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European Court of Justice Case C-596/23 [Pohjanri] on direct or indirect interlinkages between distance selling contract and transport contract
European Court of Justice Case C-596/23 [Pohjanri] on direct or indirect interlinkages between distance selling contract and transport contract
The facts
The claimant before the Helsinki Administrative Court was a German company (B UG) operating an online beverage trade. Customers were able to purchase alcoholic beverages of different brands, with a low or high alcohol content, via the website of B UG, which was also available in Finnish language (distance selling). During the ordering process, advertisements for transport services of selected transport companies/carriers appeared in addition, showing the current freight price for the total weight of the goods and the transport costs. After paying the charges for the order of the goods, the customer received a link that led to the selected transport service provider’s website. Only the contact details had to be entered there, but no more order data. Payment for the transport charges was then made by the customer directly to the respective carrier/transport service provider. In addition, the claimant expressly notified its customers of a tax liability in Finland.
The case before the Helsinki Administrative Court (Helsingin hallinto-oikeus)
The claimant B UG was therefore of the opinion that it neither dispatched nor transported, whether directly or indirectly, goods from Germany to Finland. Instead, the claimant was merely offering the option of collecting the order from a warehouse located in Germany via a dedicated website or selecting a transport service provider (single carrier) for this purpose. Consequently, only a few transport service providers were mentioned on the website. However, dispatch and transport were ultimately organised by the customers themselves.
The opponent, the Finnish tax authorities, took a different position. The claimant dispatched or transported the beverages directly or indirectly to Finland, meaning that it acted as a distance seller and was liable for the payment of excise duty and VAT in Finland. By administrative decision the Finnish tax authority imposed on B UG, for the alcoholic beverages seized, the payment of excise duty on alcohol and alcoholic beverages and a tax penalty of EUR 1 645.83. It considered that B UG or a person acting on its behalf had directly or indirectly dispatched or transported the alcoholic beverages to Finland and that, consequently, that company had acted as a distance seller and was liable for the excise duty in Finland.
The German company appealed against this decision of the Finnish tax authority to the Helsinki Administrative Court as the court of second instance under Finnish procedural law. In those circumstances, the Helsingin hallinto-oikeus decided to suspend proceedings and to refer the case to the European Court of Justice (CJEU) for a preliminary ruling. It sought, inter alia, legal clarification of the question “did the vendor of excise goods dispatch or transport goods to another Member State directly or indirectly within the meaning of Article 36 (1) of Directive 2008/118/EC ”? This directive was repealed with effect from 13 February 2023. However, a corresponding equivalent provision can be found in Art. 44 of the (new) Excise Duty Directive (Directive 2020/262/EC).
The Judgment of the European Court of Justice…
The Fourth Chamber of the CJEU, based on the opinion of the Advocate General P. Pikamäe, ruled in substance that there was an important linkage between the (distance) sales and transport contracts. From the perspective of the business transaction, the transport contract is always a secondary contract based on the primary sales contract for buying and selling goods. In the context of distance selling for the purpose of e-commerce via a dedicated website, as the Advocate General observed, the fact that the purchaser entered into two separate contracts – with the vendor for the sales contract and with the consignor/transport company for the transport contract – is not relevant for the purposes of determining whether or not the distance sale falls within the scenario referred to in Article 36 (1) of Directive 2008/118.
…and conclusions for the transport contract
This CJEU decision reinforces the legal understanding that sellers cannot circumvent national distance selling rules by structuring transactions to appear as if purchasers on the sales contract and consignees on the transport contract arrange transport independently. The CJEU emphasised that objective circumstances , rather than formal legal arrangements, determine liability for excise duties in the destination country. It aligns with previous CJEU rulings (see ECJ case C-296/95 EMU Tabac and Others ), affirming that further far-reaching transport facilitation can trigger VAT and tax obligations in EU Member states. Under these regulations, a distance sale exists (e-commerce) if goods that have already been released for consumption in a Member State (Cassis de Dijon Principle – ECJ case Rewe-Zentral AG vs Bundesmonopolverwaltung für Branntwein) are acquired by a person established in another Member State who is not an authorised warehouse keeper or registered consignee and does not carry out an independent economic activity. In this way, the goods are dispatched or transported directly or indirectly by or on behalf of the seller to an individual in another Member State. They are then subject to excise duty in the country of destination, i.e. the country in which the dispatch or transport ends with the final consignee based on the transport contract. This means, in transport terms, that it will not in all cases be the consignee indicated in the consignment note (the transport document) but instead the objective criteria should be further researched to determine the final consignee.
It was already clear that agreements between the parties to the transport contract (in the sense of the consignor and the consignee) alone are not decisive for the transport liability. The regulations on distance selling cannot be circumvented if the circumstances are considered objectively. The CJEU has now also ruled that even the naming of the transport service provider/carrier and the transmission of the order data by the seller to him should suffice as co-operation, including in case of indirect naming of the carrier. The only way to fall outside the scope of the regulations is if the seller/sender of the goods withdraws completely from the transport process in the sense that he cannot be understood as consignor in the transport contract. As prima facie evidence of this indication, the consignment note can be used as evidence of the transport contract alongside the interlinked sales contract for distance selling of goods. In this way, distance sellers can also be understood as consignors under the single transport contract with direct liability under the national tax law based on objective criteria.
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[2]Chapter V of Directive 2008/118 contained Article 36, entitled ‘Distance selling’, which provided, in paragraphs 1 to 3 thereof: “Excise goods already released for consumption in one Member State, which are purchased by a person, other than an authorised warehouse keeper 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.”.
[3]Point 36 of the CJEU decision: “… that the EU legislature is more concerned with the objective nature of the transaction than with its legal form…”.