C-296/95

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in response to requests for specific quantities '(1) The offer to purchase products from of cigarettes or tobacco from private indi- the retailer is made by the customer. viduals living in the United Kingdom, although it also sells to individuals living in Luxembourg.

(2) The agent shall receive and commu- nicate that offer to the retailer in Luxem- bourg acting as agent for the customer.

6. The system devised and implemented by the two companies is as follows:

(3) At its discretion, the retailer will accept that offer to purchase and will communicate its acceptance to the agent (a) The seller buys cigarettes of a specified (as agent of the customer) by delivering brand, under licence. the products together with a receipted copy of the agent's offer summary docu- ment.

The main proceedings and the preliminary questions

(b) Once the cheque has been paid into the agent's customer account in London, that fact is notified to the agent's office in Luxembourg, together with details of the customer's name and address.

8. The United Kingdom tax administration (the Commissioners for Customs and Excise) ordered the seizure, in Dover, of a quantity of tobacco imported under the sys- tem described above and required the pay- (c) An employee of the agent goes to the ment on those goods of United Kingdom retailer's office (which is in the same excise duty.

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9. The now appellants applied to the High (iii) transportation of the goods from Court of Justice (Queen's Bench Division) Member State B to Member State A for a declaration that the United Kingdom was arranged by the Agent; and excise duty was not payable, that the seizure of the tobacco was unlawful and that the United Kingdom tax administration should refrain from seizing tobacco imported under the scheme.

12. Products manufactured in, or imported consumption, 3 the rates of duty in force at into, the Community are subject to excise the material time being applied in the Mem- duty. Normally, payment of the tax is ber State of release for consumption. deferred until the goods are released for con- sumption. Accordingly, the collection of excise duty is in principle a matter for the Member State where the goods are con- sumed. 16. Article 7 of the directive provides that, where products subject to excise duty already released for consumption in a Mem- ber State are 'held' 4 for commercial pur- poses in another Member State, the excise duty is to be levied in that other Member State and the tax will be repayable by the 13. Before the creation of the single market, Member State from which they came. The goods subject to excise duty could be held in wording of the provision 5 is as follows: a warehouse, or move from one warehouse to another in various Member States which were parties to the suspension arrangement, 2 subject to border controls. Such controls are no longer possible since the advent of the single market. ' 1 . In the event of products subject to excise duty and already released for consumption in one Member State being held for commer- cial purposes in another Member State, the excise duty shall be levied in the Member State in which those products are held.

14. The directive lays down general condi- tions applicable to products subject to excise duty and makes specific provision for the holding and movement of them and for the 2. To that end, without prejudice to Article controls needed to ensure that tax debts are 6, where products already released for con- discharged. sumption as defined in Article 6 in one

3. Depending on all the circumstances, the duty shall be due from the person making (c) consent to any check enabling the the delivery or holding the products administration of the Member State of intended for delivery or from the person destination to satisfy itself that the goods receiving the products for use in a Member have actually been received and that the State other than the one where the products excise duly to which they are liable has have already been released for consumption, been paid. or from the relevant trader or body governed by public law.

6. The excise duty paid in the first Member State referred to in paragraph 1 shall be 4. The products referred to in paragraph 1 reimbursed in accordance with Article 22(3). shall move between the territories of the various Member States under cover of an accompanying document listing the main data from the document referred to in Article 18(1). The form and content of this ...'. document shall be established in accordance with the procedure laid down in Article 24 of this Directive.

17. Article 8 of the directive provides:

5. The person, trader or body referred to in paragraph 3 must comply with the following requirements: 'As regards products acquired by private individuals for their own use and transported by them, the principle governing the internal market lays down that excise duty shall be (a) before the goods are dispatched, make a charged in the Member State in which they declaration to the tax authorities of the are acquired.'

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— the commercial status of the holder of the products and his reasons for holding them, ' 1 . Products subject to excise duty pur- chased by persons who are not authorised warehousekeepers or registered or non- registered traders and dispatched or trans- ported directly or indirectly by the vendor — the place where the products are located or on his behalf shall be liable to excise duty or, if appropriate, the mode of transport in the Member State of destination. For the used, purposes of this Article, "Member State of

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destination" shall mean the Member State of of destination prior to dispatch of the arrival of the dispatch or transport. products and ensure that the excise duty is paid following arrival of the products,

2. To that end, the delivery of products sub- — keep accounts of deliveries of products. ject to excise duty already released for con- sumption in a Member State and giving rise to the dispatch or transport of those prod- ucts to a person as referred to in paragraph 1, established in another Member State, and which are dispatched or transported directly or indirectly by the vendor or on his behalf 4. In the case referred to in paragraph 2, the shall cause excise duty to be chargeable on excise duty paid in the first Member State those products in the Member State of desti- shall be reimbursed in accordance with nation. Article 22(4).

3. The duty of the Member State of destina- ...". tion shall be chargeable to the vendor at the time of delivery. However, Member States may adopt provisions stipulating that the excise duty shall be payable by a tax repre- sentative, other than the consignee of the products. Such tax representative must be The first preliminary question established in the Member State of destina- tion and approved by the tax authorities of that Member State.

(c) the products must be transported by the 23. I shall first mention a point which, judg- private individuals. ing from the observations of some of the parties, does not seem to have been taken sufficiently into account: the directive of which interpretation is sought is a tax meas- ure, intended to deal with matters of tax- ation, and to that end it uses tax-law classifi- cations. By this I mean that the terms used in the directive, on the basis of the correspond- ing concepts in civil or mercantile law, may have a rather independent meaning which will not coincide in every respect with that 21. In the present case there is no problem of their counterparts in civil or mercantile concerning the second condition, the legal law. aspects of which are clear: both the parties in dispute and the national court recognise that private individuals resident in the United Kingdom acquire tobacco products for their personal use, not for commercial purposes. N o doubts appear to arise as to the applica- tion of the criteria laid down in that connec- 24. In that light, it is possible that the pri- tion by Article 9 of the directive. vate individual purchaser, as a subject of civil or mercantile law, may not be precisely the same as the person with which Article 8 of the directive is concerned. That applies to a specific aspect of the involvement of the pri- vate individual in the purchase contract referred to in the directive, where it envis- ages the possibility of his acting, in entering into the contract or giving effect to it, through a third party. 22. The same does not apply to the other two conditions. The dispute between the parties has focused particularly on the requirement of transport, 'which raises con- siderable interpretative difficulties, but in my opinion the first condition too must be 25. A similar possibility is generally avail- analysed and examined in relation to the able in civil law for all types of acts-in-the- scheme described by the United Kingdom law by virtue of the principle that whoever court in its order for reference. does something for himself may also do it

27. In the first place, the private individual in this case must carry out sequentially a number of personal operations in order to benefit from the tax provisions in the Mem- ber State of purchase: as we shall see shortly, he must travel to that Member State and from there he, personally, must transport the goods acquired. It seems to me to follow 30. All this becomes clearer upon analysis — logically from those requirements that the an analysis which I shall now undertake — purchase, as such, should also be deemed to of the third precondition for application of be limited to a purchase made by the buyer the rule laid down in Article 8 of the direc- himself, not through an agent or middleman. tive.

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(ii) The concept of 'products transported', on the personal aspect by using terms according to a literal interpretation of Article equivalent to 'transport in person'. 8 of the directive

6 — Transportados por elios'. 7 — Transportés par eux-mèmes'. 8 — Transportados pelos próprios'. 9 — Trasportati dai medesimi'. 36. Article 8 does not say 'products trans- 10 — 'door hen zelf vervoerde produkten'. ported on the directions, or on behalf, of pri- 11 — 'Waren, die Privatpersonen ... sie selbst befOrden'. 12 — 'τα οποία μτταφέοουν αυτοπροσώπως'. vate individuals'. N o r does it refer to the 13 — 'Og som de selv medfører'. action of 'dispatching', which implies using

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the services of a third party. However, both the private individual and no-one else. This forms of words are found in other provisions implies, in my view, that the private indi- of the directive. vidual who buys the products subject to duty has travelled to another country and carries them with him.

40. Article 26 of the directive, 16 as a tempo- rary exception to the conditions laid down 37. It is particularly significant that Article 8, unlike Article 10, dispensed with the pos- sibility — provided for and regulated by the 16 — The original wording of Article 26 was as follows: '1. Without prejudice to Article 8, until 31 December 1996 latter — of having the goods in question and subject to a review mechanism similar to that laid down in Article 28 (2) of Directive 77/388/EEC (OJ 1977 L 145, sent, that is to say forwarded or dispatched p. 6), Denmark shall be authorised to apply the specific by private individuals to their own countries: arrangements laid down in paragraphs 2 and 3 for spirit drinks and manufactured tobaccos within the general on the contrary, it lays down the imperative framework of the approximation of excise duty rates. 2. Denmark shall be authorised to apply the following requirement that they be transported by the quantitative restrictions: person who acquired them. — private travellers entering Denmark shall benefit from the allowance in force on 31 December 1992 for ciga- rettes, cigarillos or smoking tobacco and for spuit drinks, — travellers resident in Denmark and having been outside Denmark for less than the period in force on 31 Decem- ber 1992 shall benefit from the allowances in force in Denmark on 31 December 1992 for cigarettes and spirit drinks. 38. The literal wording of the provision thus 3. Denmark may collect excise duties and carry out the necessary checks with respect to spirit drinks, cigarettes, refers to transport operations carried out by cigarillos and smoking tobacco.

by Article 8, allows the Member States to necessarily have to pay the duty applicable in which the directive is addressed to apply the country of acquisition of the products. restrictive measures to travellers who bring into their territories products subject to excise duty acquired by them in another Member State. 17 All this, as a matter of sound logic, postulates the same interpre- tation of Article 8 as the one which I advocate, namely that the cross-frontier traveller must have personally acquired and transported those products with him. 42. In any event, it must not be forgotten that Article 8 of the directive, in referring t o all products subject to excise duty, allows the buyer to transport some of them for himself without necessarily including them in 'his personal luggage': thus, for example, petrol which he has purchased in the country of destination and is in his vehicle's tank does not form part of his 'personal luggage' in the strict sense, but the rule in Article 8 never- theless continues to apply. This explains why, therefore, that article did not include the requirement that all the products referred to have to be included in travellers' personal 41. It is true that Article 8 likewise contains luggage. no express references to the traveller's 'per- sonal luggage', of which the products pur- chased should form part. However, that omission does not in my view provide a basis for arguing that transport may be undertaken on behalf of the private indi- vidual. That expression appears in Article 28 of the directive only in relation to travellers who take a flight or a sea voyage within the 43. Accordingly, I agree with the position Community, who may be granted an exemp- taken by all the Member States which inter- tion from duty. 1 8That fact has nothing to vened in this case, except France, and I differ do with Article 8, under which purchasers from that taken by the appellants in the main proceedings, which on this point coincides only partly with the view taken by the Com- 17 — According to the new text of Article 26 of the directive, in mission and the French Government. 19 force as from 1 January 1997, Denmark and Finland are authorised to restrict the grant of admission without pay- ment of other duty to 'persons who have been absent from their territory for more than 24 hours'. 18 — The Member States may grant to such travellers, until 30 19 — The Commission considers that Article 8 may be applied June 1999, exemption from excise duty on products which even if the goods, acquired personally by the purchaser, are they have bought at particular sales outlets in ports or air- not carried by him personally but by a carrier designated ports or on board the aircraft or vessel carrying them. The by him. The French Government for its part considers that exemption applies only to products in quantities not Article 8 applies both if transport of the dutiable goods is exceeding, per person and journey, the limits laid down in effected by the buyer and if it is effected on his behalf (pro- the Community provisions in force for travel between non- vided that the seller does not assume responsibility for the member countries and the Community. transport operation).

20 — This is stated in the Commission's report to the Council and the European Parliament of 13 September 1995 submit- ted in accordance with Article 4 of Council Directive (a) Commercial movement of products 92/79/EEC of 19 October 1992 on the approximation of rates for other products subject to excise duty (COM(95) under the suspension arrangement; fol- 285 Final).

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47. Within that legislative context, the inclu- of taxation in the country of destination and sion of Article 8 must be interpreted in the not that of purchase, would in all probability light of the other provisions of the directive be systematically evaded in sales between so as not to negate the effectiveness of the countries with widely differing tax rates, remaining articles. where logically there is an incentive to buy products in the country which levies the least tax.

49. The fact that, under the system at issue in the main proceedings, the appellant under- takings refuse to accept orders from private individuals which exceed those levels indi- cates their intention not to engage in fraud, but that is not a sufficient argument to ren- 52. If that interpretation were allowed, there der acceptable the incitement to fraud which, would be a lacuna in the directive regarding objectively, would result from generalisation distance purchases since, although the system of the system. used by EMU Tabac may not conform with Article 10, interpreted literally, it does not thereby cease to be, economically and legally, a distance purchase. The most appropriate legal way of supplying that lacuna is recourse to analogy: application to the cir- 50. Secondly, the rules on distance sales con- cumstances of this case of the legal provision tained in Article 10, observing the principle applicable to the most similar situation.

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53. As I see it, the legal concept closest to tions 21 imposed by Article 10 on sellers, for the 'distance purchasing' carried out, 'in the the latter to agree with their customers (or comfort of their armchairs', by United King- with their agents, as occurs in this case) cer- dom residents is, precisely, the 'distance sell- tain conditions concerning transport, per- ing' governed by Article 10 of the directive, haps even with guarantees or assurances from both the economic and the legal points from the seller. of view.

56. The analogy is not invalidated by the fact that Article 10 requires the transport t o 21 — The seller must guarantee payment of the excise duty under be carried out, directly or indirectly, by the the conditions laid down by the Member State of destina- seller or on his behalf. It would be sufficient, tion before despatch of the products; it must satisfy itself that the duty is paid after the products arrive and keep in order to sidestep all the complex obliga- records of deliveries.

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they rely on the general rule that can be they are moved outside that arrangement, in inferred from Article 6 of the directive and the context of intra-Community commercial on the allusion to the 'principle governing transactions — such as, for example, distance the internal market' mentioned in Article 8 sales — they are subject to duty at their des- of the directive. Secondly, they state that to tination. interpret that article in the manner that I have just advocated would give rise to double taxation and would render Article 10 of the directive superfluous.

64. As regards the 'principle governing the internal market' referred to in Article 8 as the reason for making the excise duty chargeable in the country of acquisition, its 61. Both when products are being moved importance as a means of interpretation is under the suspension arrangement and when much less than the appellants suggest.

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65. The internal market is characterised by 68. In the case of Article 8, double taxation the abolition between the Member States of is avoided — and the 'principle governing barriers to the free movement of goods, per- the internal market' is complied with, facili- sons, services and capital. It involves an area tating intra-Community movement of goods without internal frontiers, in which that free without frontier controls — simply by movement is guaranteed in accordance with applying the rule of taxation at origin, albeit the Treaty (Article 7a of the E C Treaty). subject to certain requirements which I have already mentioned. I do not consider that the essence of that principle, as a criterion for interpretation of the rule, calls for the limits of Article 8 to be extended in the way con- tended for by the appellants.

66. However, I consider that principle to be compatible with a taxation system which in specific cases requires excise duty — or even 69. The appellants assert, however, that the other taxes, such as VAT — to be paid at the interpretation of Article 8 which I advocate destination of the goods, not at the point of would, in certain circumstances, give rise to a origin, where the transactions take place clear case of double taxation, since they have within the Community. Needless to say, the to pay the excise duty on the same products opposite approach (taxation at origin) is also first in Luxembourg, when buying them, and perfectly compatible with the internal mar- then in the United Kingdom when receiving ket and also displays the advantages of sim- them. plicity and certainty.

excise duty which have been released for Article 8 were interpreted in the manner that consumption may, at the request of a trader I advocate, also seems to me to be in the course of his business, be eligible for unfounded. reimbursement of excise duty by the tax authorities of the Member State where they were released for consumption when they are not intended for consumption in that Member State.' And paragraphs 3 and 4 of that article deal more particularly with the conditions for reimbursement in the cases referred to in Articles 7 and 10. 75. In my opinion, Article 10 is useful not only in order to confirm the rule that dis- tance sales should be taxable at destination but also to determine the obligations of the seller and thereby facilitate monitoring of the exaction of duty in the relevant Member 72. In my opinion, those legislative provi- State. sions are sufficient to avoid double taxation of the same products, since the reimburse- ment procedure would apply to the appel- lants' case, with the result that they would be required to pay only the duty chargeable in the United Kingdom.

The second preliminary question 82. In my view, the answer that I suggest to the first preliminary question a fortiori extends to the case described in the second question. The existence of a scheme like the one described by the national court cannot preclude the chargeability of excise duty in the State of destination when the products 79. Both the appellants and the intervener in have neither been bought by private indi- support of the United Kingdom tax adminis- viduals as such nor transported by them to tration consider that no answer will be that State but have been dispatched using a needed to the second question if the inter- complex commercial mechanism. pretation of Article 8 which I set out above is adopted.

80. For my part, although essentially agree- 83. The directive clearly distinguishes opera- ing with that view, I see no problem in giv- tions in which only private individuals take ing an express answer to the national court, part from those which, involving as they do confirming that the circumstances set out in economic agents, are of a commercial nature. the second question represent no obstacle — The reference to 'private individuals' appears quite the contrary — to excise duty being only in Article 8 of the directive (and, levied in the State to which the products are derivatively, in Article 9(3)), emphasising sent. that they are acting in a merely private

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capacity, that is to say neither commercially another. The fact that such operations are nor professionally. preceded by a contract signed with the cus- tomer (the end consumer) does not deprive them of their commercial nature, on the basis of which, for example, the company could be sued in the event of breach of contract.

85. O n the basis of that distinction, a system for the distribution of tobacco products in which one or more economic agents play a decisive role at the various stages, receiving 88. From that standpoint, having regard to orders, accepting or rejecting them, giving the connections between the seller and the effect to such orders, physically receiving the agent, which are fellow subsidiaries of the products and arranging for them to be trans- same company, it is even possible that the ported to the home address in another Mem- national court, whose legal system enables it ber State of the customer who has previously to 'lift the veil of incorporation' in order to made payment is, in my opinion, a clear obviate any abuse of the law, will choose to example of a commercial operation which apply Article 10 to the case before it, taking has nothing to do with the purchases by pri- the view that it is the selling company itself vate individual covered by Article 8 of the which, by means of an entrepreneurial sub- directive. terfuge, in reality 'indirectly' transports the goods to their destination. The expression 'indirectly', when used in relation to trans- port, as it is in the said Article 10 of the directive, is very flexible and allows such a conclusion.

86. At the heart of that operation, moreover, the action of a commercial service undertak- ing, which acts as agent for the purchaser, cannot be stripped of its inherent features: the undertaking plays a commercial role in the operations of purchase, transport and 89. In the same way, if it were necessary to delivery of the products subject to excise do so as a last resort, the national court duty which move from one Member State to could decline to apply the rule contended for

(a) a private individual resident in State A acquires those goods for his own use;

(b) the purchase is made in State B, from which the goods are transported to State A;

(c) both operations involve an agent who acts in the name or on behalf of the private individual and arranges for transport of the products;

(d) the individual does not himself travel with the goods from Member State B to Member State A.

(2) The same conclusion applies where purchases displaying the same characteris- tics take place under a scheme commercially devised and adopted for commer- cial purposes by one or more economic agents.

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