
In consequence the
goods will bear excise duty at
the rate applicable in the
Member State in which the goods are loaded, provided that
this Member State is served by the ferry or air route. The goods
can be sold according to the excise rate of the Member State of
loading until the means of transport arrives in the national
territory of the Member State of destination. This basic rule
applies
territories of other
Member States are crossed during the voyage provided that
there is no stopover or intermediate call with the chance for
passengers to disembark. The mere fact of crossing through
national waters or aispace of other Member States gives no
rise to the conclusion that excise duties would become
chargeable.

irrespective of whether

fiscal

(1) OJ L 145, 13.6.1977, p. 1, (Directive as last amended by Directive

98/80/EC).

(2) OJ L 76, 23.3.1992, p. 1, (Directive as last amended by Directive

96/99/EC).

(3) OJ L 374, 31.12.1991, p. 4.
(4) Official

Journal, English Special Edition: Series-I 69(I) p. 232,

(Directive as last amended by Directive 94/4/EC).

Under the provisions of Article 7(1) and (2), goods put up for
sale within the territory of the Member State of destination
have to be taxed again. However if the ferry operators or
airlines wish to avoid taxation in the second Member State
they can declare that they do not intend to sell the goods
within the territory of this Member State. In this case Article

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Official Journal of the European Communities

C 99/21

7(1) and (2) do not apply and the goods can be held on board
without any further taxation. However in such cases the docu-
mentary control and pre-notification provisions of Article 7(7)
and (8) apply, although Member States can make bilateral
agreements according to Article 7(9)
to allow simplified
procedures. Economic operators can also continue to sell
taxed goods loaded in one Member State in territories of
other Member States. In this case, Article 7(1) and (2) apply
and the excise duties of the subsequent Member States become
chargeable. Economic operators can ask for reimbursement of
the excise duties already paid in the Member State of loading in
accordance with Article 22(3). How excise duty is to be
charged and reimbursed including the possibility for simplified
accounting procedures, is a matter for individual tax authorities
to decide.

Goods sold for immediate consumption on board ferries
and aircraft

The VAT and excise regime applicable to goods sold to
passengers for immediate consumption on board ferries and
aircraft will
remain unchanged after 1 July 1999. For
exemption to apply, Member States may continue to avail
themselves of
the option laid down in Article 23(5) of
Directive 92/12/EEC to exempt supplies of goods to be sold
immediate consumption on board ferries and aircraft.
for
Where national
legislation in accordance with Community
legislation, provides for exemption for goods sold or supplied
free of charge for immediate consumption on board,
ferry
operators and airlines will still be able to carry untaxed
alcoholic beverages or tobacco products. Exemption does not
apply where products are sold to passengers to be carried
away, even if these products are, or may be consumed on
board the ferry or the aircraft.

As to multilateral voyages with intermediate calls at one or
more Member States, the basic rule is to regard each leg of a
journey as a separate one. If a ferry operator loads goods in
Member State A and then wishes to sell them on board when
the ferry is crossing international waters operating between
Member State B and C there is no legal base for such sales
to be taxed at the rate applicable in Member State A. Since the
goods are not destined to be taken back to the Member State of
departure they have to be taxed in Member State B, and
subsequently in Member State C, according to Article 7(1)
and (2).

Goods sold by shops situated at airports and the Channel
Tunnel terminals

According to existing Community VAT and excise legislation
(Article 8(1)(b) of Directive 77/388/EEC and Article 6 of
Directive 92/12/EEC), goods supplied at these shops shall be
taxed under the conditions and subject to the VAT and excise
duty rates applicable in the Member State where the goods are
located when the supply takes place. Like other retail sales, it
means that these sales will be subject to both VAT and excise at
rates applicable where the shop is situated.

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Official Journal of the European Communities

10.4.1999

ANNEX

EXAMPLE 1

A ferry operator working between the United Kingdom and France have the opportunity to sell excisable goods like
alcoholic beverages or tobacco products according to French tax rates on the way from France to the United Kingdom
until the fiscal territory of the United Kingdom is reached. Then he will have the choice to stop selling excisable goods
in order not to trigger another taxation or to continue to sell these goods and account for the United Kingdom excise
duty. If he decides to continue sales this does not automatically mean that a double price marking is necessary. It is open
to the operator to calculate one single price according to the expected profit margins or to use different prices on both
parts of each leg. On the way back from the United Kingdom to France the ferry operator can start to sell goods
according to French tax rates as soon as the ferry has left the United Kingdom fiscal territory.

EXAMPLE 2

In the case of a ferry travelling between Germany, Denmark and Sweden with stopovers in each of these Member States
each leg of the journey has to be regarded separately. Starting from Germany the excisable goods can be sold according
to German tax rates until the ferry enters the fiscal territory of Denmark. Goods sold within the Danish territory have to
be taxed according to Danish tax rates. During the journey between Denmark and Sweden it would not be possible to
apply German tax rates even if international waters have to be crossed. If the ferry operator wishes to continue sales in
Swedish waters Swedish tax rates would become applicable.

EXAMPLE 3

An aeroplane starts in Madrid and goes without any intermediate call straight to Copenhagen crossing the air space of
France and Germany. In this case the excisable goods loaded on board and taxed in Spain can be sold on board without
further taxation in France or in Germany. During the flight French or German tax rates would not be applicable even if
the air space of these countries has to be crossed.

EXAMPLE 4

A ferry travels from Stockholm to Tallinn (in Estonia), makes an intermediate call there and then travels from Tallinn to
Helsinki. On arrival in Finland customs provisions concerning imports from third countries and customs controls would
apply. In particular, quantitative restrictions based on third country travellers’ allowances would apply in respect of any
goods purchased on the vessel.