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July 2015 - edition 144EU Tax Alert
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
Please click here to unsubscribe from this mailing.
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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.
10
‘(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:
11
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
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Editorial boardFor contact, mail: [email protected]:
● 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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