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Cross-border shopping: Commission decides to close the case against the UK over seizures of tobacco and cars

European Commission - IP/06/860   28/06/2006

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IP/06/860

Brussels, 28 June 2006

Cross-border shopping: Commission decides to close the case against the UK over seizures of tobacco and cars

The European Commission has decided to close the case against the United Kingdom over its application of EU law relating to excise duties on tobacco and alcohol. The Commission considers that the changes made by the UK authorities in its policies and practices in relation to the importation of excise goods from other Member States are in line with the changes requested in the Commission's reasoned opinion. This latest Commission action follows on earlier letters, a formal request to the UK to change its law and a referral to the Court of Justice (see IP/01/1482, IP/02/1320, IP/03/1539, IP/04/867 and IP/04/1255 ).

"The Commission has been examining the United Kingdom's policy concerning cross border shopping for tobacco and alcohol very carefully over a long period of time" said László Kovács, the European Commissioner for Taxation and Customs Union. "Member States have a right and duty to combat fraud and fight tax evasion. I am pleased that we were able to agree to ensure that the balance is maintained between this legitimate aim and the principles of the Internal Market. Of course, I am also pleased that we have been able to find a pragmatic outcome in this case, in order to avoid lengthy proceedings before the European Court of Justice.”

Background information

Under EU legislation, individuals are entitled to bring back excise goods (tobacco and alcoholic beverages) which have been bought tax paid in a Member State without incurring further charges, provided the goods are transported by the individuals themselves and are for their own use. This does not apply if the goods are bought on behalf of a third party.

Where Member States suspect such goods are not for own use, they are required to give consideration to specified criteria before coming to a conclusion on whether or not these goods are for a commercial purpose. One such criterion is the quantity of goods. However quantity is but one criterion amongst others and the Member States may not apply any quantitative limits (except in respect of certain new Member States whose duty rates do not meet EU minimum levels).

Where a person brings back goods for a commercial purpose, i.e. a purpose other than his own use, and fails to comply with the formalities that apply to such situations under EC rules, the Member States are entitled to apply sanctions, provided these are reasonable and proportionate in accordance with general principles of EU law.

Infringement proceedings

Following a number of complaints, the Commission opened in October 2001 proceedings against the United Kingdom, asking the UK for observations on its policies and practices in applying EU law on the importation of excise goods from other Member States.

Since then, the UK and the Commission has been engaged in an exchange of views on this issue.

In the time passed since the beginning of the proceedings, the Commission understood that the UK had gradually modified its policies in relation to the forfeiture of vehicles in cases involving purchases of excise goods on behalf of a third party and for small-scale offences. The Commission further understood that the UK had amended its legislation to make clear that the burden of proving that goods are held for a commercial purpose rested with the authorities.

Nevertheless, the Commission considered that two aspects of the UK's sanctions policies – those relating to the purchase of excise goods on behalf of a third party, and the importation of excise goods by post (referred to below as "irregular movement") - remained disproportionate where there were no aggravating circumstances.

The Commission therefore issued a reasoned opinion (see IP/04/867) requesting the United Kingdom to modify its policies. As the United Kingdom failed to comply, the Commission decided (see IP/04/1255) to refer the matter to the European Court of Justice (ECJ) for a ruling.

Following further discussions, the United Kingdom has amended its policies relating to such irregular movements, as laid out in the Commission's reasoned opinion.

Under the new policies, in such irregular movement cases, the UK will no longer systematically seize as liable to forfeiture the goods and cars of persons holding excise goods for purposes other than their own use.

Instead, in first-time irregular movements without aggravating circumstances, the holder will be offered the option of holding on to his goods against payment of the duty plus a penalty. Where a car is used to carry the goods in such cases it will not be seized but the owner will normally be warned that it could be seized in any further cases.

The Commission considers that there is no further need to refer the case to the ECJ as the Commission believes that this new policy corresponds to the practical policy changes set out in the Commission's reasoned opinion.

Commission case's reference number is: 2001/4138
For the latest general information on infringement measures against Member States see:

http://ec.europa.eu/community_law/eulaw/index_en.htm


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