MEMO/04/80
Brussels, 2nd April 2004
Movement of products subject to excise duties: frequently asked questions
(See also IP/04/452)
How would the Commission proposal change the situation of a private individual buying excise duty products (like alcohol) in one Member State and then consuming them in another Member State?
The Commission proposal presented on 2 April 2004 would extend the application of the principle under which private individuals can freely acquire products subject to excise duty intended for personal consumption in a Member State and bring them back to another state, without these products being subject to taxation in the state of destination.
At present, this principle is limited to cases where the private individual himself transports the products subject to excise duty. The Commission is proposing to also applying this principle if the transport of the products is organised entirely by the private individual themselves (but not where the transport of the products is organised by the vendor). Thus, if a private individual arranges for a transport company or a friend to bring back excise duty products to a Member State, the country of destination could not tax these products. This would not however apply to tobacco products, for which nothing would change so as to take account of public health objectives, and in particular the health policy recommended by the EC treaty and the framework agreement for the anti-smoking fight of the World Health Organisation signed by the EC on 16 June 2003.
How would the proposal change the situation for a producer or retailer wishes to sell products subject to excise duty directly to private individuals in other Member States via the Internet?
If we are talking about distance selling for which transport or the forwarding of the products is carried out directly or indirectly by or on behalf of the seller, the excise duty and the value added tax (VAT) are currently levied by the salesman in the Member State where it delivers the excise duty products and the formalities as regards excise duties and VAT have to be carried out by the retailer. The private individual who buys the products does not face any formalities.
The Commission proposal would not change these arrangements but would simplify the formalities on the part of the retailer. It would in particular introduce a harmonised procedure, involving a single notification to a central office in each receiving Member State, where the foreign retailer should periodically pay the excise duty due periodically on the basis of an overall declaration for all his sales in that Member State during the period in question. There would no longer therefore be obligation to name a responsible representative or to deal with various regional offices according to where the products are delivered.
Internet sites marketing cigarettes sometimes claim that the excise duty is not payable in the destination Member State. Is this true?
Only tobacco acquired by private individuals for personal use and physically transported by the individuals themselves are exempt from taxation in the destination Member State. In all the other cases, the VAT and excise duties are payable in the destination Member State, unless they are gifts from one private individual to another private individual and no money changes hands (see below). Consequently, schemes proposed by Internet sites in order to avoid taxation in the receiving Member State are in violation of EU excise duty and VAT legislation. When products are sent from third countries to the European Union, customs duty is also due.
The new proposal for a Directive would not change these principles in any way.
Why would the proposal for a Directive eliminate the "indicative" limits which exist to distinguish the products intended for commercial purposes from products intended for private use?
Private individuals not wishing to pay VAT and excise duties in the destination Member State have to ensure that the products that they bring back are indeed intended for personal use. They can be for his own personal use, for consumption by his own family and friends, for the marriage party of a son or daughter, etc. The destination Member State has the right to tax the products only if products are not intended for personal use. This is the case, for example, if products are resold (even if not at a profit) or are consumed at a party where people have to pay an entrance fee.
It is therefore the use of the product which determines whether tax is due in the destination country, rather than the quantity transported which is only one element to be taken into account by the authorities to establish whether the products are intended for commercial or private use. Other elements to be taken into account by the authorities are the commercial status of the person holding the goods, where the products are held, whether the goods are in a car, van or lorry, and documents such as receipts related to the products) In order to avoid confusion, the proposed Directive would therefore eliminate the "indicative" limits (800 cigarettes, 10 litres of spirituous beverages, 90 litres of wine, etc.) as an element of proof to distinguish between products intended for commercial purposes and products intended for private use.
Would the proposal modify the treatment of alcoholic beverages or of tobacco products received by a private individual as gifts, by post or by courier, from another Member State?
No. The proposal for a Directive would not change the treatment of gifts, but would clarify the fact that such movements without commercial nature involve neither formalities, nor payment of the excise duty in the destination Member State. This principle applies also if the person offering the products transports them itself or sends them, by post for example.
Certain conditions have however to be met:
- the gift has to be given from private individual to private individual
- the products subject to excise duty have to be intended exclusively for the personal or family use of the recipient
- there can be direct or indirect payment of any amount.
What happens if a private individual moves house to another Member State and transfers, on this occasion, his wines cellar? Would the proposal change anything in this respect?
No, the proposal would not change the tax treatment of such transfers as such, but would clarify the fact that no formality or payment of the excise duty can be required in the country of destination when a private individual transports his wine cellar, or has it transported, as part of his removal from one Member State to another.
