Contact: Jamie Harley
Deloitte
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The European Court of Justice (ECJ) has today ruled out the possibility of EU citizens benefiting from lower duty rates in other member states by ordering dutiable products, such as alcohol and tobacco, online from overseas vendors.

The decision was delivered in the case of Mr Joustra, a Dutch national, who as part of a 70 strong wine club tried to benefit from lower excise rates in France by ordering wine there and arranging for a transport company to collect it and deliver it to his home in the Netherlands. 

The result comes as a surprise as it runs contrary to the guidance given to the ECJ by the Advocate General’s opinion in December 2005.  However, it does match the position taken by countries, such as the UK and Netherlands, which have interpreted European Law as meaning that their citizens can only take advantage of lower duty rates in member states if the individuals travel there and physically transport the goods home themselves.

Darren Stephens, head of Deloitte’s indirect tax group for consumer business, commented: “This decision means it will not be possible for UK shoppers to go online to benefit from lower duty rates on alcohol and tobacco without actually leaving the UK. The ruling ends speculation that the UK would have to take a more relaxed approach to cross-border shopping, which would give rise to a considerable drain on receipts to the Exchequer. 

“This is a significant case which will leave certain governments, including the UK, breathing a sigh of relief, as it prevents a potential loss of many millions of Euros in tax and duty.

“The European Court made it clear that the underlying purpose of excise duty legislation and the prevention of increased fraud arising on dutiable goods were vital considerations in arriving at the Joustra ruling.”

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