Excise duties on distance sales of wine in the EU in the context of the Advocate General’s opinion

The sale of alcohol, including wine, between EU countries comes with obligations regarding excise duties and VAT. Currently, the Court of Justice of the European Union (CJEU) is reviewing case C-596/23 (Pohjanri), which could impact business models and pricing policies due to the scope of excise taxation. On September 26, 2024, Advocate General Priit Pikamäe issued an opinion on this matter, shedding new light on the interpretation of excise duty regulations in the context of distance sales.

Distance sales and excise duties

Under EU regulations, distance sales occur when excisable goods are sold to consumers, and the transport is organized directly or indirectly by the seller or on their behalf. In such cases, the seller is responsible for paying excise duty in the destination country, which can significantly affect profit margins and the competitiveness of the offer.

In the case under review by the CJEU, wine was sold online from Germany to customers in Finland. The ordering process allowed customers to choose a carrier, and the supplier informed customers that they were responsible for paying taxes in Finland. As a result, the seller assumed that their business model did not constitute distance sales, leaving it to customers to decide whether they should pay excise duty and potentially VAT in Finland.

Key interpretation by the CJEU

The Advocate General emphasized that even minimal involvement by the seller in organizing transport could result in them being deemed responsible for paying excise duty in the recipient country. This means that, for example, if the supplier:

• recommends specific carriers,
• provides links to carriers’ websites,
• indicates transportation costs,
• transfers order details directly to the carrier,

they may be considered the organizer of the transport.

In the analyzed case, the company B UG sold alcoholic beverages to Finland, allowing customers to select a carrier from a list recommended on its website. Even though customers independently contracted with the carriers, the Advocate General argued that the company should be responsible for paying excise duty in Finland, describing this as “the only interpretation consistent with economic and commercial realities.”

However, the final decision rests with the CJEU, which may still side with the supplier’s argument that their involvement in organizing transport is insufficient to classify it as distance sales.

What does this mean for other suppliers?

Selling wine via distance sales to other EU countries requires a thorough analysis of the delivery model regarding involvement in transport organization. Even indirect actions may lead to excise duty obligations.

In this context, suppliers should consider implementing the following practical steps:

1. Sales Model Analysis: Evaluate whether the business model could be interpreted as organizing transport under excise and VAT regulations.
2. Clear Information for Customers: Ensure that customers are fully informed of their responsibility for organizing transport.
3. Monitoring Legal Changes and Case Law: Stay updated on excise duty regulations in the countries where customers are purchasing wine to react promptly to any changes.

It will also be crucial to follow whether the CJEU upholds the Advocate General’s position and how the Finnish court rules on this matter.