The European Court of Justice (ECJ) has recently emphasised the importance of the general principles of EU law – in particular the principle of proportionality – for the interpretation of the excise duty directives. The fact-based and flexible interpretation is a welcome development and should lead to a limitation of the overly formal interpretation of excise duty legislation in many EU member states, based on a proper assessment of individual cases.
First, the ECJ has decided on when excise duty becomes chargeable in the case of drop shipments (case C-355/14 – Polihim). In the judgment the court linked the release for consumption to the physical removal of the goods from the tax warehouse. Additionally, the ECJ has applied a proportionality test to the authorities’ refusal of an exemption of excise duty. The tax authority had assumed a tax liability because of a formal error in the tax documents. However, the ECJ ruled it disproportionate to refuse a tax exemption if the material requirements are met.
In its second decision the ECJ equally stressed the priority of the material requirements (case C-418/14 – ROZ-Swit). It considered it disproportionate to refuse a tax relief on the grounds of not submitting a statement within a prescribed time limit, even in case the material requirements were met. The tax authority had applied the excise duty applicable to motor fuels, even though there was no doubt that the goods were used for heating purposes.
In continuation of its VAT case law, the ECJ considered national measures disproportionate that, de facto, create a system of strict joint and several liability (case C-81/15 – Karelia). According to the EJC, a system of increased liability is only permissible if it is clearly and expressly provided for by national legislation and if it leaves the authorised warehousekeeper a genuine possibility of avoiding liability. This results from the principles of legal certainty and proportionality.