July 2015 - edition 144EU Tax Alert

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Highlights in this edition

CJ rules that Netherlands legislation that denies the deduction of foreign expenses by a non-resident worker is not in breach of the free movement of workers (Kieback)On 18 June 2015, the CJ delivered its judgment in case Staatssecretaris van Financiën v D.G. Kieback (C-9/14). The case deals with the Netherlands legislation that precluded the deduction, or the purposes of determining the income received by Mr Kieback when he was in paid employment in the Netherlands, from 1 January to 31 March 2005, the expenses incurred during the same period for the reimbursement of a loan secured by a mortgage and taken out for the acquisition of a dwelling which he owns and which is located in Germany.

AG Jaaskinen opines on Netherlands withholding tax legislation considering that withholding tax imposed on non-resident portfolio investors may not exceed the overall income taxation of resident taxpayers and that discriminatory taxation by the source State can only be neutralized by a full credit in the State of residence. (Miljoen and others) On 25 June 2015, AG Jaaskinen delivered his Opinion in joined cases J.B.G.T. Miljoen (C-10/14), X (C-14/14) and Société Générale S.A. (C-17/14) v Staatssecretaris van Financiën. The case deals with refund requests of the Netherlands 15% withholding tax imposed on dividends paid to two individual taxpayers resident in Belgium and one corporate taxpayer resident in France.

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Contents

Highlights in this edition• CJ rules that Netherlands legislation that denies the

deduction of foreign expenses by a non-resident

worker is not in breach of the free movement of

workers (Kieback)

• AG Jaaskinen opines on Netherlands withholding tax

legislation considering that withholding tax imposed

on non-resident portfolio investors may not exceed

the overall income taxation of resident taxpayers

and that discriminatory taxation by the source State

can only be neutralized by a full credit in the State of

residence (Miljoen and others)

State Aid / WTO• Commission opens two in-depth investigations into

Hungary’s food chain inspection fee and tax on

tobacco sales

• Commission increases number of tax rulings under

review

VAT• CJ rules that UK’s reduced VAT rate on energy-saving

supplies is not in conformity with EU VAT Directive

(Commission v United Kingdom and Northern Ireland)

• CJ rules that land use taxes must be included in VAT

taxable amount of supply (Lisboagás GDL)

• Advocate General opines that a company with

exclusively public capital cannot qualify as a body

governed by public law (Saudaçor)

• Commission objects to request of Italy for application

of reverse charge mechanism to large retailers

• Council authorizes Denmark to reintroduce measure

which simplifies occasional non-business use of cars

Customs Duties, Excises and other Indirect Taxes• CJ rules on CN classification of e-book readers

(Amazon EU Sarl)

• CJ rules on application of reduced excise rate for

small breweries (Brasserie Bouquet SA)

• CJ rules on customs debt for goods refused by

consignee (DSV Road A/S)

• 7th EU-Japan Joint Customs Cooperation Committee

(JCCC)

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In its judgment, the CJ started by observing that in

situations such as the one at hand, discrimination arises

from the fact that the personal and family circumstances

of a non-resident who receives the major part of his

income and almost all his family income in a Member

State other than that of his residence are not taken into

account either in the State of residence or in the State

of employment. In relation to tax advantages connected

with a particular taxpayer’s ability to pay tax, the mere

fact that a non-resident has received, in the State of

employment, income in the same circumstances as

a resident of that State does not suffice to make his

situation objectively comparable to that of a resident. In

addition, it is necessary, in order to establish that such

situations are objectively comparable, that, due to that

non-resident’s receiving the major part of his income in

the Member State of employment, the Member State of

residence is not in a position to grant him the advantages

which follow from taking into account his aggregate

income and his personal and family circumstances.

Therefore, when a non-resident leaves during the course

of the year to pursue his occupational activity in another

country, there is no reason to infer that, by sole virtue

of that fact, the State of residence will not therefore be

in a position to take the interested party’s aggregate

income and personal and family circumstances into

account. Moreover, the CJ observed that because after

leaving, the party concerned could have been employed

successively or even simultaneously in several countries

and been able to choose to fix the centre of his personal

and financial interests in any one of those countries, the

State where he pursued his occupational activity before

leaving cannot be presumed to be in a better position

to assess that situation with greater ease than the State

or, as the case may be, the States in which he resides

after leaving. The CJ referred to the fact that it could be

otherwise only if it were the case that the interested party

had received, in the Member State of employment that

he left during the course of the year, the major part of

his income and almost all his family income for the same

year, since that State would then be in the best position

to grant him the advantages determined by reference

to his aggregate income and his personal and family

circumstances.

Highlights in this editionCJ rules that Netherlands legislation that denies the deduction of foreign expenses by a non-resident worker is not in breach of the free movement of workers (Kieback)On 18 June 2015, the CJ delivered its judgment in case

Staatssecretaris van Financiën v D. G. Kieback (C-9/14).

The case deals with the Netherlands legislation that

precluded the deduction, or the purposes of determining

the income received by Mr Kieback when he was in

paid employment in the Netherlands, from 1 January to

31 March 2005, the expenses incurred during the same

period for the reimbursement of a loan secured by a

mortgage and taken out for the acquisition of a dwelling

which he owns and which is located in Germany.

Mr Kieback is a German national. From 1 January to

31 March 2005, he worked in the Netherlands, but

resided in Germany, where he possessed a dwelling

as owner. After that period, he moved to work in the

United States. Had he continued in his employment in

the Netherlands during the whole of 2015, he would

have been able, despite being a non-resident in that

Member State, to deduct the ‘negative income’ relating

to his dwelling and resulting from the expenses incurred

in relation to the loan taken out for its acquisition from

the taxable income from his employment for that year

provided that he had received, in that Member State,

the major part of his income during that year. Having

established that Mr Kieback had received the major

part of his income for 2005 in the United States, the

Netherlands tax authorities taxed him on the income he

received in the Netherlands for that year, without taking

account of the ‘negative income’ relating to his dwelling.

Mr Kieback appealed from this decision considering that

the refusal to deduct those expenses amounted to a

breach to the free movement of workers.

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tax, whereas in 2008, such credit was not possible due to

the losses incurred in France during that year.

This Opinion fundamentally dealt with two questions:

a) In order to determine if the Netherlands withholding

tax gives rise to a forbidden restriction on the

free movement of capital what is the appropriate

comparison to be made between domestic and cross-

border situations?

b) What is the role of double tax treaties for the purposes

of neutralizing a discriminatory tax treatment at

source?

As regards the first question, the fundamental issue was

to determine whether for the purposes of comparison it

is relevant to take into account the possibility allowed

to residents to systematically deduct the tax paid over

dividends – conceived as an advanced payment – to

the personal or corporate income tax or even obtain a

refund of that tax. In that event, it would also be relevant

to determine how to calculate the effective tax burden

and whether it is relevant to take into account elements

such as the part of income which is exempt or different

expenses related with the shares from the dividends

arise.

AG Jaaskinen started by observing that prima facie,

both resident and non-resident are subject to a similar

mechanism of taxation as regards dividend distributions

as the 15% withholding tax applies irrespective of the

place of residence of the individual or company receiving

those dividends. The dispute arises whether the fact

that for residents the withholding tax on dividends

constitute an advance payment while for non-residents it

constitutes a final levy amounts to a forbidden difference

in treatment. For that purpose, the AG observed that

in his view, the relevant issue is whether the practical

effect of legislation leads to a less favourable treatment

of non-residents. Therefore, the AG concluded that the

comparison between residents and non-residents should

be made considering the income taxation on shares

held by residents of which the dividends withholding tax

constitutes an advance payment.

In accordance, the CJ concluded that a non-resident

taxpayer who has not received, in the State of

employment, all or almost all his family income from

which he benefited during the year in question as a

whole is not in a comparable situation to that of residents

of that State, therefore, account does not require to be

taken of his ability to pay tax charged, in that State, on

his income. The Member State in which a taxpayer has

received only part of his taxable income during the whole

of the year at issue is therefore not bound to grant him

the same advantages which it grants to its own residents.

Therefore, the Netherlands legislation is not in breach of

the free movement of workers.

AG Jaaskinen opines on Netherlands withholding tax legislation considering that withholding tax imposed on non-resident portfolio investors may not exceed the overall income taxation of resident taxpayers and that discriminatory taxation by the source State can only be neutralized by a full credit in the State of residence (Miljoen and others)On 25 June 2015, AG Jaaskinen delivered his Opinion in

joined cases J. B. G. T. Miljoen (C-10/14), X (C-14/14) and

Société Générale S.A. (C-17/14) v Staatssecretaris van

Financiën. The case deals with refund requests of the

Netherlands 15% withholding tax imposed on dividends

paid to two individual taxpayers resident in Belgium and

one corporate taxpayer resident in France. Concretely,

Mr Miljoen was a Netherlands national resident in

Belgium which was subject to Netherlands withholding

tax on participations in three funds. Mr Miljoen submitted

a request to the Netherlands tax authorities on part of

the tax withheld. Similarly, Me X was also a Netherlands

national resident in Belgium subject to Netherlands

withholding tax. In addition he was subject in Belgium to

25% on the net amount of the dividends received without

the possibility of crediting the tax paid in the Netherlands.

Finally, Société Générale SA (a French company that held

shares in Netherlands listed companies which received

dividends that were subject to Netherlands withholding

tax) for the years of 2000 through 2007, was able to credit

the withholding tax against the French corporate income

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State Aid/WTOCommission opens two in-depth investigations into Hungary’s food chain inspection fee and tax on tobacco sales On 15 July 2015, the Commission opened two separate

in-depth investigations to examine whether two recent

Hungarian measures with steeply progressive rate

structures are in line with EU State aid rules.

The first measure concerns a food chain inspection fee

and the second, a tax on turnover from the production

and trade of tobacco products. The Commission has

concerns in both cases that the progressivity of the

rates based on turnover provides companies with a low

turnover a selective advantage over their competitors, in

breach of EU State aid rules.

The Commission has also issued injunctions, prohibiting

Hungary from applying the progressive rates of the

food chain inspection fee and the tobacco tax until the

Commission has concluded its assessment. The opening

of in-depth investigations gives interested third parties

the opportunity to comment on the measures under

assessment.

Commission increases number of tax rulings under reviewAs referred to in the EUTA edition 143, on 8 June 2015,

the European Commission announced that it had asked

15 additional EU Member States to hand over one or

more individual tax rulings each. The Member States

concerned are Austria, Belgium, the Czech Republic,

Denmark, Finland, France, Germany, Hungary, Italy,

Lithuania, Portugal, Romania, Slovakia, Spain and

Sweden. Once these rulings have been received, the

Commission will conduct a preliminary review in order

to determine whether a (public) formal investigation into

potential State aid is warranted. Upon opening a formal

investigation, the names of companies involved will be

published officially.

As regards the criteria to determine the effective tax

burden, the AG observed that first of all, it should take

into account the tax base for which the Netherlands tax

is calculated. Then, the second criterion should be the

relevant period which should be calculated by reference

to the calendar year. As regards the third criteria,

the question was whether the comparison should be

made taking into account all the Netherlands dividends

obtained by a non-resident during the relevant period or

alternatively, determined separately based on dividends

received by each Netherlands company distributing

dividends. The AG considered the first option to be more

adequate. Finally, the fourth criterion for comparison was

whether for the purposes of determining the effective

tax burden not only all the direct costs related to the

dividends should be taken into account but also other

expenses which although not deriving from the dividends

are somehow related to such dividends. As a reply to

this issue, the AG considered that relevant in his view

was to calculate the net amount of dividends which is

the only relevant amount for the purposes of performing

a comparison.

As regards the second question, AG Jaaskinen recalled

that there is a breach of the free movement of capital if

treatment of a resident is less favourable when compared

to that of a non-resident. However, that does not require

a Member State to refund the amount of tax charged as

a consequence of its discriminatory legislation where the

application of a double tax treaty allows neutralizing the

negative effects of that legislation through a tax credit

or imputation regarding taxation withheld in the source

State. The AG further added that, in order to neutralize

entirely the discrimination it is not sufficient as such that

the legislation makes a reference to the domestic law of

the State of residence for the purposes of obtaining a tax

reduction in this State and which, in any event, is only

achieved in certain cases. It is that the neutralization is

achieved in all cases. Therefore, in the concrete case, as

the Netherlands-Belgian tax treaty does not provide for

a full tax credit, that means that a disadvantage suffered

by taxpayers that do not reside in the Netherlands is not

compensated in all cases.

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part of a social policy’ and ‘renovation and repairing of

private dwellings, excluding materials which account for

a significant part of the value of the service supplied’. The

Commission stated that the UK’s reduced rate scheme

cannot be directly linked to Category 10. Furthermore,

it stated that insofar as the energy-saving materials and

the installation thereof fall within Category 10a, the UK

reduced rate scheme goes beyond the requirement laid

down in Category 10a as it does not regard the materials’

proportional value to the total value of the service

supplied.

Regarding the complaint relating to Category 10, the

CJ found that, with the extension of the scope of the

reduced VAT rate to all residential accommodation, no

account is being taken of the restriction pertaining to the

social context in accordance with the EU VAT Directive.

According to the CJ, the provisions of national law at

issue cannot be regarded as adopted for reasons of

exclusively or principally social interest. Regarding

Category 10a, the CJ ruled that the United Kingdom, by

not excluding materials which account for a significant

part of the value of the service supplied, does not comply

with the conditions governing the application of the VAT

Directive, read together with Category 10a of Annex III

thereto. The argument from the United Kingdom that the

so-called ‘zero rate system’ is applicable to operations of

provision and construction of dwellings was, according

to the CJ, not sufficient ground to call the Commission’s

complaint into question. As a result, the CJ concluded that

the complaints relating to the infringement of Category 10

and 10a are well founded.

CJ rules that land use taxes must be included in VAT taxable amount of supply (Lisboagás GDL)On 11 June 2015, the CJ delivered its judgment in the

case Lisboagás GDL v Autoridade Tributária e Aduaneira

(C-256/14). Lisboagás is a Portuguese company holding

the exclusive concession for the public service regional

gas distribution network in municipalities in the region of

Lisbon.

In the recent past the Commission had already requested

individual rulings from Cyprus, Ireland, Luxembourg,

Malta, the Netherlands and the UK (including Gibraltar).

Estonia and Poland have not been willing to provide

an overview to the Commission of their rulings granted

from 2010 to 2013, such as the Commission previously

requested from all Member States. As a result, the

Commission had not been able to approach them

with a request to hand over individual tax rulings for a

follow-up review. Both countries have now received an

injunction notice ordering them to provide the information

requested.

VAT CJ rules that UK’s reduced VAT rate on energy-saving supplies is not in conformity with EU VAT Directive (Commission v United Kingdom and Northern Ireland)On 4 June 2015, the CJ delivered its judgment in

case European Commission v United Kingdom and

Northern Ireland (C-161/14). This case started with an

infringement procedure opened by the Commission by

letter of 29 September 2011, that the United Kingdom

should bring to an end the incompatibility of the system

of reduced VAT rates (5%) on supplies of energy-saving

materials and to the installation thereof. In reaction,

the United Kingdom removed the reduced rate of VAT

concerning buildings intended for charitable purposes

and maintained that the legislation, as a result, complied

with EU law. However, the Commission was not satisfied

with the United Kingdom’s reply and decided to bring the

case before the CJ.

The Commission considered that the system of reduced

rates applying to the supplies of energy-saving materials

and to the installation thereof, laid down in British

national provisions, exceeds the possibilities offered to

EU Member States by Annex III to the EU VAT Directive.

Categories 10 and 10a of this Annex III cover ‘provision,

construction, renovation and alteration of housing, as

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a separate item in the invoices issued is irrelevant in

that regard. As a result, according to the CJ, the amount

of land use taxes is part of the consideration received

by Lisboagás and must be included in the VAT taxable

amount of the supply.

Advocate General opines that a company with exclusively public capital cannot qualify as a body governed by public law (Saudaçor) On 25 June 2015, Advocate General Jääskinen issued

his Opinion in the case Saudaçor – Sociedade Gestora

de Recursos e Equipamentos de Saúde dos Açores, S.A.

contra Fazenda Pública (C-174/14). Saudaçor is a limited

liability company with exclusively public capital, of which

the share capital fully belongs to the Autonomous Region

of the Azores. The company had been established for

the transformation of the regional Institute for Healthcare

Financial Management and performed services of

general economic interest in the field of healthcare, such

as planning, control and constructions. The Portuguese

tax authorities took the view that Saudaçor, based on

its legal regime, was not a body governed by public

law as mentioned in Article 13, first paragraph, EU VAT

Directive, and that the national VAT exemption for such

bodies was not applicable. Furthermore, according to the

tax authorities, Saudaçor would qualify as a VAT taxable

person as it deducted input VAT on goods and services,

without paying any VAT due. Accordingly, the tax

authorities imposed VAT assessments for the VAT due

by Saudaçor for the years 2007-2010. Saudaçor brought

an action against these VAT assessments and finally, the

matter ended up with the Supreme Administrative Court.

As the company’s regime has both public as private

characteristics, the question arose whether Saudaçor

qualifies as a body governed by public law as mentioned

in Article 13, first paragraph, EU VAT Directive. The

Supreme Administrative Court decided to refer to the CJ

for a preliminary ruling in this respect.

As the natural gas distribution network comprises pipes

which are installed on the publicly-owned property of

certain municipalities, Lisboagás is obliged to pay the land

use taxes imposed by those municipalities. After having

paid the land use taxes to the municipalities, Lisboagás

passes the amount of those taxes on to the company

responsible for marketing gas when it bills that company.

That company then passes on the amount of land use

taxes to consumers in their gas supply bill. Following

the instructions of the tax authorities, Lisboagás self-

assessed VAT at the standard rate of 23% on the land

use tax amounts, which were subsequently passed on

to consumers. It included that VAT in the relevant regular

VAT returns and paid it in time.

Following the dismissal of its complaint seeking VAT

recovery, Lisboagás brought an action. In the view of

Lisboagás, the land use taxes may not be included in

the taxable amount of its supplies as they are not directly

linked to the taxable transactions carried out by it, not

linked to the activity covered by the concession agreement

and the collection of the taxes does not represent actual

compensation for a taxable transaction carried out by it

for the entity which markets the gas. The tax authorities

however, observed that the use or utilization of publicly-

owned property entails an act of consumption. In their

view, the passing-on of the tax assessed forms part of

a supply of services which culminates in the supply of

gas to consumers. Finally, the matter ended up with the

Arbitration Tribunal, which decided to refer to the CJ for a

preliminary ruling on the VAT treatment of the passing on

of the land use taxes.

In conclusion, the CJ ruled that Lisboagás does not pass

on the land use taxes as such to the company responsible

for marketing the gas, but rather the price of using

publicly-owned municipal property. According to the CJ,

that price is part of the set of costs borne by Lisboagás

which, in turn, forms part of the price for its supply of

services to be paid for by the marketing company. The

fact that the amount of the land use taxes is listed as

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Council authorizes Denmark to reintroduce measure which simplifies occasional non-business use of cars On 13 January 2015, Denmark requested the Commission

authorization to apply a measure derogating from the

provision of the EU VAT Directive governing the right to

deduct input VAT. Previously, the Council had already

granted such a measure, but this derogation expired on

31 December 2014. Without the derogation measure,

the legislation in Denmark implies that if a light goods

vehicle with a maximum authorized weight of 3 tonnes is

registered with the Danish authorities as being used for

business purposes only, the taxable person is authorized

to fully deduct the input VAT on the purchase and running

costs of the vehicle. If such a vehicle is subsequently

used for private purposes, the taxable person loses the

right to deduct the VAT incurred on the purchase cost of

the vehicle. The reintroduced special measure however,

allows taxable persons who have registered a vehicle

as being for business purposes only to use the vehicle

for non-business purposes, and to calculate the taxable

amount of the deemed supply on a daily flat-rate basis,

rather than losing their right to deduction. The derogating

measure will expire on 31 December 2017.

Customs Duties, Excises and other Indirect TaxesCJ rules on CN classification of e-book readers (Amazon EU Sarl)On 11 June 2015, the CJ delivered its judgment in the

case Amazon EU Sarl (C-58/14). The case concerns

the classification in the Combined Nomenclature (CN) of

e-book readers with a dictionary function.

Amazon is a company which imports inter alia reading

devices for electronic books. In addition to the hardware

and software necessary for reading books, a speech

output option and a programme for the reproduction of

audio formats, the devices have a dictionary function. The

Oxford American Dictionary and the Oxford Dictionary

of English are thus pre-installed in the apparatus, and

additional dictionaries may be downloaded and installed.

Firstly, the AG opined that it should be assessed whether

Saudaçor is a VAT taxable person. According to the CJ,

it is clear that there is a direct link between the payments

made by the Autonomous Region of the Azores and the

services of general interest supplied by Saudaçor. As a

result, in the view of the AG, Saudaçor is a VAT taxable

person. Furthermore, according to the AG, it should be

assessed if Saudaçor is exempt from VAT as a body

governed by public law. In this respect, the AG recalled

that Saudaçor was governed by private law and was

subject to common tax law. Consequently, Saudaçor had

to be considered a private market operator and cannot

qualify as a body governed by public law.

Commission objects to request of Italy for application of reverse charge mechanism to large retailersUnder Article 395 of the EU Vat Directive, Italy requested

an authorization from the Council in order to apply a

special derogation measure. The measure would regard

the application of the reverse charge mechanism in

relation to supplies to large retailers. The derogation would

be applicable to all types of consumer goods supplied to

hypermarkets, supermarkets and hard discount stores

and intended to be sold by them to final consumers. In

its communication, the Commission indicated that it had

reason to doubt that such an application could still be

regarded as a special derogation measure given the very

high number of products for final consumption involved.

In addition, neither the nature nor the extent had been

demonstrated of possible specific fraud problems in

relation to suppliers to the large retail sector. Moreover,

according to the Commission, the measure would be

likely to shift fraud to the retail level and to other EU

Member States. For the aforementioned reasons, the

Commission concluded that the derogation requested by

Italy cannot be justified.

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‘(1) Is the description of goods in subheading

8543 70 10 of the CN to be understood as covering

only apparatus which have exclusively translation or

dictionary functions?

(2) If the first question is to be answered in the negative,

does subheading 8543 70 10 of the CN cover also

apparatus the translation or dictionary function

of which is insignificant by comparison with their

principal function (in this case, a reading function)?

The CJ ruled that the CN must be interpreted as meaning

that a reading device for electronic books which has

a translation or dictionary function must, where that

function is not its principal function, that being a matter

for the national court to ascertain, be classified under

subheading 8543 70 90 and not under subheading

8543 70 10.

CJ rules on application of reduced excise rate for small breweries (Brasserie Bouquet SA)On 4 June 2015, the CJ delivered its judgment in the case

Brasserie Bouquet SA (C-285/14). The case concerns

the question whether the reduced rate of excises for

beer could be applied for a brewery that operates under

a license.

Brasserie Bouquet operates a restaurant in which it sells

beer it has brewed itself. Its beer production complies with

an agreement of 10 December 1998, entitled ‘Contrat

d’affiliation au Cercle des 3 brasseurs’ (Membership

contract for the Circle of the Three Brewers) concluded

with ICO 3B SARL (‘the membership contract’). Pursuant

to the membership contract, that company has authorised

Brasserie Bouquet to use its trademarks and its

commercial designation ‘LES 3 BRASSEURS’, and has

undertaken to pass on its know-how and, in particular, to

supply the yeast strains.

Reading devices for electronic books imported into

Germany by Amazon in June 2011 were classified under

CN subheading 8543 70 90 by the competent customs

authorities, as a result of which 3.7% import duty became

due. In July 2011, Amazon brought an objection against

that classification. By decision of 20 October 2011,

the Hauptzollamt Itzehoe (Principal Customs Office,

Itzehoe, Germany), the competent authority at that time,

reclassified the reading devices under CN subheading

8543 70 10. CN subheading 8543 7010 attracts 0% import

duty. On 26 October 2011, Amazon sought binding tariff

information from the HZA and proposed that the reading

devices be classified under CN subheading 8543 70 10.

However, in the binding tariff information thus delivered,

the HZA decided to classify the reading devices under

CN subheading 8543 70 90 on the ground that their main

function is the reproduction of books stored in electronic

form and not the translation or dictionary function.

Amazon then brought an action before the German

Courts that ultimately led to the case being brought

before the Bundesfinanzhof (Federal Finance Court).

The Bundesfinanzhof considered that, where apparatus

is to be classified in the CN, the subheading with

the most precise description of that apparatus takes

precedence over the subheadings relating to general

descriptions. That court pointed out that the conditions for

the application of the general rule of interpretation in Part

One, Section I, A, 3(a) of the CN were not fulfilled, given

that there are not two subheadings capable of being taken

into consideration for classifying the reading devices at

issue in the main proceedings. Subheading 8543 70 90 of

the CN does not constitute another possible classification

for the purposes of that general rule of interpretation. As

it is only a residual subheading, it can be applied only

where classification in a more specific subheading is not

possible, which is not the case in the main proceedings.

It was in those circumstances that the Bundesfinanzhof

decided to stay the proceedings and refer the following

questions to the Court for a preliminary ruling:

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brewery concerned makes its beer in accordance with an

agreement pursuant to which it is authorised to use the

trademarks and production process of a third party.

CJ rules on customs debt for goods refused by consignee (DSV Road A/S) On 25 June 2015, the CJ delivered its judgment in the

case DSV Road A/S (C-187/14). The case concerns the

incurrence of a customs debt for goods that were placed

under the external transit procedure, were refused by the

consignee and returned without having been submitted

to the customs office.

On 23 April 2007 and 10 April 2008, DSV, a Danish

transport and logistics undertaking, initiated, as the

principal, two external Community transit procedures

(‘the transit procedures’) for the transport of 148 and

703 packages of electronic goods between the customs

office of departure located in the free port of Copenhagen

(Denmark) and the customs office of destination in

Jönköping (Sweden) respectively. Without carrying out a

physical check of the goods, the Danish customs office of

departure authorities ordered their release with time-limits

for their presentation at the customs office of destination

until 31 August 2007 and 13 April 2008 respectively.

In both cases, DSV transported the goods to Jönköping,

where, however, the consignee refused to accept the

goods. Consequently, on 4 September 207 and 14 April

2008 respectively, DSV brought those goods back to

the free port of Copenhagen without their having been

presented to the Jönköping or Copenhagen free port

customs offices and without the transit documents having

been cancelled.

DSV argued that the same 148 and 703 packages of

electronic goods were dispatched a second time to

Jönköping on 13 September 2007 and 17 April 2008

respectively with other electronic goods. DSV had initiated

a new transit procedure and a new transit document in

respect of each of those deliveries, of a total of 573 and

939 packages of electronic goods respectively. Those

second transit procedures were correctly discharged

on 13 September 2007 and 23 April 2008 respectively.

In exchange, Brasserie Bouquet is to comply with the

obligations in the document entitled ‘Bible du Cercle

des 3 brasseurs’, which contains information relating, in

particular, to the know-how and production process in a

microbrewery. The membership contract also states that

Brasserie Bouquet is required to obtain certain products

exclusively from ICO 3B SARL and that it must pay that

company an entrance fee to the ‘Cercle des 3 brasseurs’

as well as a fixed amount every month.

Considering that it satisfied the conditions laid down

in Article 178-0a A of Annex III to the General Tax

Code in order to be taxed as a small independent

brewery, Brasserie Bouquet declared the quantities

of beer produced at its establishment to the Customs

Administration on the basis of the reduced rate of excise

provided for in Article 520 A I(a) of the General Tax Code.

The Customs Administration issued Brasserie Bouquet

with a revised assessment challenging the application

of the reduced rate for the period from December 2007

to November 2010 and then sent it a recovery notice

for the sum claimed. Brasserie Bouquet appealed from

this decision which ultimately ended before the Cour de

Cassation. The Cour de cassation decided to stay the

proceedings and to refer the following question to the

Court for a preliminary ruling:

‘Must Article 4(2) of Directive 92/83 be interpreted as

meaning that the term “operate under licence” refers

exclusively to operation under a licence to exploit a

patent or trademark, or can that provision be interpreted

as meaning that the term “operate under licence” refers

to operation in accordance with a production process of a

third party and authorised by that party?’

The CJ ruled as follows:

For the purpose of applying the reduced rate of excise

duty on beer the condition laid down in Article 4(2) of

Council Directive 92/83/EEC of 19 October 1992 on

the harmonisation of the structures of excise duties on

alcohol and alcoholic beverages according to which a

brewery must not operate under licence, is not met if the

12

3. Is Article 859 of the Implementing Regulation to be

interpreted as meaning that, in the circumstances

of the main proceedings, there is an infringement

of obligations which has had no significant effect on

the proper course of the customs procedure, if it is

assumed that (a) each of the two generated transits

in 2007 and 2008 respectively concerned the same

goods, or (b) it cannot be documented that they were

the same goods?

4. Can the first Member State into which the goods

were imported refuse the taxable person designated

by the Member State a deduction of the import VAT

pursuant to Article 168(e) of the VAT Directive, where

the import VAT is charged to a carrier of the goods

in question who is not the importer and owner of the

goods but has simply transported and been in charge

of the customs dispatch of the consignment as part of

its freight forwarding operations, which are subject to

VAT?’

The CJ ruled as follows:

1. Article 203 of Council Regulation (EEC) No 2913/92

of 12 October 1992 establishing the Community

Customs Code, as amended by Council Regulation

(EC) No 1791/2006 of 20 November 2006 must be

interpreted as meaning that a customs debt is not

incurred on the basis of the sole fact that the goods

placed under an External Community transit procedure

are, after an unsuccessful delivery attempt, brought

back to the free port of departure without having been

presented to either the customs office of destination or

the customs of the free port if it is established that the

same goods were subsequently transported again to

their destination under a second correctly discharged

External Community transit procedure. However, if it

is not possible to establish that the goods covered

by the first and second External Community transit

procedures are the same goods, a customs debt is

incurred under that provision;

However, Skatteministeriet disputed the fact that the 148

and 703 packages of electronic goods covered by the

first transit procedures were also included in the second

transit procedures.

In respect of each of the first undischarged transit

procedures, Den danske told- og skatteforvaltning

(the Danish Tax and Customs Authority) demanded

payment from DSV for customs duties under Article 203

of the Customs Code and, in the alternative, under

Article 204 of that Code. In addition, Den danske told- og

skatteforvaltning demanded payment of VAT on the import

of the goods which were subject to those procedures, on

the basis of Paragraph 39(1)(4) of the Customs Law, in

the version codified by Law No 867 of 13 September

2005. It was apparent from the file before the Court

that DSV had paid the VAT on import but that its right to

deduct that VAT was refused. Since DSV contested those

decisions, the case is presently pending before the Østre

Landsret (Eastern Regional Court of Appeal).

In those circumstances, the Østre Landsret decided to

stay the proceedings and to refer the following questions

to the Court for a preliminary ruling:

‘1. Is Article 203(1) of the Customs Code to be

interpreted as meaning that there is removal from

customs supervision in a situation such as that of the

main proceedings, if it is assumed that (a) each of the

two generated transits in 2007 and 2008 respectively

concerned the same goods, or (b) it cannot be

documented that they were the same goods?

2. Is Article 204 of the Customs Code to be interpreted

as meaning that customs debt arises in a situation

such as that of the main proceedings, if it is assumed

that (a) each of the two generated transits in 2007

and 2008 respectively concerned the same goods, or

(b) it cannot be documented that they were the same

goods?

13

Businesses in many countries across the world can

be accredited as an Authorised Economic Operator,

or a trusted trader, in order to facilitate access to

simplified customs regimes and be granted more

favourable treatment when complying with new security

requirements. The EU and Japan have mutually

recognised their respective ‘trusted trader’ programmes in

respect of security requirements in 2010, and the Mutual

Recognition Agreement has been fully implemented

since 2011. The digitalisation of customs procedures is

crucial in order to ensure that these programmes function

properly and effectively.

The EU and Japan also confirmed their willingness

to strengthen cooperation between their customs

authorities with the objective of identifying and mitigating

threats which may affect international trade routes.

Facilitating trade by exploring new mechanisms, such as

accelerated trade lanes, to support exporters in both the

EU and Japan was also a key priority of the meeting.

The objective of such innovations is to provide concrete

benefits for businesses trading across borders.

Mutual recognition of authorised economic operators

Following the signature of the decision on the mutual

recognition of AEOs between the EU and Japan

on 24 June 2010, the implementation of the mutual

recognition of authorised economic operators started on

24 May 2011. Since then, both EU and Japanese AEOs

have enjoyed trade facilitation benefits in the partner

countries. This was preceded by the adoption of a

specific adequacy decision by the European Commission

on Japanese data protection on 29 March 2011, which

made the data exchange possible.

2. Article 204 of Council Regulation (EEC) No 2913/92

of 12 October 1992 establishing the Community

Customs Code, as amended by Council Regulation

(EC) No 1791/2006 of 20 November 2006, read

in conjunction with Article 859 of Commission

Regulation (EEC) No 2454/93 of 2 July 1993 laying

down provisions for the implementation of Council

Regulation (EEC) No 2913/92, as amended by

Commission Regulation (EC) No 214/2007 of

28 February 2007, must be interpreted as meaning

that the late presentation at the customs office of

destination under a second External Community

transit procedure of goods placed under a first External

Community transit procedure constitutes an omission

which leads to a customs debt being incurred, unless

the conditions laid down in Article 356(3) or the

second indent of Article 859 and point 2(c) thereof

of that regulation are satisfied, which it is for the

referring court to ascertain;

3. Article 168(e) of Council Directive 2006/112/EC of

28 November 2006 on the common system of value

added tax must be interpreted as not precluding

national legislation which excludes the deduction of

VAT on import which the carrier, who is neither the

importer nor the owner of the goods in question and

has merely carried out the transport and customs

formalities as part of its activity as a transporter of

freight subject to VAT, is required to pay.

7th EU-Japan Joint Customs Cooperation Committee (JCCC)During the 7th EU-Japan Joint Customs Cooperation

Committee on 10 June 2015, top-level customs officials

discussed bilateral cooperation and took an important

step towards the creation of an IT system which will

support automated data exchange between Japanese

and EU customs authorities for the mutual recognition

of Authorised Economic Operators (AEO) by signing

the Interface Control Document which constitutes the

technical specifications for these exchanges.

14

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, Luxembourg and Switzerland.

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legal services. Our close cooperation with prominent

international law and tax law firms makes Loyens & Loeff

the logical choice for large and medium-size companies

operating domestically or internationally.

Editorial boardFor contact, mail: eutaxalert@loyensloeff.com:

● 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.

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15-07-EN

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