September 2013 - edition 121EU Tax Alert

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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.

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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

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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.

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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.

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(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.

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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

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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.

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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.

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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

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Editorial boardFor contact, mail: eutaxalert@loyensloeff.com:

● 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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