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Last Updated: Friday, 17 November 2006, 16:15 GMT
Q&A: Buying tobacco and alcohol in the EU
Booze cruiser
The booze cruise could become a thing of the past
The European Court of Justice has given its judgement on a case that could have changed the way Europeans buy alcohol and cigarettes.

The case raised the question whether someone who buys alcohol or tobacco from another country, and arranges for it to be delivered to the door, could avoid paying excise duty in his or her home country.

The court said No, to avoid paying the duty, the goods must be transported personally by the buyer.

Why was the judgement important?

If the answer had been Yes, EU citizens would have been able to order goods from a member state where duties are low - saving themselves money that would otherwise have gone to the taxman.

Since the answer is No, they will continue having to travel themselves to the country where they want to buy the goods - or pay the duty.

Why is this good news for the taxman?

If it had turned out to be be legal, many more people would have ordered alcohol and tobacco from abroad than currently go on booze cruises from the UK to France, or from Finland to Estonia.

That is because it is easier to order alcohol or cigarettes by telephone or mail, or via the internet, than to go abroad and fetch them - unless you live near an international border. Delivery charges would usually be lower than travel costs too.

Which countries would have stood to lose most?

The countries where alcohol and tobacco are most expensive would appear to have been most vulnerable.

Let's take wine and cigarettes as examples.


Duty on wine graphic
Thirteen countries charge no excise duty on wine: Austria, Cyprus, Czech Rep, Germany, Greece, Hungary, Italy, Luxembourg, Malta, Portugal, Slovakia, Slovenia, Spain
In the case of wine, excise duty and VAT play a key role.

Duties on a bottle of wine are highest in Ireland, the UK, Sweden and Finland (between 1.6 and 2 euros - or 1 and 1.35). By contrast, 13 EU states levy no duty at all. VAT ranges from 1.20 to 2.50 euros (80p to 1.70) on a bottle of wine costing 10 euros (6.70), with Luxembourg and Portugal at the lowest end of the scale and Denmark and Sweden at the highest.

Germany and Spain, with zero duty and low VAT (16%), are attractive places to buy wine. France has negligible duty (about 3 cents, or 2p per bottle) and a middling VAT rate of 19.6%. Italy has zero duty and 20% VAT.


Cigarette prices vary enormously from one member state to another, from 38.5 euros (26) in the UK for 100 cigarettes in the most popular price category to 3.2 euros (2.20) in Latvia. This is only partly connected with the taxes and duties charged, which range from 80% of the total cost in France, to 56% in Lithuania.

What, precisely, did the court have to decide?

As regards products acquired by private individuals for their own use and transported by them... excise duty shall be charged in the member state in which they are acquired
Directive 92/12, Article 8
The Dutch Supreme Court asked the European Court for help interpreting one of the directives that establishes the EU's single market.

The directive says that excise duty is in general chargeable in the EU country of final destination. However, it also makes an exception for products "acquired by private individuals for their own use and transported by them" - in this case excise duty is charged in the member state where the goods were acquired.

The court had to decide whether products someone buys abroad and arranges to be delivered fall under the description "acquired by private individuals for their own use and transported by them".

What do European governments think?

The Italian, Dutch, Polish, Portuguese, Swedish and UK governments submitted observations to the court saying that the words "transported by them" should be interpreted strictly.

In their view, if someone arranges for goods to be delivered, the goods are not being transported "by them" - so duty should be charged in the country of final destination.

What did the court's advisers say?

An adviser to the court (known as an advocate general) took the opposite view. He said that someone buying goods in this way should pay excise duty in the country of acquisition.

So was the judgement a surprise?

Not really.
chart showing price of cigarettes
It is sometimes said that the court follows the advocate general's opinion in 80% of cases - but the court itself rejects this. A spokesman points out that the figure of 80% dates back to an era when advocates general were asked for opinions on straightforward cases (where the chances of the court agreeing were high) and they no longer are.

He also says that it is often hard to determine when the court has followed the advocate general's opinion, as the court may follow the adviser's reasoning yet draw a different conclusion, or draw the same conclusion for different reasons.

What goods might have been affected by the judgement?

The directive refers to alcohol, alcoholic beverages, manufactured tobacco and mineral oils (such as petrol or diesel) for private use.

How did the case arise?

It arose after a Dutch wine club bought some wine in France and arranged for it to be delivered to the Netherlands. The Dutch authorities charged duty, and the wine club appealed.

How much does the UK make from duties on alcohol and tobacco?

It expects to make 16.1bn from excise on alcohol and tobacco in the 2006/7 financial year. That breaks down as 8bn on tobacco, 3.4bn on beer, 2.4bn on wine and 2.3bn on spirits.

It lost 1bn in uncollected revenue on cigarettes in 2004/5, and 300m on wine, beer and spirits.

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