EU Tax Alert

September 2013 - edition 121

The EU Tax Alert is an e-mail newsletter to inform you of recent developments in the EU that are of interest for tax professionals. It includes recent case law of the European Court of Justice, (proposed) direct tax and VAT legislation, customs, state aid, developments in the Netherlands, Belgium and Luxembourg and more. To subscribe (free of charge) see: www.eutaxalert.com

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Highlights in this edition Netherlands Supreme Court refers preliminary questions to the CJ regarding the amendments to the Netherlands 30% ruling, effective as per 1 January 2012 The Supreme Court of the Netherlands has referred preliminary questions to the CJ regarding the question if the 150 kilometres requirement of the Netherlands 30% ruling is in accordance with the free movement of workers set out in Article 45 TFEU. Under the 30% ruling, the employer may pay the employees, who have been posted to the Netherlands or recruited from abroad to work in the Netherlands, a tax free allowance of 30% of the employee’s wage. This 30% tax free allowance is intended to cover extraterritorial expenses which the employee has to make as a consequence of the fact that the employee works outside his home country. In the underlying case, an employee who did not met the 150 kilometres requirement requested a 30% ruling. The Netherlands tax inspector rejected this request. The employee argued that the 150 kilometres requirement was in conflict with the free movement of workers, as laid down in Article 45 TFEU, and the principle of equality.

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Contents Top News •

Netherlands Supreme Court refers preliminary questions to the CJ regarding the amendments to the Netherlands 30% ruling, effective as per 1 January 2012

Customs Duties, Excises and other Indirect Taxes •

CJ rules on the legal requirements with regard to excise products shipped to another EU Member State

•

CJ rules on the incurrence of a customs debt for goods stolen from a customs warehouse

•

Protecting IPR: Customs detain EUR 1 billion worth of fake goods at EU borders in 2012

•

EU-Colombia trade agreement takes effect on 1 August 2013

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Top News

The District Court of Breda argued that even if there

Netherlands Supreme Court refers preliminary questions to the CJ regarding the amendments to the Netherlands 30% ruling, effective as per 1 January 2012

Supreme Court, however, argued, with reference to the

The Supreme Court of the Netherlands has referred

comparable to a person living outside the 150 kilometres

preliminary questions to the CJ regarding the question

border. Furthermore, regarding the comparison, the

if the 150 kilometres requirement of the Netherlands

legislature had assumed that a person living within the

30% ruling is in accordance with the free movement of

150 kilometres border has no or few extra territorial

workers set out in Article 45 TFEU.

expenses. In this respect, the Supreme Court argued

Under the 30% ruling, the employer may pay the

that this assumption was not based on empirical

employees, who have been posted to the Netherlands

research and for that reason, it is doubtful whether the

or recruited from abroad to work in the Netherlands,

assumption is correct.

is an unequal treatment under equal circumstances in this case an objective justification is applicable. The cases Orange European Smallcap Fund (C-194/06) and D (C-376/03), that the case law of the CJ is not clear on the point whether in the underlying case a person living within the 150 kilometres border is

a tax free allowance of 30% of the employee’s wage. This 30% tax free allowance is intended to cover

In the case that there is no equal treatment under

extraterritorial expenses which the employee has to

equal circumstances, it has to be determined if the

make as a consequence of the fact that the employee

150 kilometres requirement is in breach of the free

works outside his home country. On 1 January 2012, an

movement of workers. The Supreme Court argued that

amendment to the 30% ruling came into force in order

an employee from a Member State to whom the 30%

to prevent the improper use of the 30% ruling. Under

ruling is applicable does not have to keep accounts

this amendment, the 30% ruling became applicable

of the extraterritorial expenses and most likely, will

only to employees who have lived at a distance of more

receive a higher tax free allowance in comparison to

than 150 kilometres from the Netherlands border for a

an employee from another Member State to whom the

period of more than two thirds of the twenty-four months

30% ruling is not applicable. By which, according to the

prior to the commencement of employment in the

Supreme Court, the 150 kilometres requirement could

Netherlands (‘150 kilometres requirement’). Employees

constitute an obstacle to the free movement of workers.

who do not meet these criteria may only receive a tax free reimbursement for the actual extraterritorial

In the view of the Supreme Court, the 150 kilometres

expenses.

requirement is justified, as it should be considered a compelling reason of the public interest. However,

In the underlying case, an employee who did not met

according to the Supreme Court, there is no case law

the 150 kilometres requirement requested a 30% ruling.

of the CJ which provides certainty on this point. Also,

The Netherlands tax inspector rejected this request. The

the answer to the question whether the 150 kilometres

employee argued that the 150 kilometres requirement

requirement is proportional was not entirely clear to the

was in conflict with the free movement of workers,

Supreme Court.

as laid down in Article 45 TFEU, and the principle of equality. Therefore, according to the employee, the 30% ruling should have been granted.

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Therefore, the Supreme Court has referred the following

Danish undertakings registered in the Det Centrale

questions to the CJ :

Virksomhedsregister (Central Business Register). In the

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case of Swedish customers, Metro issues that card only 1. Does the 150 kilometres requirement make an

to undertakings which are registered for VAT in Sweden.

indirect distinction between nationality of employees

A customer to whom several Metro cards are issued

or otherwise constitute an obstacle to the free

may make those cards available to other individuals

movement of workers?

who can use those cards for their own purchases. This

2. Must the 150 kilometres requirement be considered a compelling reason of the public interest?

applies to both Danish and Swedish customers. Metro has over 250,000 registered customers and has issued

3. Is the 150 kilometres requirement proportional?

over 700,000 Metro cards.

Customs Duties, Excises and other Indirect Taxes

The person making the purchase is not subject to any

CJ rules on the legal requirements with regard to excise products shipped to another EU Member State (Metro Cash & Carry Denmark)

purchased for private use.

requirement to provide proof of identity or of his capacity as a trader or as a representative of the undertaking to which the Metro card was issued. Metro does not conduct checks at the check‑out counter to verify whether the goods are being purchased for commercial use or whether goods are solely or additionally

The sale of spirits is always subject to Danish VAT and Danish excise duties, regardless of the customer’s nationality.

On 18 July 2013, the CJ delivered its judgment in the case Metro Cash & Carry Denmark (C-315/12). This

It appears from a request for assistance made on

case deals with the requirements that can occur in

12 February 2007, justified on the basis of the risk

the situation that excise goods were sold by Metro in

of fraud in the catering sector, that the Skatteverket

Denmark and the seller does not know whether the

(Swedish Tax Agency) had sought information from

buyer, who will ship the goods to another EU Member

the Danish customs and tax administration concerning

State, is a private individual or not and whether these

purchases made by Swedish customers at Metro in

goods are to be held for commercial purposes in the

2003 and 2004. The information received had been

other EU Member State.

used in inspections carried out in a number of Swedish restaurants following which, in all cases, the operators

Metro conducts a business in Denmark selling a broad

of the restaurants received notices of assessment and

range of goods, including spirits, to Danish customers

had their licence withdrawn.

or customers from other Member States. Metro uses the ‘cash and carry’ business model.

The Skatteministeriet subsequently adopted a decision under which Metro was required to receive copy 1 of the

Purchases can be made at Metro only on presentation,

simplified accompanying document at the sale of spirits

at the checkout-counter, of a machine-readable

to Swedish customers.

card (‘the Metro card’) which is issued on request to

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Please note that the above questions are not the literal questions referred by the Supreme Court.

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The action brought by Metro against that decision was

(4) Do the entry into force of Directive 2008/118 and the

dismissed by the Østre Landsret (Eastern Regional

repeal of Directive 92/12 give rise to a change in the

Court, Denmark) by judgment of 19 March 2010.

legal position as regards the implications of Directive 92/12 in relation to the answers to Questions 1 to 3?

On 11 May 2010, Metro appealed against that judgment

(5) Is the phrase products acquired by private

to the Højesteret. The Højesteret decided to stay the

individuals for their own use in Article 8 of Directive

proceedings and to refer the following questions to the

92/12 and Article 32(1) of Directive 2008/118 to

Court of Justice for a preliminary ruling:

be interpreted as meaning that it covers, or can

‘(1) Are Directive 92/12 and Regulation No 3649/92

cover, purchases of goods subject to excise duty

to be interpreted as meaning that a trader in a

in circumstances such as those arising in the main

Member State who, in circumstances such as

proceedings? If the answer to that question is in

those arising in the main proceedings, sells goods

the negative, must the purchases then come under

subject to excise duty which have been released

Article 7 of Directive 92/12 and/or Article 33 of

for consumption in that Member State and which

Directive 2008/118?’

are supplied at the vendor’s place of business to a purchaser who is resident in another Member State,

The CJ ruled that:

without the vendor assisting in the provision or

1. The relevant legislation must be interpreted as

arrangement of transport, must carry out (i) a check

meaning that a trader, such as the trader at issue

to determine whether the purchase of the goods

in the main proceedings, is not required to check

which are subject to duty is made with a view to their

whether purchasers from other Member States

importation into that second Member State, and (ii) a

intend to import products subject to excise duty into

check to determine whether the goods are to be

another Member State and, where relevant, whether

imported for private or commercial use? (2) If Question 1 is answered in the affirmative, must

such importation is for private or commercial use. 2. Articles 32 to 34 of Council Directive 2008/118/

the trader, at the time of the sale of goods subject to

EC of 16 December 2008 concerning the general

excise duty in circumstances such as those arising

arrangements for excise duty and repealing

in the main proceedings, when carrying out the

Directive 92/12/EEC must be interpreted as not

checks referred to, apply rules of presumption as to

substantially amending Articles 7 to 9 of Directive

the purchaser’s intention with regard to the goods

92/12 as amended by Directive 92/108 in a manner

purchased?

which would warrant, in circumstances such as

(3) If Question 1 is answered in the affirmative, are Directive 92/12 and Regulation No 3649/92 to be

those at issue in the main proceedings, a different answer to the first question.

interpreted as meaning that a vendor, as referred

3. Article 8 of Directive 92/12 as amended by Directive

to in Question 1, in circumstances such as those

92/108 must be interpreted as being capable of

arising in the main proceedings, must refuse to

covering the purchase of products subject to excise

accede to a purchaser’s wish to purchase goods

duty in circumstances such as those at issue in

subject to excise duty if the purchaser does not offer

the main proceedings where those products are

to present copy 1 of the simplified accompanying

acquired by private individuals, for their own use and

document referred to in Article 4 of Regulation

are transported by them, which is for the competent

No 3649/92, if the intention in making the purchase

national authorities to check on a case-by-case

is to use the dutiable goods for commercial purposes

basis.

in the purchaser’s home country? An answer to this question is also requested in the event that rules of presumption, as referred to in Question 2, are to be applied.

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CJ rules on the incurrence of a customs debt for goods stolen from a customs warehouse (Harry Winston)

treated the theft of goods as equivalent to their

On 11 July 2013, the CJ delivered its judgment in the

exempted the trader if he proved that the irretrievable

case Harry Winston (C-273/12). This case deals with the

loss – in the present case, the theft – was the result of

question whether a customs debt arises for goods that

force majeure.

destruction or irretrievable loss within the terms of Article 206 of the Customs Code, and that that doctrine

are stolen from a customs warehouse or whether in the situation that goods are stolen no customs debt shall be

The Cour d’appel thus held that Harry Winston could

deemed to be incurred because of irretrievable loss of

have taken the view, relying on the principle of legitimate

goods as a result of force majeure.

expectation, that it did not have to pay customs duties in this case, subject to demonstrating that that theft

Following an armed robbery with hostage-taking on

was the result of force majeure. In that regard, the

6 October 2007, in the course of which items of jewellery

Cour d’appel held that the armed robbery at issue,

placed under customs warehousing arrangements

having been unforeseeable and unavoidable by reason

were stolen, the customs administration, by a collection

of its brutality and criminal characteristics, fulfilled

notice of 16 November 2007, sought payment from

the conditions of force majeure and had led to an

Harry Winston of the customs duties and VAT applicable

irretrievable loss of the goods.

to those goods. Harry Winston, being the keeper of the customs warehouse, following an unsuccessful

With regard to the VAT, the Cour d’appel took the view

administrative complaint, brought proceedings against

that the Court of Justice had acted correctly in holding,

the customs administration with a view to having that

in its judgment in case C‑435/03 British American

notice set aside.

Tobacco and Newman Shipping, that the theft of goods does not constitute a ‘supply of goods for consideration’

By decision of 3 June 2009, the Tribunal d’instance du

within the meaning of Article 2 of the VAT directive and

10 arrondissement de Paris (District Court of the 10th

cannot, therefore, as such, be subject to VAT.

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District of Paris) set aside the collection notice in relation to the VAT and, with regard to the customs duties,

The customs administration appealed in cassation. It

stayed the proceedings pending a ruling by the Court

complained that the Cour d’appel, first, had failed to

of Justice on two questions referred for a preliminary

investigate, as it had been requested to do, whether

ruling concerning the interpretation of Article 206 of the

the Court had not been correct to hold, in its judgment

Customs Code.

in Esercizio Magazzini Generali and Mellina Agosta, that the theft of goods subject to customs duties did

The customs administration appealed against that

not extinguish the obligations relating to them and,

decision.

secondly, concerning the VAT, that it gave its ruling in reliance on the judgment in British American Tobacco

By judgment of 7 December 2010, the Cour d’appel

and Newman Shipping, even though, in the present

(Court of appeal) first, upheld the decision of the

case, the chargeable event giving rise to the tax was not

Tribunal d’instance du 10 arrondissement de Paris

a ‘supply of goods for consideration’, within the meaning

which had set aside the collection notice in relation to

of Article 2(1)(a) of the VAT directive, but an ‘importation’

the VAT, and secondly, varied the decision relating to the

referred to in Article 2(1)(d) of that directive.

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customs debt. The Cour de cassation pointed out that two new factors, In relation to the customs duties, the Cour d’appel

which have arisen since the judgment in Esercizio

held, basing itself on the Bulletin officiel des douanes

Magazzini Generali and Mellina Agosta, preclude a

No 6551 of 29 May 2002, that the French authorities

conclusive finding that that judgment is still, for certain,

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part of positive law. First, the Customs Code, adopted in

2. The second subparagraph of Article 71(1) of Council

1992, did not repeat the requirement of the ninth recital

Directive 2006/112/EC of 28 November 2006 on

in the preamble to Directive 79/623, referred to in the

the common system of value added tax must be

judgment in Esercizio Magazzini Generali and Mellina

interpreted as meaning that the theft of goods

Agosta, which made the extinction of the customs debt

placed under customs warehousing arrangements

conditional on the circumstance, whether actual or

gives rise to the chargeable event and causes value

presumed, that the goods did not find their way back

added tax to become chargeable.

to the economic circuit after the theft. Secondly, the

constitute a ‘supply of goods for consideration’ within the

Protecting IPR: Customs detain EUR 1 billion worth of fake goods at EU borders in 2012

meaning of Article 2 of the VAT directive and could not

EU Customs detained almost 40 million products

therefore, as such, be subject to VAT.

suspected of violating intellectual property rights (IPR)

Court held in its judgment in British American Tobacco and Newman Shipping that the theft of goods did not

in 2012, according to the Commission’s annual report In those circumstances, the Cour de cassation decided

on customs actions to enforce IPR. Although this is

to stay the proceedings and to refer the following

less than the 2011 figure, the value of the intercepted

questions to the Court for a preliminary ruling:

goods is still high, at nearly EUR 1 billion. The report of

‘1. Is Article 206 of the Customs Code to be interpreted

5 August 2013 gives statistics on the type, provenance

as meaning that the theft, in the circumstances of

and transport method of counterfeit products detained

the present case, of goods held under customs

at the EU’s external borders. Cigarettes accounted for

warehousing arrangements constitutes the

a large number of interceptions (31%), miscellaneous

irretrievable loss of the goods and a case of force

goods (e.g. bottles, lamps, glue, batteries, washing

majeure, with the consequence that, in that situation,

powder) were the next largest category (12%), followed

no customs debt on importation is deemed to have

by packaging materials (10%). Postal and courier

been incurred?

packages accounted for around 70% of customs

2. Is the theft of goods held under customs warehousing arrangements such as to give rise

interventions in 2012, with 23% of the detentions in postal traffic concerning medicines.

to the chargeable event and to cause the VAT to become chargeable pursuant to Article 71 of the VAT

In terms of where the fake goods were coming from,

directive?’

China continued to be the main source. Other countries, however, were the top source for specific product

The CJ ruled as follows:

categories, such as Morocco for foodstuffs, Hong

1. Article 203(1) of Council Regulation (EEC)

Kong for CD/DVDs and other tobacco products (mainly

No 2913/92 of 12 October 1992 establishing the

electronic cigarettes and liquid fillings for them), and

Community Customs Code, as amended by Council

Bulgaria for packaging materials. Around 90% of all

Regulation (EC) No 1791/2006 of 20 November

detained cases were either destroyed or a court case

2006, must be interpreted as meaning that a theft

was initiated to determine the infringement.

of goods placed under customs warehousing those goods within the meaning of that provision,

EU-Colombia trade agreement takes effect on 1 August 2013

giving rise to a customs debt on importation. Article

On 1 August 2013, a comprehensive and far-reaching

206 of that regulation is capable of applying only

trade deal became applicable on the basis of which

to situations in which a customs debt is liable to be

trade barriers between the EU and Colombia have been

incurred pursuant to Articles 202 and 204(1)(a) of

lifted. The Agreement opens up markets for both EU

that regulation.

and Colombian exporters, eventually bringing annual

arrangements constitutes an unlawful removal of

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savings of more than EUR 500 million for companies. The improved, more stable conditions for trade and investment are expected to boost trade and investment between the EU and the Andean region. The deal was signed by the EU, Colombia and Peru in June 2012, and will be applicable between all three parties. The agreement will open up markets for products traded between the EU, Colombia and Peru. At the end of the transition period, there will be no customs duties at all on industrial and fisheries products and trade in agricultural products will become considerably more open. As a result, exporters could save as much as EUR 500 million annually in tariffs alone. The main benefit of the new trade regime will come from a more transparent, predictable and enforceable business environment. This is expected to create significant new opportunities for businesses and consumers on both sides. Better conditions for creating business links should lead to more integrated value chains and make it easier to transfer technology. The EU-Colombia deal includes far-reaching provisions on the respect of human rights, the rule of law and effective implementation of international conventions on labour rights and environmental protection. Civil society organizations will be systematically involved to monitor the implementation of these commitments. The aim of the agreement between the EU, Colombia and Peru is also to foster regional integration among the Andean countries. Therefore, the door is still open for the other Andean countries – Ecuador and Bolivia – to enter into the partnership.

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Maastricht University)

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For contact, mail: [email protected]:

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Bruno da Silva (Loyens & Loeff Amsterdam;

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University of Amsterdam)

University of Amsterdam)

Editors ●

Patricia van Zwet

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Bruno da Silva

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