EU Tax Alert - Microsoft · The EU Tax Alert is an e-mail newsletter to inform ... the CJ delivered...
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August 2014 - edition 133EU Tax Alert
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Highlights in this editionCommission investigates tax and non-tax State aid to sea ports On 9 July 2014, the Commission sent letters to Belgium and France enquiring about corporate tax advantages being
granted to sea ports.
CJ rules that Danish legislation regarding reincorporation of the losses previously deducted in respect of permanent establishments located abroad contravenes the freedom of establishment (Nordea Bank Danmark A/S)On 17 July 2014, the CJ delivered its judgement in case Nordea Bank Danmark A/S v Skatterministeriet (C-48/13).
The case deals with the Danish legislation regarding reincorporation of losses previously deducted in respect of
permanent establishments located abroad.
The CJ ruled that such legislation which reincorporates previously deducted losses incurred by foreign permanent
establishments intro the transferring company’s taxable profit in the event of transfer of those permanent
establishments to non-resident companies in the same group, contravenes the freedom of establishment in so far
as the Member State of the transferring company taxes both the profits made by those establishments before its
transfer and the gain upon the transfer.
CJ rules that bank may be obliged to include just part of rental payments in pro rata (Banco Mais)On 10 July 2014, the CJ delivered its judgment in the case Fazenda Pública v Banco Mais SA (C-183/13). Banco
Mais is a Portuguese bank which carries out leasing activities in the automotive sector and other financial activities.
It carries out both transactions in respect of which VAT is deductible and transactions in respect of which VAT is not
deductible.
The CJ ruled that a Member State in circumstances such as the one at hand, cannot be precluded from requiring
a bank which inter alia carries out leasing activities, to include in the pro rata calculation only the part of the rental
payments that corresponds to interest, where that use of the goods and services is primarily caused by the financing
and management of the leasing contracts, which is a matter for the national court to ascertain.
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ContentsHighlights in this edition• Commission investigates tax and non-tax State aid
to sea ports
• CJ rules that Danish legislation regarding
reincorporation of the losses previously deducted in
respect of permanent establishments located abroad
contravenes the freedom of establishment (Nordea
Bank Danmark A/S)
• CJ rules that bank may be obliged to include just part
of rental payments in pro rata (Banco Mais)
State Aid / WTO• European Commission approves exemptions from
tax on advertising materials
• European Commission opens formal investigation
into tax exemption for Netherlands public companies
• Property transfer tax exemptions for reorganization of
local authorities found not to be aid
Direct taxation• AG Niessen opines on Netherlands rules regarding
Netherlands rules on mortgage interest relief
VAT• CJ rules that non-recoverability of leasing cars after
termination of leasing contracts does not qualify as a
self-supply (BCR Leasing)
• CJ rules that Member State is not allowed to require
payment of import VAT when reporting of that VAT
has already taken place under the reverse charge
mechanism (Equoland)
• Advocate General opines that transport or dispatch
to customer commences in Member State where
condition of good is brought in accordance with
contract (Fonderie)
• First evaluation of VAT cross-border ruling (CBR) pilot
case
• Commission formally requests France to levy VAT on
sporting events
• Commission publishes report on feasibility of new
VAT rules 2015
Customs Duties, Excises and other Indirect Taxes• CJ rules on the incurrence of a customs debt resulting
from an unlawful removal of goods from customs
supervision (SEK Zollagentur GmbH)
• CJ rules on the principle of respect for the rights of
the defence (Kamino International Logistics BV and
Datema Hellmann Worldwide Logistics BV)
• CJ rules on the CN classification of oil products with
aromatic constituents (Lukoyl Neftohim Burgas AD)
• CJ rules on the CN classification of plasma screens in
which video tuner can be inserted (Panasonice Italia
SpA)
• CJ rules on the CN classification of a substance
producing, by chemical reaction and exposure to
a laser light, a fluorescent effect intended for the
analysis of white blood cells (Sysmex)
• Commission refers UK to Court of Justice for failure
to comply with EU rules on marked fuel
• Commission refers Portugal to Court of Justice over
excise duty rules for cigarettes
• Operation ERMIS: 70 000 counterfeit goods seized in
EU joint customs operation
• Customs: Tackling smuggling and fraud in excise
goods
4 5
compared with those having PEss in Denmark. They
lay down a rule requiring the reincorporation of losses
lawfully deducted in respect of the foreign establishments
transferred which does not apply if establishments in
Denmark are transferred in identical circumstances. That
disadvantageous treatment is liable to deter a Danish
company from carrying on its business through a PE
situated in a Member State or in a State that is party to
the EEA Agreement other than Denmark and therefore
constitutes a restriction prohibited in principle by the
provisions of the TFEU and the EEA Agreement that
relate to freedom of establishment.
The CJ then went to analyse the justifications invoked
by the Danish Government based on the need to
ensure a balanced allocation of the power to impose
taxes between Member States in connection with the
prevention of tax avoidance. The CJ recalled that the
objective of the Danish legislation is thus to avoid the risk
of tax avoidance which would consist, in particular, in a
group organising its business in such a way that it deducts
from its taxable income in Denmark the losses incurred
by a loss-making PE situated abroad and then, once
that establishment has become profitable, transfers the
establishment’s business to a company which it controls
but which is liable to tax not in Denmark. If Denmark were
denied the power to reincorporate the losses thereby
deducted into the taxable profit of the Danish company
carrying out the transfer, when it has lost the power to
tax any future profits, arrangements of the above kind
would artificially erode its tax base and, therefore, affect
the allocation of the power to impose taxes. However, the
CJ considered that the legislation went beyond what is
necessary to attain that objective.
The CJ recalled that the balanced allocation of the power
to impose taxes has the objective of safeguarding the
symmetry between the right to tax profits and the right
to deduct losses. That means that the losses deducted
in respect of a PE must be capable of being offset by
taxation of the profits made by it under the tax jurisdiction
of the Member State in question, that is to say, both the
profits made throughout the period when the permanent
establishment belonged to the resident company and
those made at the time of the permanent establishment’s
transfer. In the present case it was not disputed that the
Highlights in this editionCommission investigates tax and non-tax State aid to sea ports On 9 July 2014 the Commission sent letters to Belgium
and France enquiring about corporate tax advantages
for ports. In respect of Germany, the Commission
asked questions about other (non-tax) competitive
advantages to ports. The functioning and tax treatment
of ports in certain other EU Member States is still under
investigation.
CJ rules that Danish legislation regarding reincorporation of the losses previously deducted in respect of permanent establishments located abroad contravenes the freedom of establishment (Nordea Bank Danmark A/S)On 17 July 2014, the CJ delivered its judgement in
case Nordea Bank Danmark A/S v Skatterministeriet
(C-48/13). The case deals with the Danish legislation
regarding reincorporation of losses previously deducted
in respect of permanent establishments (PEs) located
abroad.
Under the Danish legislation applicable in the main
proceedings, resident companies take into account on
an ongoing basis the profits and losses of their PEs
located abroad when determining the taxable income
of the company. Nordea Bank is a company resident
in Denmark which engaged in retail banking activities
in Finland, Sweden and Norway through loss-making
PEs and lawfully deducted the losses from its taxable
income in Denmark. In 2000, the activities of those PEs
were restructured. The transactions were considered
as a partial sale of the business to other companies
of the group. The losses previously deducted - which
had not been matched by subsequent profits - were
reincorporated into Nordea Bank’s taxable profit. Nordea
Bank considered that such reincorporation was contrary
to freedom of establishment.
The CJ started by considering that the Danish legislation
results in an advantage being denied to Danish
companies having permanent establishments abroad
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took the view that fully including the rental turnover
from the leasing transactions distorted the calculation
and that, based on Article 17, paragraph 5 of the Sixth
EU VAT Directive, only the part of the rental payments
which related to interest should be included. As a result,
Banco Mais was required to pay arrears of VAT together
with compensatory interest. Finally, the matter ended up
before the Supreme Court, which decided to stay the
proceedings. The Supreme Court referred to the CJ for
a preliminary ruling regarding the question whether the
rental payments should be fully taken into account in the
numerator or that only the interest had to be taken into
account.
The CJ ruled that a Member State, in circumstances such
as the one at hand, cannot be precluded from requiring
a bank which inter alia carries out leasing activities, to
include in the pro rata calculation only the part of the
rental payments that corresponds to interest, where that
use of the goods and services is primarily caused by
the financing and management of the leasing contracts,
which is a matter for the national court to ascertain.
State Aid/WTOEuropean Commission approves exemptions from tax on advertising materials On 9 July 2014, the European Commission approved
a Danish tax on advertising material delivered to
households, which included an exemption for materials
from certain government-recognised educational
societies, weekly newspapers (with at least 25% editorial
content) and telephone directories. The tax, as such,
aims to reduce the volume of household waste paper.
The first exemption was found not to constitute aid as EU
trade would not be affected. Given the social role of weekly
newspapers in distributing local information and serving
as a means of communication for the elderly and in low-
populated areas, the Commission approved the second
exemption. The exemption for telephone directories also
constituted State aid, but the Commission’s final view on
its compatibility was not addressed in the press release
currently available.
profits of a PE belonging to a resident company that are
made before the permanent establishment’s transfer to
a non-resident company in the same group are taxable
in Denmark. In addition in the event of a subsequent
sale, the gain made upon the transfer is then added to
the taxable income of the Danish company carrying out
the transfer.
Therefore the Court concluded that the reincorporation of
the previously deducted losses went beyond necessary
to the need to safeguard the balanced allocation of the
power to impose taxes. It stressed that such conclusion
was not altered by the fact, put forward by the Danish
Government, that it would be difficult for it in the event
of an intragroup transfer to verify the market value of
the business transferred in another Member State. Such
difficulties are not specific to cross-border situations
since the Danish authorities necessarily already carry out
similar checks when a business is sold in the context of an
intragroup transfer of a resident establishment. Moreover,
the Danish authorities in any event would always have
the power to request from the transferring company the
documents that appear to them necessary in order to
verify whether the value of the business adopted for the
purpose of calculating the gain on transfer of a foreign
establishment is the same as the market value
CJ rules that bank may be obliged to include only part of rental payments in pro rata (Banco Mais) On 10 July 2014, the CJ delivered its judgment in the case
Fazenda Pública v Banco Mais SA (C-183/13). Banco
Mais is a Portuguese bank which carries out leasing
activities in the automotive sector and other financial
activities. It carries out both transactions in respect of
which VAT is deductible and transactions in respect of
which VAT is not deductible. In this regard, Banco Mais
incurred general costs on which VAT is charged.
For determining the deductible VAT on the general costs,
Banco Mais calculated its pro rata, including (besides
the financial transactions) the turnover from the leasing
transactions in respect of which VAT is deductible in the
numerator and (besides the financial transactions) the
turnover from all leasing transactions in the denominator.
The Portuguese tax authorities, however, in essence,
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The taxpayer, a Netherlands national, is a foreign
taxpayer for Netherlands tax purposes. He lives in
Spain, but derives his income only from the Netherlands
(60%) and Switzerland (40%), as a shareholder of his
100% holding company in the Netherlands. He owns a
house in Spain, partly paid for by means of a mortgage,
with which mortgage interest is involved. The taxpayer
takes the position that the negative income from these
interest costs in Spain should be taken into account
in the Netherlands, based on EU law (in particular,
considering the case law of the CJ in the Schumacker
and Rennerberg judgments, without opting for treatment
as a foreign taxpayer under Netherlands law (article 2.5
Income Tax Act). The Netherlands tax inspector did not
allow this deduction, because there is no possibility to
refer to EU law. The Netherlands Court decided in favour
of the tax inspector, considering that in order to be able to
rely on the Schumacker case, a person must be regarded
as an employee.
The AG divided the problem into three sub questions. The
first question, whether the taxpayer can be treated as an
employee for EU law purposes. The taxpayer argued
that, because his father is the director of the company,
and the taxpayer himself is only the shareholder, there is
a position of subordination and he can be treated as an
employee. However, as the AG pointed out, in a case of
a 100% interest, the shareholder’s position is so strong
that there cannot be a position of subordination. The
Netherlands Court also came to this conclusion.
Second, where the taxpayer is not considered an
employee, the AG addressed the question whether this
would be relevant for applying the Schumacker case.
The tax inspector argued that, because the Schumacker
case dealt with the situation of an employee, this case
cannot be relied on in the present situation. The court
agreed with this argument. The AG pointed out however,
referring to the Wielockx case, that the Schumacker case
should apply to all persons who perform cross-border
work. The AG concluded that the Netherlands has to take
into account the personal allowances.
Finally, the AG addressed the question how to attribute
the personal allowances when there are two working
European Commission opens formal investigation into tax exemption for Netherlands public companies In May 2013, the European Commission proposed to
the Netherlands to change its corporate tax system in
regard to public undertakings by 2015, which, for the
most part, are exempt under the current system. The
Netherlands government had previously accepted the
measures proposed by the Commission (to the extent
that it would be in effect as of 2016). In a draft proposal
for a law changing the corporate tax, an exemption was
included for five seaports. From this, the Commission
concluded that the Netherlands authorities had not fully
accepted the measures proposed by it. For that reason,
the Commission has opened a full investigation as a next
step to order the Netherlands to change its system as
part of its monitoring obligations of existing aid schemes.
Property transfer tax exemptions for reorganization of local authorities found not to be aid On 26 May 2014, the European Commission found
that a German exemption from property transfer tax for
reorganizations of public authorities did not constitute
aid. As part of local merging or reorganization, land can
be transferred from one legal entity to another. Given
public policy reasons for such transfers, this did not lead
to State aid given the logic of a property transfer tax. It
should be noted that the Commission considered that
neither the merging of two economic activities nor the
development of such an activity should be the purpose
of a reorganization.
Direct TaxationAG Niessen opines on Netherlands rules regarding Netherlands rules on mortgage interest reliefOn 17 July 2014, AG Niessen issued his Opinion in
Hoge Raad (case 13/03468). The case deals with a
Netherlands foreign taxpayer who cannot claim mortgage
interest relief in his home State because no income is
derived from there. In particular, it deals with the issue of
how to allocate the mortgage interest relief to the working
States, between EU and Third (Non-EU) countries.
7
Regarding the missing cars, the tax authorities considered
that in accordance with the national Fiscal Code, the
relevant transactions had to be defined as ‘self-supplies’
and that BCR Leasing had to issue invoices to itself in
respect of these supplies. To the contrary, BCR Leasing
stated that the national legislation was not compatible
with the system of the EU VAT Directive. Finally, the
matter ended up before the Court of Appeal, which
decided to stay the proceedings and to refer to the CJ
for a preliminary ruling regarding the question if Article 16
or Article 18 of the EU VAT Directive applies in the case
at hand.
In conclusion, the CJ ruled that the impossibility for the
leasing company to recover the goods in the case at
hand cannot be regarded as a supply of goods for private
use of BCR Leasing or of its staff, within the meaning of
Article 16 EU VAT Directive. First, the goods are not in
their possession; second, the situation is the result of the
lessee’s allegedly wrongful conduct; and third, the goods
cannot be considered as being applied for purposes other
than those of the business of BCR Leasing. According to
the CJ, Article 18 EU VAT Directive also cannot be applied
to the underlying case, as the situations described in this
provision do not occur.
CJ rules that Member State is not allowed to require payment of import VAT when reporting of that VAT has already taken place under the reverse charge mechanism (Equoland) On 17 July 2014, the CJ delivered its judgment in the case
Equoland Soc. coop. (‘Equoland’) v Ufficio delle Dogane
di Livorno (C-272/13). Equoland, an Italian company,
imported in June 2006 a consignment of goods from a
third country. On the customs declaration, it was stated
that those goods were destined for the tax warehouse for
the purposes of VAT. Consequently, no payment of VAT
on importation was requested on the date of transaction.
On the day after the import, the goods were listed in a
warehouse register. As it was discovered that the goods
had never been physically stored in the warehouse,
the goods were immediately withdrawn from the tax
warehouse arrangements. Accordingly, VAT was paid by
Equoland under the reverse charge mechanism.
States, and specifically, when one of these States is
not an EU Member State, such as Switzerland. The AG
discussed seven different approaches on how to allocate
the personal allowances. According to him, the most
preferable approach is to let each working State calculate
the personal allowances according to its national tax law,
and then divide this by the number of working States
(in this case two). When one of the States is not an
EU Member State, the AG put forward that this country
cannot be taken into account by the other working States.
In the present case, this would mean that the Netherlands
would have to take into account the interest costs for the
full amount.
However, the AG argued that the CJ should decide on
the question whether the EC-Switzerland Agreement
of free movement of persons is applicable. Besides,
the interpretation of this agreement in the light of the
Schumacker case law should be dealt with by the CJ.
VAT CJ rules that non-recoverability of leasing cars after termination of leasing contracts does not qualify as a self-supply (BCR Leasing) The CJ delivered its judgment in the case SC BCR
Leasing IFN SA v Agenția Naționalǎ de Administrare
Fiscalǎ etc. (C-438/13) on 17 July 2014. BCR Leasing
is a Romanian company whose main activity is financial
leasing. For that purpose, it acquires cars from various
suppliers, which it leases to natural or legal persons.
In respect of the acquisition of the cars, BCR Leasing
deducts the input VAT paid in full.
As a result of late or non-payments by the lessees, BCR
Leasing terminated a number of the financial leasing
contracts. The lessees were required to return the goods
to BCR Leasing within three days of the termination of
the contract, but a number of the lessees refused to do
so. Despite the proceedings initiated by BCR Leasings,
some of the cars could not be recovered within the time-
limits set and as the contract had been terminated, BCR
Leasing no longer sent invoices with VAT to the lessees.
Accordingly, VAT was no longer collected by BCR Leasing
in respect of the terminated leasing contracts.
8 9
Fonderie took the view that the supply of the goods to
Atral was an Intra-Community supply of goods and that
the supply took place in Italy, where the transport of the
metal components started. Consequently, Fonderie took
the view that it did not have any transactions for which it
required a VAT registration in France and that, therefore,
it was entitled to reclaim the VAT on the invoice issued
by Saunier-Plumaz based on the refund procedure of
the Eighth EU VAT Directive. The French tax authorities,
however, opposed this view and stated that the supply
of goods was a local supply in France, as the varnished
metal components were dispatched from Saunier-Plumaz
to Atral. In that case, Fonderie could only deduct French
input VAT by registering and filing VAT returns in France.
The Advocate General opined that the transport or the
dispatch to the customer can only commence when the
good is in a condition in accordance with the contract. As
this condition was only achieved after the varnishing of
the metal components, the dispatch to Atral commenced
in France. Consequently, according to the Advocate
General, the place of supply of the components was in
France.
First evaluation of VAT cross-border ruling (CBR) pilot case Recently, the EU VAT Forum has made a first evaluation
of the VAT CBR pilot case, which started in June 2013.
The participating national tax authorities and businesses
aired their wish to extend the initiative to other EU
Member States. A first list of cross-border tax rulings has
already been published. The pilot case will be further
evaluated at the end of this year.
Commission formally requests France to levy VAT on sporting events On 10 July 2014, the Commission formally requested
France to bring the VAT treatment of tickets for admission
to matches and other sporting events in conformity with
the EU VAT Directive. Under the EU VAT Directive, the
admission fee should, in general, be subject to VAT.
According to the Commission, France so far has retained
by way of derogation an exemption for sporting events
that were subject to entertainment tax. However, in
the meantime, French municipalities have made use
of a created possibility to exempt sporting events on
With regard to the situation, the Customs Agency claimed
that the application of the law on VAT warehouses is
subject to the necessary condition that the imported goods
are ‘physically’ placed in the warehouses. Therefore,
the postponement of payment of VAT on importation
was unjustified and the Customs Agency took the view
that Equoland had not paid the VAT due on importation.
Consequently, the Customs Agency sought payment
of the VAT on importation plus a penalty of 30% of the
VAT amount. Equoland opposed this view and argued
that it had regularized its situation by paying the VAT on
importation through the reverse charge mechanism to
the tax authorities instead of to the Customs Agency. In
the end, the matter ended up before the Regional Tax
Court of Tuscany, which Court referred the question to
the CJ for a preliminary ruling.
The CJ ruled that Article 16 (1) of the EU Sixth
Directive does not preclude national legislation which
makes the grant of an exemption, such as the one at
hand, conditional on the fact of whether the goods are
physically placed in a tax warehouse. Furthermore, the
CJ concluded that the penalty procedure may prove to
be disproportionate, given the impossibility of adapting it
to the specific circumstances of each case, which is for
the referring court to decide. Finally, according to the CJ,
national legislation may not require the payment of VAT
on importation even though that VAT has already been
settled under the reverse charge mechanism through
self-invoicing.
Advocate General opines that transport or dispatch to customer commences in Member State where condition of good is brought in accordance with contract (Fonderie) On 3 July 2014, Advocate General Kokott issued her
Opinion in the case Sociéte Fonderie 2A (‘Fonderie’)
v Ministre de l’Economie et des Finances (C-446/13).
Fonderie, an Italian company, sold metal components to
its customer (Atral) in France. Before supplying them to
Atral, the goods were varnished in France by Saunier-
Plumaz, for the account of Fonderie. For this activity,
Saunier-Plumaz invoiced an amount including French
VAT to Fonderie, for which VAT Fonderie wished to obtain
a refund.
9
The following day, the haulage company designated by
SEK Zollagentur, the approved consignor, was meant
to collect a number of consignments, including the
aforementioned articles, at the temporary storage location
and deliver them to a recipient in Greven (Germany).
When the articles arrived, the recipient established that
the bicycle carriers were not included in the consignments
and accordingly, notified the customs office at the place
of destination.
The Hauptzollamt Gießen then wrote to SEK Zollagentur,
requesting information on the whereabouts of the bicycle
carriers. SEK Zollagentur replied that the bicycle carriers
had not been loaded on 17 January 2010. It stated that
the owner of the temporary storage facility had not been
able to keep the stored consignments in its warehouse
and hand them over to the haulage company, which was
why the bicycle carriers had not been handed over to the
haulage company as planned and had remained at the
temporary storage facility.
On 1 February 2010, a new consignment for the bicycle
carriers was arranged under a fresh transit procedure.
The recipient then released the bicycle carriers for free
circulation and paid import duties of EUR 2,000.
The Hauptzollamt Gießen also charged the same amount
to SEK Zollagentur on the ground that the latter had
removed the bicycle carriers from customs supervision by
failing to present them at the customs office at the place
of destination at the time of the first transit procedure.
SEK Zollagentur took the view that the customs duties
being charged were not legally owed and requested
repayment pursuant to Article 236 of the Customs Code.
It asserted that a transit procedure began only when
the goods were actually collected from the storage
depot, irrespective of the declaration made by it. Before
the transport began, the external Community transit
procedure had not commenced, with the result that the
only party responsible for the removal from customs
supervision was the owner of the temporary storage
facility.
their territory from entertainment tax. The Commission
opposes the extended existence of the VAT exemption
and takes the view that France should levy VAT on tickets
for events which are not subject to entertainment tax. If
France does not react in a satisfactory manner within two
months, the Commission may refer France to the CJ.
Commission publishes report on feasibility of new VAT rules 2015 On 26 June 2014, the Commission published a report
on the feasibility of the new VAT rules for telecom,
broadcasting and electronic services as of 1 January
2015. The report focuses on the action taken to ensure
the proper and efficient implementation of the new rules.
On the way forward, the Commission recommends the
Member States to take all relevant actions to set up the
necessary IT infrastructure in due time, to fully implement
the audit guidelines, to refrain from the option to require
an invoice on B2C supplies covered by the new place-
of-supply rules and to designate an easily accessible
contact point for double taxation problems.
Customs Duties, Excises and other Indirect TaxesCJ rules on the incurrence of a customs debt resulting from an unlawful removal of goods from customs supervision (SEK Zollagentur GmbH) On 12 June 2014, the CJ delivered its judgment in case
SEK Zollagentur GmbH (C- 75/13). The case concerns
the unlawful removal of bicycle carriers that were placed
under temporary storage.
On 15 January 2010, a shipment of 12 bicycle carriers
was brought into the customs territory of the European
Union. The shipment was placed in temporary storage
and the owner of the storage facility presented the goods
to customs and drew up a summary declaration thereof.
On 17 January 2010, SEK Zollagentur declared the
bicycle carriers for transit under the external Community
transit procedure. The bicycle carriers were released for
transit the same day.
10 11
2. The fourth indent of Article 203(3) of Regulation
No 2913/92, as amended by Regulation No
648/2005, must be interpreted as meaning that,
in circumstances such as those of the main
proceedings, where an article is removed from
customs supervision, the person who, as the
approved consignor, placed that article in the
external Community transit procedure is a customs
debtor under that provision. ‘
CJ rules on the principle of respect for the rights of the defence (Kamino International Logistics BV and Datema Hellmann Worldwide Logistics BV) On 3 July 2014, the CJ delivered its judgment in the joint
cases Kamino International Logistics BV (C-129/13) and
Datema Hellmann Worldwide Logistics BV (C-130/13).
The case concerns the possible infringement of the right
to be heard before duty assessments are imposed in the
situation that party concerned has the opportunity to be
heard during the objection stage.
In each of the actions in the main proceedings, a customs
agent, namely Kamino in Case C-129/13 and Datema in
Case C-130/13, acting on the instructions of the same
undertaking, filed in 2002 and 2003 declarations for the
release for free circulation of specified goods, described
as ‘garden pavilions/party tents and side walls’.
Kamino and Datema declared those goods under code
6 601 10 00 of the Combined Nomenclature (‘Garden or
similar umbrellas’) and paid customs duty at the rate of
4.7% cited for that code.
Following an inspection by the Netherlands customs
authorities, the tax inspector found that the classification
was incorrect and that the goods concerned should be
classified under code 6 306 99 00 of the Combined
Nomenclature (‘Tents and camping goods’), to which a
higher rate of customs duty of 12.2% applies.
As a result, the tax inspector sent, by decisions of 2 and
28 April 2005, demands for payment on the basis of
Articles 220(1) and 221(1) of the Customs Code, in order
to effect the recovery of the additional customs duties still
due from Kamino and Datema, respectively.
Following the dismissal of its action brought against
the decision refusing it repayment, SEK Zollagentur
brought an action before the Finanzgericht Hessen
(Finance Court, Hessen), which upheld the refusal of
repayment on the ground that the duties could not be
repaid because they were legally owed. SEK Zollagentur
brought an appeal on a point of law (‘revision’) before the
Bundesfinanzhof (Federal Finance Court).
In those circumstances, the Bundesfinanzhof decided to
stay proceedings and to refer the following questions to
the Court for a preliminary ruling:
‘1. Are the relevant provisions of the Customs Code,
in particular Article 50 thereof, to be interpreted
as meaning that an article left with a person by
the customs authority for temporary storage in an
approved place is deemed to have been removed
from customs supervision if it is declared for an
external transit procedure, but it does not in fact
accompany the prepared transit papers on the
transport planned and is not presented to the
customs office at the place of destination?
If the answer to the first question is affirmative:
In such circumstances is the person who, as the approved
consignor, placed the goods in the transit procedure a
customs debtor under the first indent of Article 203(3)
of the Customs Code or under the fourth indent of
Article 203(3) of the Customs Code?’
The CJ ruled as follows:
‘1. Articles 50 and 203 of Council Regulation (EEC)
No 2913/92 of 12 October 1992 establishing
the Community Customs Code, as amended by
Regulation (EC) No 648/2005 of the European
Parliament and of the Council of 13 April 2005, must
be interpreted as meaning that an article left for
temporary storage must be deemed to have been
removed from customs supervision if it is declared
for an external Community transit procedure, but
it does not in fact leave the storage facility and is
not presented to the customs office at the place of
destination, although the transit documents have
been presented there.
11
2. If the answer to Question 1 is in the affirmative:
(a) Must the European law principle of respect for
the rights of the defence by the authorities be
interpreted to mean that the principle is infringed
where the addressee of an intended decision
was not given a hearing before the authorities
adopted a measure which adversely affected it
but was given the opportunity to be heard at
a subsequent administrative (objection) stage,
which precedes access to the national courts?
(b) Are the legal consequences of the infringement
by the authorities of the European law principle
of respect for the rights of the defence governed
by national law?
3. If the answer to Question 2(b) is in the negative, what
circumstances may the national courts take into
account when determining the legal consequences,
and in particular may they take into account whether
it is likely that, without the infringement by the
authorities of the European law principle of respect
for the rights of the defence, the proceedings would
have had a different outcome?’
By order of the President of the Court of 24 April 2013,
Cases C-129/13 and C-130/13 were joined for the
purposes of the written and oral proceedings and the
judgment.
The CJ ruled as follows:
1. The principle of respect for the rights of the defence
by the authorities and the resulting right of every
person to be heard before the adoption of any
decision liable adversely to affect his interests,
as they apply in the context of Council Regulation
(EEC) No 2913/92 of 12 October 1992 establishing
the Community Customs Code, as amended by
Regulation (EC) No 2700/2000 of the European
Parliament and of the Council of 16 November
2000, may be relied on directly by individuals before
national courts.
2. The principle of respect for the rights of the defence
and, in particular, the right of every person to be
heard before the adoption of an adverse individual
Kamino and Datema did not have the opportunity to be
heard before the demands for payment were issued.
They lodged an objection against the relevant demand
with the tax inspector, who dismissed it after considering
the arguments made.
Their appeals against those dismissal decisions were
declared unfounded by the Rechtbank te Haarlem. On
further appeal, the Gerechtshof te Amsterdam (Appeals
Court) upheld the judgment of the Rechtbank te Haarlem
in so far as it required Kamino and Datema to perform
their obligations under the demands for payment at issue.
Both Kamino and Datema then appealed on a point of
law to the Hoge Raad der Nederlanden.
In its orders for reference, the Hoge Raad der
Nederlanden (Supreme Court) noted that, on appeal,
the Gerechtshof te Amsterdam found, in the light of the
judgment of the Court in Sopropé, C-349/07, that the
tax inspector had infringed the principle of respect for
the rights of the defence insofar as he had not offered
the interested parties, before issuing the demands for
payment at issue, the opportunity to express their views
on the information on which the post-clearance recovery
of the customs duties was based.
The Hoge Raad der Nederlanden noted, however, that
neither the Customs Code nor the applicable national
law contains procedural provisions requiring customs
authorities to give a customs debtor, before effecting the
communication of a customs debt under Article 221(1)
of the Customs Code, the opportunity to make known
his views as regards the information on which the post-
clearance recovery is based.
In those circumstances, the Hoge Raad der Nederlanden
decided to stay the proceedings and to refer the following
questions, which are formulated in the same terms
in Cases C-129/13 and C-130/13, to the Court for a
preliminary ruling:
‘1. Does the European law principle of respect for the
rights of the defence by the authorities lend itself to
direct application by the national courts?
12 13
CJ rules on the CN classification of oil products with aromatic constituents (Lukoyl Neftohim Burgas AD) On 12 June 2014, the CJ delivered its judgment in
case Lukoyl Neftohim Burgas AD (Lukoyl, C- 330/13).
The case concerns the classification in the Combined
Nomenclature (CN) of a product that, according to an
analysis of the customs laboratory in Ruse (Bulgaria),
exists of an oil, which, more precisely, is a directly distilled
petrol oil containing a mixture of hydrocarbons in which
the weight of the aromatic constituents exceeds that of
the non-aromatic constituents. That oil was not composed
of benzol (benzene), toluol (toluene), xylol (xylenes),
naphthalene, other aromatic hydrocarbon mixtures,
creosote oils or crude oils, sulphuretted toppings, basic
products, anthracene or phenols.
On basis of this analysis, the goods were classified in
CN heading 2707, subheading 2707 9999. An additional
amount of import duty and VAT became due. Appeals
were filed at the Administrativen sad Burgas.
Proceedings were stayed and following questions were
referred to the CJ:
‘1. Is the method for determining the aromatic
constituents of substances under Chapter 27 of the
CN, set out in Annex A to the Explanatory Notes to
Chapter 27 of the CN, inconsistent with the definition
of aromatic constituents contained in the general
considerations on Chapter 27 of the HS? If so, how
are those constituents to be determined and is the
ASTM D 2007 method a suitable and appropriate
means of doing so?
2. What is the meaning of the term ‘non-aromatic
constituents’ used in the explanatory notes to
Chapter 27 of the CN, the Explanatory Notes to
Chapter 27 of the HS and note 2 to Chapter 27
of the HS? Is the meaning of that term the same
as that of the term ‘non-aromatic hydrocarbons’
or is it broader? If it is broader than the meaning
of the latter term, does it include all constituents
which, by reference to weight, are not covered by
the term ‘aromatic constituents’, or does it refer to
constituents of a substance, such as that at issue in
measure must be interpreted as meaning that, where
the addressee of a demand for payment adopted
in a procedure for the post-clearance recovery of
customs duties on imports, under Regulation No
2913/92, as amended by Regulation No 2700/2000,
he has not been heard by the authorities before the
adoption of the decision, his rights of defence are
infringed even though he can express his views
during a subsequent administrative objection stage,
if national legislation does not allow the addressees
of such demands, in the absence of a prior hearing,
to obtain suspension of their implementation until
their possible amendment. Such is the case, in
any event, if the national administrative procedure
implementing the second subparagraph of Article
244 of Regulation No 2913/92, as amended by
Regulation No 2700/2000, restricts the grant of such
suspension where there is good reason to believe
that the disputed decision is inconsistent with
customs legislation or that irreparable damage is to
be feared for the person concerned.
3. The conditions under which observance of the
rights of the defence is to be ensured and the
consequences of the infringement of those rights
are governed by national law, provided that the
rules adopted to that effect are the same as those
to which individuals in comparable situations under
national law are subject (principle of equivalence)
and that they do not make it impossible in practice
or excessively difficult to exercise the rights of
defence conferred by the European Union legal
order (principle of effectiveness).
The national court, which is under an obligation to ensure
that European Union law is fully effective, may, when
assessing the consequences of an infringement of the
rights of the defence, in particular the right to be heard,
consider that such an infringement entails the annulment
of the decision taken at the end of the administrative
procedure at issue only if, had it not been for such an
irregularity, the outcome of the procedure might have
been different.
13
Pursuant to note 2 to Chapter 27 of the HS, the
description ‘petroleum oils and oils obtained from
bituminous minerals’ in heading 2710 is to be
understood as also including similar oils, as well
as those consisting mainly of mixed unsaturated
hydrocarbons, obtained by any process, provided
that the weight of the non-aromatic constituents
exceeds that of the aromatic constituents.
8. Is there an inconsistency between the CN
Explanatory Notes to subheadings 2707 99 91 and
2707 99 99 … and the Explanatory Notes to heading
2710 of the HS, Part I (B), to which the explanatory
notes to Chapter 27 of the CN refer?
9. Which are the authentic language versions and what
is the true meaning of the second sentence of the CN
Explanatory Notes to subheadings 2707 99 91 and
2707 99 99, which, in Bulgarian, reads ‘mezhdu tezi
produkti mogat da se upomenat’ (literal translation:
‘of these products mention may be made of’ and, in
English, ‘these products are’)?
10. How is a product with characteristics such as those
of the product at issue in the main proceedings to be
classified if the weight of the aromatic constituents
in that product exceeds that of the non-aromatic
constituents, but the product does not fulfil all four
cumulative conditions set out in the first point of the
Explanatory Notes to subheadings 2707 99 91 and
2707 99 99 of the CN?’
The CJ ruled as follows:
1. The criterion to take into consideration in order
to classify products with characteristics such
as those of the product at issue in the main
proceedings under Heading 2707 or Heading
2710 of the Combined Nomenclature in Annex I to
Council Regulation (EEC) No 2658/87 of 23 July
1987 on the tariff and statistical nomenclature and
on the Common Customs Tariff, as amended by
Commission Regulation (EC) No 1006/2011 of
27 September 2011, is the content by weight of the
aromatic constituents in relation to the non-aromatic
constituents.
the main proceedings, which, by reference to weight,
do not fall under either of those two categories, that
is to say ‘aromatic constituents’ or ‘non-aromatic
constituents’?
3. Is it permissible for one and the same method to be
used to determine both aromatic and non-aromatic
constituent content for the purposes of Chapter
27 of the CN and Chapter 27 of the HS and, if so,
which? If this is not permissible, which method must
be used to determine the aromatic constituents and
the non-aromatic constituents respectively?
4. Which of the two headings — 2707 or 2710 — of
Chapter 27 of the CN most accurately describes a
product with characteristics such as those of the
substance at issue in the main proceedings?
5. In the event that both headings describe with equal
accuracy a product having characteristics such
as those of the substance at issue in the main
proceedings, is it the fact that its weight is made up
predominantly of aromatic constituents that gives
the product its essential character?
6. Which of the two headings — 2707 or 2710 — covers
products with properties which are most similar to
the characteristics of the product at issue in the main
proceedings?
7. Is there an inconsistency between part of the CN
Explanatory Notes to subheadings 2707 99 91 and
2707 99 99 and note 2 to Chapter 27 of the HS, or
is that note not exhaustive and to be regarded as
merely illustrative?
According to the CN Explanatory Notes to
subheadings 2707 99 91 and 2707 99 99, ‘heavy
oils (other than crude) obtained from the distillation
of high-temperature coal tar or other products
similar to those oils’ are to be classified according
to their characteristics in subheadings ‘2710 19 31
to 2710 19 99’ if they do not fulfil the four cumulative
conditions set out in the CN Explanatory Notes to
the former subheadings.
14 15
DVD players, video cameras and television satellite
receivers;
• the screens in question are not supplied with a video
card at the time of importation, but such a card can
easily be purchased separately and at very low cost,
and can easily be inserted into the appropriate slot
provided for that purpose;
• at the time of importation, the screens are equipped
with two loudspeakers and a remote control, and that
those parts could be used only if the screen is used
to receive composite AV video signals if a video card
is inserted; and
• the user manual for those screens refers specifically
to the product’s audiovisual capabilities and to the
possibility of inserting a video card in order to activate
reception of television signals.
For the purpose of making customs declarations,
the applicants in the main proceedings classified the
screens imported under heading 8471 60 90 of the CN,
as screens exclusively intended for the transmission of
images generated by a computer, with the result that
those goods were exempt from customs duties and the
payment of value added tax at the rate of 20%.
However, the Agenzia took the view that those screens
should have been classified under heading 8528 of the
CN, which refers inter alia to reception apparatus for
television and video monitors, with the result that customs
duties at a rate of 14% were applicable.
The applicants in the main proceedings brought actions
before the Commissione tributaria provinciale di Milano
(Provincial Tax Court, Milan), which rejected those
actions on the ground that the possibility to programme
the screen to receive composite video signals simply by
inserting a video card meant that the apparatus could not
be classified under tariff heading 8471 of the CN, because
it no longer met the condition that the screen had to be
used principally or predominantly in an automatic data-
processing system.
The applicants in the main proceedings appealed against
the judgments in first instance before the Commissione
tributaria regionale di Milano (Regional Tax Court, Milan).
That court confirmed the classification of the imported
2. The expression ‘aromatic constituents’ in Chapter
27 of the Combined Nomenclature in Annex I to
Regulation No 2658/87, as amended by Regulation
No 1006/2011, must be interpreted as being wider
than ‘aromatic hydrocarbons’.
3. It is, in principle, for the national courts to establish
the most appropriate method to determine the
content of aromatic constituents of a specific product
in order to classify it under Heading 2707 or Heading
2710 of the Combined Nomenclature in Annex I to
Regulation No 2658/87, as amended by Regulation
No 1006/2011.
4. Point 1 of the Explanatory Notes to the Combined
Nomenclature in Annex I to Regulation No 2658/87,
as amended by Regulation No 1006/2011, on
subheadings 2707 99 91 and 2707 99 99 thereof
must be interpreted as being non-exhaustive, so
that a product falling within Heading 2707 of the
Combined Nomenclature which cannot be classified
under a specific subheading must be classified
under subheading 2707 99 99 thereof.
CJ rules on the CN classification of plasma screens in which video tuner can be inserted (Panasonice Italia SpA) On 17 July 2014, the CJ delivered its judgment in case
Panasonice Italia SpA (C-472/12). The case concerns
the classification in the Combined Nomenclature (CN) of
certain plasma screens.
The plasma screens that are subject to proceedings that
are installed against duty assessments resulting from
the classification of screens in CN heading in 8528 are
described by the national court as follows:
• the screens in question are colour monitors with a
diagonal screen measurement of 106.6 centimetres;
• in the state in which they are imported, the screens
are capable of reproducing only data generated by an
automatic data-processing system;
• however, with the insertion of a video card into the
appropriate slot with which the screen is equipped
they are also able to receive composite AV video
signals and thus also to be connected to sound
and image recording and reproducing apparatus,
15
screen of 106.6 centimetres, equipped with two
loudspeakers and a remote control, and with an
input device designed for the insertion of a video
card (very inexpensive and easy to find and insert)
which was not imported with the screen, but which,
once inserted, meant that the screen was capable
of receiving composite AV video signals and could
be connected, not only to automatic data-processing
machines, but also to recording and reproducing
apparatus, DVD players, video cameras and satellite
receivers?
(2) If the answer to the above question is in the negative,
does Regulation No 754/2004 actually require a
screen of that type to be classified under heading
8528 of the CN, and, if the answer to that question
is affirmative, do the provisions of Regulation
No 754/2004 have to be regarded as interpretative
and, as such, as having retroactive effect save where
earlier specific provisions to the contrary apply.’
The CJ ruled as follows:
1. For the purpose of tariff classification in the
Combined Nomenclature set out in Annex I to
Council Regulation (EEC) No 2658/87 of 23 July
1987 on the tariff and statistical nomenclature
and on the Common Customs Tariff, in the
versions resulting successively from Commission
Regulation (EC) No 2388/2000 of 13 October
2000, Commission Regulation (EC) No 2031/2001
of 6 August 2001, Commission Regulation (EC)
No 1832/2002 of 1 August 2002, and Commission
Regulation (EC) No 1789/2003 of 11 September
2003 of screens with the objective characteristics
at issue in the main proceedings, account should
be taken of their inherent intended purpose, which
consists in reproducing the data from an automatic
data-processing machine and from composite
video signals. Such screens must be classified
under subheading 8471 60 90 of the Combined
Nomenclature if they are used solely or mainly
in an automatic data-processing system, within
the meaning of Note 5B(a) of Chapter 84 of the
Combined Nomenclature, or under subheading
8528 21 90 thereof if that is not the case, which is
screens under tariff heading 8528 of the CN, but held that
the administrative penalties imposed were to be annulled,
given that objective uncertainties of interpretation existed.
Both the applicants in the main proceedings and the
Agenzia brought appeals in cassation against the
judgments delivered in the appeal. In their appeal, the
applicants in the main proceedings maintained their
position, according to which, the imported screens must
be classified under subheading 8471 60 90 of the CN
since, at the time of importation, they were without video
cards and, therefore, could only be used to transmit
images generated by a computer. The Agenzia restated
its argument that the classification of those screens
under heading 8528 of the CN was well-founded and
challenged the annulment by the court of appeal of the
administrative penalties imposed.
The referring court considered that the imported screens
must be classified under heading 8528 of the CN, which
refers, inter alia, to reception apparatus for television
and video monitors, for the following reasons. First, the
reception of composite video signals is one of the intrinsic
characteristics of those screens even before the insertion
of a video card, given the slot expressly provided for that
purpose. Second, no economic or technological reason
justifies the design of those screens, which are able to
receive composite video signals only after the insertion
of a video card, so that the only conceivable explanation
remains the desire to unfairly profit from the more
favourable customs treatment provided for computer
screens.
The referring court also enquired about the possibility
to apply the provisions of Regulation No 754/2004
retroactively, under which the imported screens should
be classified under heading 8528 of the CN.
In those circumstances, the Corte suprema di cassazione
decided to stay the proceedings before it and to refer the
following questions to the Court for a preliminary ruling:
‘(1) Was it necessary, before the entry into force of
Regulation No 754/2004, to classify under heading
8471, or under heading 8528 of the CN, a plasma
colour screen with a diagonal measurement of the
16 17
laser light, causing a fluorescence of the nucleic acids
present in the nucleus and cytoplasm of the leukocytes.
This fluorescence subsides rapidly after the end of the
exposure to the laser light.
At the time of importation, the product at issue in the main
proceedings was declared by Sysmex as coming under
subheading 3822 00 00 of the CN and was thus released
into free circulation exempt from customs duties. On
18 June 2007, the Hauptzollamt Hamburg-Hafen, taking
the view that that product did not come under that
subheading, issued a notice of additional assessment
providing for the a posteriori recovery of customs duties
on the importation of Stromatolyser-4DS at a rate of
6.5%.
Proceedings were initiated at the Finanzgericht in
Hamburg. The Finanzgericht Hamburg decided to stay
the proceedings and to refer the following question to the
Court for a preliminary ruling:
‘Should a product have been classified, in 2005, under
heading 3212 of the CN as a dye or colouring matter
where it is composed of solvents and of a polymethine
substance which can have a certain colouring
effect — which, on textiles at least, is not permanent —
but which, in the case of the product to be classified,
serves to obtain information on particles (white blood
cells) contained in a test solution (pre-treated blood)
by means of a process in which, through the deposition
of ions in defined components of the particles (nucleic
acids), the substance forms molecular structures which,
when exposed to laser light on a certain wavelength,
become fluorochromatic for a limited period and this
state and its extent are measured with the aid of a special
photoelectric cell?
The CJ ruled as follows:
The Combined Nomenclature set out in Annex I to
Council Regulation (EEC) No 2658/87 of 23 July 1987
on the tariff and statistical nomenclature and on the
Common Customs Tariff, as amended by Regulation
(EC) No 1810/2004 of 7 September 2004, must be
interpreted as meaning that a product, composed of
solvents and of a polymethine-based substance, which,
although it may have a weak and non-permanent dyeing
a matter for the national court to determine on the
basis of the objective characteristics of the screens
at issue in the main proceedings, and in particular
those mentioned in the Explanatory Notes relating
to heading 8471 of the Harmonised Commodity
Description and Coding System established by
the International Convention on the Harmonised
Commodity Description and Coding System
concluded in Brussels on 14 June 1983, with its
amending protocol of 24 June 1986, in particular
in points 1 to 5 of the part of Chapter I D relating
to display units for automatic data-processing
machines.
2. Commission Regulation (EC) No 754/2004 of
21 April 2004 concerning the classification of certain
goods in the Combined Nomenclature cannot be
applied retroactively.
CJ rules on the CN classification of a substance producing, by chemical reaction and exposure to a laser light, a fluorescent effect intended for the analysis of white blood cells (Sysmex)On 17 July 2014, the CJ delivered its judgment in case
Sysmex (C-480/13). The case concerns the classification
in the Combined Nomenclature (CN) of a substance
producing, by chemical reaction and exposure to a laser
light, a fluorescent effect intended for the analysis of
white blood cells.
In July 2005, Sysmex imported into Germany a liquid
under the commercial designation ‘Stromatolyser-4DS’.
Stromatolyser-4DS is a bluish transparent liquid put up
for retail sale. It is composed of solvents, namely ethylene
glycol (96.9%) and methanol (3%), and of a synthetic
organic substance (0.002%) which, chemically, belongs
to the polymethines and, more precisely, to the cyanines.
This liquid is intended for the analysis of white blood
cells (leukocytes) in order to determine the existence of a
possible pathology. Specifically, the blood to be analysed
undergoes a preparatory operation. The Stromatolyser-
4DS is then added to the prepared blood, which causes
a chemical reaction. The resulting mixture is exposed to
17
Under EU law (Directive 2008/118/EC), excise duty on
tobacco products must be charged at the rate applicable
on the date on which they are released for consumption.
There is no provision under EU legislation which allows
Member States to add supplementary duty to this
release-date tax rate, or to limit the distribution of tobacco
products for fiscal reasons.
By applying the sales-and-marketing prohibition, Portugal
implies that all cigarettes bearing the old tax markings
and unsold at the end of the transitional period were
released in excessive quantity. Such a presumption is
inadmissible under the case law of the Court of Justice.
The Portuguese sales-and-marketing prohibition is
clearly disproportionate to any fraud-tackling objective. It
also runs contrary to the provisions of Directive 2008/118/
EC, under which Member States must ensure that tax
markings do not create obstacles to the free movement
of excise goods.
The failure of Portugal to comply with these rules results
in situations whereby operators are not allowed to sell
cigarettes, which were taxed and which comply with all
requirements for a free circulation on the Single Market.
Operation ERMIS: 70 000 counterfeit goods seized in EU joint customs operation Over 70,000 counterfeit goods were seized during a
major Joint Customs Operation (JCO) code-named
‘ERMIS’. The Operation focussed on postal and courier
mail traffic, to identify fake products shipped through small
consignments. JCO ERMIS was carried out by the Greek
Customs Administration and the European Anti-Fraud
Office (OLAF), and also involved customs experts from
the Commission, Member States, FYROM, Montenegro,
Serbia and Turkey. The results of this operation were
unveiled at a debriefing meeting in Athens and have been
published across Europe.
JCO ERMIS was carried out in March 2014. Customs
authorities performed intensified controls and exchange
of intelligence on parcels coming into the EU from third
countries, via mail. Within the course of the operation,
over 70,000 counterfeit items were seized in 634 different
seizures. The goods varied in nature from mobile phones,
effect on textiles, is not in practice used for its dyeing
properties and is intended exclusively for the analysis of
white blood cells, by means of the deposition of ions in
defined components of those blood cells, which, when
exposed to laser light, become fluorescent for a limited
period, comes under heading 3822 of the Combined
Nomenclature relating to laboratory reagents.
Commission refers UK to Court of Justice for failure to comply with EU rules on marked fuel The European Commission has decided to refer the
United Kingdom to the Court of Justice of the European
Union for not properly applying the rules on fiscal marking
on fuel.
Under EU rules, fuel that can benefit from a reduced tax
rate has to be marked by coloured dye. Fishing vessels,
for example, are allowed to benefit from a lower taxed
fuel but private leisure boats must use fuel subject to a
standard rate.
Currently, UK law does not require fuel distributors to
have two separate fuel tanks to distinguish between the
lower tax marked fuel and the fuel subject to the standard
rate. As a result, private leisure boat owners are often in
a situation where they can only purchase marked fuel.
As a consequence, private leisure boats may not pay the
right amount of tax, as they purchase use fuel normally
intended for fishing vessels. Not only does this go against
EU excise rules, but it also puts private boats at risk of
heavy penalties if they are checked by local authorities
when they travel to another Member State.
Commission refers Portugal to Court of Justice over excise duty rules for cigarettesThe European Commission has decided to refer Portugal
to the Court of Justice for failing to change its excise duty
rules related to the marketing of cigarettes. In Portugal, a
time limit for the sale of cigarettes is set down, linked to
the fiscal stamp on the packaging. The design of the tax
markings in Portugal changes regularly and a new tax
rate frequently applies with the new marking. Cigarettes
cannot be sold any later than three months after the end
of the year that they are released for consumption.
18
of the total seizures of smuggled tobacco came by sea
from Asia, the Middle East and North Africa, while the
remaining 10% were of unknown origin. Based on the
findings of DISMANTLE, the report presents a number of
specific recommendations to ensure better risk targeting
of smuggled excise goods in the future.
DISMANTLE is what is known as a priority control
action (PCA), whereby customs undertake common and
intensified controls to target specific risks. The benefit
of such actions is that they help identify illicit patterns,
investigate similar cases and pinpoint where further
improvements can be made in customs activities to
clamp down on smuggling.
Among some of the main findings of DISMANTLE were:
• There is a wide diversity between national customs
control policies in the EU
• Sharing expertise, working jointly on risk analysis,
and monitoring the impact and results in real time,
can deliver very successful results (e.g., five cases
of transnational fraud were uncovered thanks to
common data analysis, that would not otherwise
have been detected).
• There are a significant number of smuggling cases
via rail traffic, with the contraband goods hidden
beneath a first layer of other goods
• The risk of ‘green borders’ i.e., smuggling through a
point in the border where there is no customs post
(such as a village / river) needs to be addressed.
Mobile customs units could be very effective in this
respect.
• The majority of smuggled cases were small or medium
quantities, brought into the EU by passengers
• A number of cases of evasion happened within EU
Intra-community movements, rather than at the
border.
On the basis of these findings, a series of
recommendations are made in the report. Notably,
it underlines the need for continued and deepening
cooperation between customs authorities and
investigators, ensuring the quality, accessibility and
timeliness of collected data, and pursuing measures to
improve the capacity for electronic risk profiling.
sunglasses, and small vehicle spare parts, to medicines
and pharmaceutical products. Most goods were found to
come from the Far East. Such counterfeit products can
pose a risk to EU consumers, given that they tend not to
be produced in line with the relevant health and safety
legislation. Moreover, counterfeit trade undermines
legitimate businesses. Although an additional number
of 210 seizures were made, the goods were released
by customs officials because of the lack of cooperation
from rights-holders, who did not come to identify the
goods and certify they were counterfeit. The participants
to the operation recalled that the cooperation of private
companies is essential to the success of such customs
operations, as only the rights-holders can certify that the
goods seized are not authentic.
JCO ERMIS follows up on previous actions coordinated
by OLAF (JCO FAKE, JCO SIROCCO and JCOs
DIABOLO I and DIABOLO II) which aim to curb the
smuggling of counterfeit goods. Such Joint Customs
Operations help generate increased intelligence, stronger
cross-border cooperation and more accurate targeting
of smuggling risk areas. Furthermore, through the high
number of seizures, the Joint Customs Operation has
once again helped avoid losses to the EU’s and Member
States’ budgets in the form of evaded customs duties and
taxes.
Customs: Tackling smuggling and fraud in excise goods Around 816 million cigarettes and 240,000 litres of alcohol
were seized by EU customs over a 10-month period
in 2013, a report published by the Commission today
reveals. The report details the planning, implementation
and results of ‘DISMANTLE’, a targeted customs operation
to tackle the risk of smuggling and fraud in excise
goods. Between March and December 2013, customs
controls were increased at the eastern border, on the
basis of common risk criteria and real-time information
exchange between EU customs authorities. During that
period, seizures in smuggled tobacco reported in the
Common customs risk management system increased
considerably – by 105% - compared to the same period in
2012. Around 1/3 of the quantity seized came from source
countries targeted through DISMANTLE, notably Russia,
Ukraine, Belarus, Bosnia-Herzegovina and Serbia. Half
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Correspondents● Gerard Blokland (Loyens & Loeff Amsterdam)
● Kees Bouwmeester (Loyens & Loeff Amsterdam)
● Almut Breuer (Loyens & Loeff Amsterdam)
● Robert van Esch (Loyens & Loeff Rotterdam)
● Sarah Van Leynseele (Loyens & Loeff Brussel)
● Raymond Luja (Loyens & Loeff Amsterdam;
Maastricht University)
● Arjan Oosterheert (Loyens & Loeff Amsterdam)
● Lodewijk Reijs (Loyens & Loeff Rotterdam)
● Bruno da Silva (Loyens & Loeff Amsterdam;
University of Amsterdam)
● Patrick Vettenburg (Loyens & Loeff Rotterdam)
● Ruben van der Wilt (Loyens & Loeff Amsterdam)
www.loyensloeff.com
About Loyens & LoeffLoyens & Loeff N.V. is the first firm where attorneys at
law, tax advisers and civil-law notaries collaborate on a
large scale to offer integrated professional legal services
in the Netherlands, Belgium and Luxembourg.
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Editorial boardFor contact, mail: [email protected]:
● René van der Paardt (Loyens & Loeff Rotterdam)
● Thies Sanders (Loyens & Loeff Amsterdam)
● Dennis Weber (Loyens & Loeff Amsterdam;
University of Amsterdam)
Editors● Patricia van Zwet
● Bruno da Silva
Although great care has been taken when compiling this newsletter, Loyens & Loeff N.V. does not accept any responsibility whatsoever for any
consequences arising from the information in this publication being used without its consent. The information provided in the publication is intended
for general informational purposes and can not be considered as advice.