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No EU tax harmonisation

Published:  23 July, 2008

by Rebecca Gibb
The European Court of Justice has ruled that consumers will not be allowed to buy alcohol or cigarettes from Europe over the internet without paying domestic import duty.

The decision goes against advice from the advocate-general that alcohol (and tobacco) bought for personal consumption in European countries where excise duty is lower could be transported home by a third party and be exempt from domestic duty.

The case was brought by a Dutch wine club that objected to paying extra taxes on wine they had imported from France.

The Dutch government demanded the club pay tax, as no club member had accompanied the wine on its journey - and the ruling went in favour of the Dutch government.

The decision is also a victory for the British Treasury, which makes around 16 billion a year from excise duty on alcohol and cigarettes.

Speaking to the Financial Times on Friday, Treasury officials said it was the right and commonsense judgment that upholds the existing laws on cross-border shopping and national rates of taxation.'

Keith Hobson of law firm Halliwells told Harpers: This decision is not a complete bolt from the blue - the ECJ ruled on a similar case involving tobacco in 1998 and came to the same conclusion.'

Consumers can still travel to the EU and buy alcohol and cigarettes for private consumption without paying excise duty, but must travel with the goods. In the UK, the personal allowance limits are 90 litres of wine, 100 litres of beer and 10 litres of spirits.

Tesco had a contingency plan in case the ruling went in favour of the wine club. Andrew Gale, technical manager for beers, wines and spirits, said: We wanted to be in a position to take advantage of any ruling. We were looking at options to operate a out of continental Europe.'

It is good news for wine merchants who feared the repercussions. Wine merchant Noel Young told Harpers: We can breathe easy for a while but I'm sure we haven't heard the last of this. The coverage has also given tremendous publicity to booze cruises, which isn't good for business. I'm sure some of our customers will still go to France to buy their wines - especially Champagne for weddings - but they'll always come back to us for advice.'