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September 2013 - edition 121EU 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.
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Highlights in this editionNetherlands Supreme Court refers preliminary questions to the CJ regarding the amendments to the Netherlands 30% ruling, effective as per 1 January 2012The 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.
3
ContentsTop 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
4 5
The District Court of Breda argued that even if there
is an unequal treatment under equal circumstances in
this case an objective justification is applicable. The
Supreme Court, however, argued, with reference to 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
comparable to a person living outside the 150 kilometres
border. Furthermore, regarding the comparison, the
legislature had assumed that a person living within the
150 kilometres border has no or few extra territorial
expenses. In this respect, the Supreme Court argued
that this assumption was not based on empirical
research and for that reason, it is doubtful whether the
assumption is correct.
In the case that there is no equal treatment under
equal circumstances, it has to be determined if the
150 kilometres requirement is in breach of the free
movement of workers. The Supreme Court argued that
an employee from a Member State to whom the 30%
ruling is applicable does not have to keep accounts
of the extraterritorial expenses and most likely, will
receive a higher tax free allowance in comparison to
an employee from another Member State to whom the
30% ruling is not applicable. By which, according to the
Supreme Court, the 150 kilometres requirement could
constitute an obstacle to the free movement of workers.
In the view of the Supreme Court, the 150 kilometres
requirement is justified, as it should be considered
a compelling reason of the public interest. However,
according to the Supreme Court, there is no case law
of the CJ which provides certainty on this point. Also,
the answer to the question whether the 150 kilometres
requirement is proportional was not entirely clear to the
Supreme Court.
Top NewsNetherlands Supreme Court refers preliminary questions to the CJ regarding the amendments to the Netherlands 30% ruling, effective as per 1 January 2012The 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. On 1 January 2012, an
amendment to the 30% ruling came into force in order
to prevent the improper use of the 30% ruling. Under
this amendment, the 30% ruling became applicable
only to employees who have lived at a distance of more
than 150 kilometres from the Netherlands border for a
period of more than two thirds of the twenty-four months
prior to the commencement of employment in the
Netherlands (‘150 kilometres requirement’). Employees
who do not meet these criteria may only receive a
tax free reimbursement for the actual extraterritorial
expenses.
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. Therefore, according to the employee, the 30%
ruling should have been granted.
5
Danish undertakings registered in the Det Centrale
Virksomhedsregister (Central Business Register). In the
case of Swedish customers, Metro issues that card only
to undertakings which are registered for VAT in Sweden.
A customer to whom several Metro cards are issued
may make those cards available to other individuals
who can use those cards for their own purchases. This
applies to both Danish and Swedish customers. Metro
has over 250,000 registered customers and has issued
over 700,000 Metro cards.
The person making the purchase is not subject to any
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
purchased for private use.
The sale of spirits is always subject to Danish VAT and
Danish excise duties, regardless of the customer’s
nationality.
It appears from a request for assistance made on
12 February 2007, justified on the basis of the risk
of fraud in the catering sector, that the Skatteverket
(Swedish Tax Agency) had sought information from
the Danish customs and tax administration concerning
purchases made by Swedish customers at Metro in
2003 and 2004. The information received had been
used in inspections carried out in a number of Swedish
restaurants following which, in all cases, the operators
of the restaurants received notices of assessment and
had their licence withdrawn.
The Skatteministeriet subsequently adopted a decision
under which Metro was required to receive copy 1 of the
simplified accompanying document at the sale of spirits
to Swedish customers.
Therefore, the Supreme Court has referred the following
questions to the CJ1:
1. Does the 150 kilometres requirement make an
indirect distinction between nationality of employees
or otherwise constitute an obstacle to the free
movement of workers?
2. Must the 150 kilometres requirement be considered
a compelling reason of the public interest?
3. Is the 150 kilometres requirement proportional?
Customs Duties, Excises and other Indirect TaxesCJ rules on the legal requirements with regard to excise products shipped to another EU Member State (Metro Cash & Carry Denmark)
On 18 July 2013, the CJ delivered its judgment in the
case Metro Cash & Carry Denmark (C-315/12). This
case deals with the requirements that can occur in
the situation that excise goods were sold by Metro in
Denmark and the seller does not know whether the
buyer, who will ship the goods to another EU Member
State, is a private individual or not and whether these
goods are to be held for commercial purposes in the
other EU Member State.
Metro conducts a business in Denmark selling a broad
range of goods, including spirits, to Danish customers
or customers from other Member States. Metro uses the
‘cash and carry’ business model.
Purchases can be made at Metro only on presentation,
at the checkout-counter, of a machine-readable
card (‘the Metro card’) which is issued on request to
1 Please note that the above questions are not the literal questions referred by the Supreme Court.
6 7
(4) Do the entry into force of Directive 2008/118 and the
repeal of Directive 92/12 give rise to a change in the
legal position as regards the implications of Directive
92/12 in relation to the answers to Questions 1 to 3?
(5) Is the phrase products acquired by private
individuals for their own use in Article 8 of Directive
92/12 and Article 32(1) of Directive 2008/118 to
be interpreted as meaning that it covers, or can
cover, purchases of goods subject to excise duty
in circumstances such as those arising in the main
proceedings? If the answer to that question is in
the negative, must the purchases then come under
Article 7 of Directive 92/12 and/or Article 33 of
Directive 2008/118?’
The CJ ruled that:
1. The relevant legislation must be interpreted as
meaning that a trader, such as the trader at issue
in the main proceedings, is not required to check
whether purchasers from other Member States
intend to import products subject to excise duty into
another Member State and, where relevant, whether
such importation is for private or commercial use.
2. Articles 32 to 34 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 not
substantially amending Articles 7 to 9 of Directive
92/12 as amended by Directive 92/108 in a manner
which would warrant, in circumstances such as
those at issue in the main proceedings, a different
answer to the first question.
3. Article 8 of Directive 92/12 as amended by Directive
92/108 must be interpreted as being capable of
covering the purchase of products subject to excise
duty in circumstances such as those at issue in
the main proceedings where those products are
acquired by private individuals, for their own use and
are transported by them, which is for the competent
national authorities to check on a case-by-case
basis.
The action brought by Metro against that decision was
dismissed by the Østre Landsret (Eastern Regional
Court, Denmark) by judgment of 19 March 2010.
On 11 May 2010, Metro appealed against that judgment
to the Højesteret. The Højesteret decided to stay the
proceedings and to refer the following questions to the
Court of Justice for a preliminary ruling:
‘(1) Are Directive 92/12 and Regulation No 3649/92
to be interpreted as meaning that a trader in a
Member State who, in circumstances such as
those arising in the main proceedings, sells goods
subject to excise duty which have been released
for consumption in that Member State and which
are supplied at the vendor’s place of business to a
purchaser who is resident in another Member State,
without the vendor assisting in the provision or
arrangement of transport, must carry out (i) a check
to determine whether the purchase of the goods
which are subject to duty is made with a view to their
importation into that second Member State, and (ii) a
check to determine whether the goods are to be
imported for private or commercial use?
(2) If Question 1 is answered in the affirmative, must
the trader, at the time of the sale of goods subject to
excise duty in circumstances such as those arising
in the main proceedings, when carrying out the
checks referred to, apply rules of presumption as to
the purchaser’s intention with regard to the goods
purchased?
(3) If Question 1 is answered in the affirmative, are
Directive 92/12 and Regulation No 3649/92 to be
interpreted as meaning that a vendor, as referred
to in Question 1, in circumstances such as those
arising in the main proceedings, must refuse to
accede to a purchaser’s wish to purchase goods
subject to excise duty if the purchaser does not offer
to present copy 1 of the simplified accompanying
document referred to in Article 4 of Regulation
No 3649/92, if the intention in making the purchase
is to use the dutiable goods for commercial purposes
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.
7
treated the theft of goods as equivalent to their
destruction or irretrievable loss within the terms of
Article 206 of the Customs Code, and that that doctrine
exempted the trader if he proved that the irretrievable
loss – in the present case, the theft – was the result of
force majeure.
The Cour d’appel thus held that Harry Winston could
have taken the view, relying on the principle of legitimate
expectation, that it did not have to pay customs duties
in this case, subject to demonstrating that that theft
was the result of force majeure. In that regard, the
Cour d’appel held that the armed robbery at issue,
having been unforeseeable and unavoidable by reason
of its brutality and criminal characteristics, fulfilled
the conditions of force majeure and had led to an
irretrievable loss of the goods.
With regard to the VAT, the Cour d’appel took the view
that the Court of Justice had acted correctly in holding,
in its judgment in case C-435/03 British American
Tobacco and Newman Shipping, that the theft of goods
does not constitute a ‘supply of goods for consideration’
within the meaning of Article 2 of the VAT directive and
cannot, therefore, as such, be subject to VAT.
The customs administration appealed in cassation. It
complained that the Cour d’appel, first, had failed to
investigate, as it had been requested to do, whether
the Court had not been correct to hold, in its judgment
in Esercizio Magazzini Generali and Mellina Agosta,
that the theft of goods subject to customs duties did
not extinguish the obligations relating to them and,
secondly, concerning the VAT, that it gave its ruling in
reliance on the judgment in British American Tobacco
and Newman Shipping, even though, in the present
case, the chargeable event giving rise to the tax was not
a ‘supply of goods for consideration’, within the meaning
of Article 2(1)(a) of the VAT directive, but an ‘importation’
referred to in Article 2(1)(d) of that directive.
The Cour de cassation pointed out that two new factors,
which have arisen since the judgment in Esercizio
Magazzini Generali and Mellina Agosta, preclude a
conclusive finding that that judgment is still, for certain,
CJ rules on the incurrence of a customs debt for goods stolen from a customs warehouse (Harry Winston)On 11 July 2013, the CJ delivered its judgment in the
case Harry Winston (C-273/12). This case deals with the
question whether a customs debt arises for goods that
are stolen from a customs warehouse or whether in the
situation that goods are stolen no customs debt shall be
deemed to be incurred because of irretrievable loss of
goods as a result of force majeure.
Following an armed robbery with hostage-taking on
6 October 2007, in the course of which items of jewellery
placed under customs warehousing arrangements
were stolen, the customs administration, by a collection
notice of 16 November 2007, sought payment from
Harry Winston of the customs duties and VAT applicable
to those goods. Harry Winston, being the keeper of
the customs warehouse, following an unsuccessful
administrative complaint, brought proceedings against
the customs administration with a view to having that
notice set aside.
By decision of 3 June 2009, the Tribunal d’instance du
10e arrondissement de Paris (District Court of the 10th
District of Paris) set aside the collection notice in relation
to the VAT and, with regard to the customs duties,
stayed the proceedings pending a ruling by the Court
of Justice on two questions referred for a preliminary
ruling concerning the interpretation of Article 206 of the
Customs Code.
The customs administration appealed against that
decision.
By judgment of 7 December 2010, the Cour d’appel
(Court of appeal) first, upheld the decision of the
Tribunal d’instance du 10e arrondissement de Paris
which had set aside the collection notice in relation to
the VAT, and secondly, varied the decision relating to the
customs debt.
In relation to the customs duties, the Cour d’appel
held, basing itself on the Bulletin officiel des douanes
No 6551 of 29 May 2002, that the French authorities
8 9
2. The second subparagraph of Article 71(1) of Council
Directive 2006/112/EC of 28 November 2006 on
the common system of value added tax must be
interpreted as meaning that the theft of goods
placed under customs warehousing arrangements
gives rise to the chargeable event and causes value
added tax to become chargeable.
Protecting IPR: Customs detain EUR 1 billion worth of fake goods at EU borders in 2012 EU Customs detained almost 40 million products
suspected of violating intellectual property rights (IPR)
in 2012, according to the Commission’s annual report
on customs actions to enforce IPR. Although this is
less than the 2011 figure, the value of the intercepted
goods is still high, at nearly EUR 1 billion. The report of
5 August 2013 gives statistics on the type, provenance
and transport method of counterfeit products detained
at the EU’s external borders. Cigarettes accounted for
a large number of interceptions (31%), miscellaneous
goods (e.g. bottles, lamps, glue, batteries, washing
powder) were the next largest category (12%), followed
by packaging materials (10%). Postal and courier
packages accounted for around 70% of customs
interventions in 2012, with 23% of the detentions in
postal traffic concerning medicines.
In terms of where the fake goods were coming from,
China continued to be the main source. Other countries,
however, were the top source for specific product
categories, such as Morocco for foodstuffs, Hong
Kong for CD/DVDs and other tobacco products (mainly
electronic cigarettes and liquid fillings for them), and
Bulgaria for packaging materials. Around 90% of all
detained cases were either destroyed or a court case
was initiated to determine the infringement.
EU-Colombia trade agreement takes effect on 1 August 2013On 1 August 2013, a comprehensive and far-reaching
trade deal became applicable on the basis of which
trade barriers between the EU and Colombia have been
lifted. The Agreement opens up markets for both EU
and Colombian exporters, eventually bringing annual
part of positive law. First, the Customs Code, adopted in
1992, did not repeat the requirement of the ninth recital
in the preamble to Directive 79/623, referred to in the
judgment in Esercizio Magazzini Generali and Mellina
Agosta, which made the extinction of the customs debt
conditional on the circumstance, whether actual or
presumed, that the goods did not find their way back
to the economic circuit after the theft. Secondly, the
Court held in its judgment in British American Tobacco
and Newman Shipping that the theft of goods did not
constitute a ‘supply of goods for consideration’ within the
meaning of Article 2 of the VAT directive and could not
therefore, as such, be subject to VAT.
In those circumstances, the Cour de cassation decided
to stay the proceedings and to refer the following
questions to the Court for a preliminary ruling:
‘1. Is Article 206 of the Customs Code to be interpreted
as meaning that the theft, in the circumstances of
the present case, of goods held under customs
warehousing arrangements constitutes the
irretrievable loss of the goods and a case of force
majeure, with the consequence that, in that situation,
no customs debt on importation is deemed to have
been incurred?
2. Is the theft of goods held under customs
warehousing arrangements such as to give rise
to the chargeable event and to cause the VAT to
become chargeable pursuant to Article 71 of the VAT
directive?’
The CJ ruled as follows:
1. Article 203(1) 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 theft
of goods placed under customs warehousing
arrangements constitutes an unlawful removal of
those goods within the meaning of that provision,
giving rise to a customs debt on importation. Article
206 of that regulation is capable of applying only
to situations in which a customs debt is liable to be
incurred pursuant to Articles 202 and 204(1)(a) of
that regulation.
9
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.
10
11
Correspondents● Peter Adriaansen (Loyens & Loeff Luxembourg)
● Séverine Baranger (Loyens & Loeff Paris)
● Gerard Blokland (Loyens & Loeff Amsterdam)
● Kees Bouwmeester (Loyens & Loeff Amsterdam)
● Almut Breuer (Loyens & Loeff Amsterdam)
● Mark van den Honert (Loyens & Loeff Amsterdam)
● Leen Ketels (Loyens & Loeff Brussel)
● 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
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in the Netherlands, Belgium and Luxembourg.
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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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