Advocate General Pikamäe has delivered his Opinion in Case C-596/23, Pohjanri, a reference for a preliminary ruling from the Administrative Court of Helsinki (Helsingin hallinto-oikeus), Finland. In this case involving the handling of excise duties, he concluded that the Court should rule that an if an online undertaking recommends specific transport options for the cross-border sale of alcohol, that undertaking is engaged in ‘distant selling’, and thus liable to collect excise duties.
Background and facts
The case involves an undertaking’s website, which recommended specific transport companies to customers, provided information on transport costs, and facilitated the transport process through direct links to the transport companies’ websites.
In other words, when purchasing the goods from a seller’s online store (goods for sale from Germany), customers in Finland are offered a choice of transport goods. The seller does not transport the goods themselves, but offers potential buyers the option at the online checkout to arrange the transport of the goods from the seller in Germany to their home in Finland.
The Finnish tax authority argued that this level of involvement constituted ‘distance selling’, making that undertaking liable for excise duty in Finland.
The Administrative Court of Helsinki (Helsingin hallinto-oikeus) made a reference for a preliminary ruling to the Court of Justice of the European Union (CJEU), wanting to know ‘who’ is to handle the levying of the excise duties in this case: the seller? or the transporter?
The case has been lodged as Case C-596/23, Pohjanri, and is known within the Finnish judicial system as case 5328/2023.
Legal question
The case concerns an interpretation of Directive 2008/118 concerning the general arrangements for excise duty.
The core issue revolves around the interpretation of ‘distance selling’ under Article 36(1) of Directive 2008/118. It stipulated that,
‘1. Excise goods already released for consumption in one Member State, which are purchased by a person, other than an authorised warehousekeeper or a registered consignee, established in another Member State who does not carry out an independent economic activity, and which are dispatched or transported to another Member State directly or indirectly by the vendor or on his behalf shall be subject to excise duty in the Member State of destination.
For the purposes of this Article, ‘Member State of destination’ shall mean the Member State of arrival of the consignment or of transport.’
Opinion of the Advocate General
The Opinion of Advocate General Pikamäe was delivered on 26 September 2024.
He commenced by noting that the case offers the Court the first opportunity to rule on the scope of that provision of Directive 2008/118, by indicating the degree of involvement of the vendor in the transport of excise goods that makes it possible to identify ‘distance selling’, and thus ,to conclude that the vendor is liable to pay excise duty in the Member State of destination of those goods.
The Advocate General analysis drew on the principles established in previous case-law, particularly the judgment in EMU Tabac and Others (C-296/95), which emphasised the importance of the vendor’s role in the transport of goods. The Advocate General also considers the judgment in KrakVet Marek Batko (C-276/18), which dealt with similar issues in the context of value-added tax (VAT).
From this, he drew the criteria for determining the vendor’s involvement include the significance of delivery in the vendor’s commercial practices, the attribution of choices related to transport methods, the burden of risk in transport, and the payment arrangements for the goods and their transport.
Advocate General Pikamäe proposed that the Court interpret Article 36(1) of Directive 2008/118/EC to mean that excise goods should be considered ‘dispatched or transported to another Member State directly or indirectly by the vendor or on his behalf’, if the vendor guides the purchaser’s choice of the transport company.
This includes situations where the vendor’s website recommends specific transport companies, provides information about transport costs, and contains links to the transport companies’ websites, which transmit information about the goods to be transported without further intervention by the purchaser.
He emphasised that such actions by the vendor constitute sufficient involvement to classify the transaction as ‘distance selling’, making the vendor liable for the collection of excise duties in the Member State of destination. For him, he argued that this interpretation aligns with the economic and commercial realities of the transactions, and prevents vendors from evading excise duty liabilities through indirect means.
In other words, the Finnish tax authority should win the case given that for him, the undertaking’s actions amount to sufficient involvement to classify such transactions as ‘distance selling’.
Read the Opinion
The judgment of the Fourth Chamber of the Court of Justice will be delivered in late 2024, or early 2025.
In the meantime, the Opinion of Advocate General Pikamäe in Case C-596/23, Pohjanri, delivered on 26 September 2024, can be read here.