E-commerce and Excise Duties : EU Court’s Ruling

The recent ECJ ruling of 19 December 2024 in case C-596/23 underscores the impact of transport facilitation by vendors on their tax liabilities for the cross-border sale of excise goods to individuals.

Similar to EU VAT rules, excise duty on B2C distance sales of specific goods, such as alcohol, is payable in the destination Member State by the vendor. However, if the vendor is not directly or indirectly involved in the cross-border transport of the excise goods sold, the duty may instead be due either by the transporter in the destination country or by the vendor in the country of acquisition, provided the goods are transported abroad by the individual buyers themselves.

According to Council Directive 2020/262 (formerly Directive 2008/118), which governs excise duties across the EU, these duties become chargeable at the time, and in the Member State, of release for consumption. Consequently, identifying the Member State in which the excise goods are presumed to be released to the individual buyers for their own consumption is critical. This determination depends on the transport and dispatch conditions : “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.” Art.36 of D. 2008/118.

The case-law

The case C-596/23 involves B UG, a German company selling alcoholic beverages online to Finnish individuals, and its excise duty liabilities in Finland. While B UG did not undertake the transport itself, its website actively guided buyers toward specific transport options. These included recommending transport companies, providing links, and transmitting order details to carriers who billed the purchasers directly.

The court’s decision focused on whether B UG’s actions rendered it liable under EU rules for distance selling, subject to excise duties in Finland, as outlined in Directive 2008/118 and the Finnish Law on Excise Duty (182/2010).

The Court’s Decision

The Court of Justice clarified that excise liability does not depend on the formal separation of contracts but on the economic reality of the transaction. By redirecting buyers to specific transporters, the vendor effectively influenced the transport arrangements, thus becoming indirectly involved under Article 36(1) of Council Directive 2008/118.

The court emphasized that Article 36 aims to ensure that taxes are aligned with where goods are consumed, thereby preventing loopholes based on transaction formalities. The vendor’s role in facilitating transport was sufficient to trigger liability, even if the buyer directly paid the transporter.

Article 36(1) of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC

must be interpreted as meaning that in the situations referred to in that provision, excise goods must be regarded as ‘dispatched or transported to another Member State directly or indirectly by the vendor or on his behalf’, such that that vendor is liable for excise duty in that other Member State, where he or she acts in such a way as to guide the purchaser’s choice of the company responsible for the dispatch and/or transport of those goods by suggesting and facilitating the use of certain companies that can be responsible for that.

Implications

For Vendors: Online sellers must carefully evaluate their involvement in logistics. Even indirect actions, such as recommending transport services or linking to carriers, may establish liability for excise duties in the destination country.

For Consumers: Buyers engaging in cross-border purchases should be aware of potential complexities if transport arrangements are tied to the seller. It is advisable to clarify excise duty obligations in advance.

Conclusion

The ruling reinforces the principle that B2C sellers who indirectly facilitate cross-border transport are accountable for excise duties in the buyer’s country. It highlights the balance between harmonising EU trade and ensuring fair tax compliance for distance sales of excise goods. Businesses must carefully structure cross-border sales processes to avoid unintended liabilities.