Brussels, Belgium – A recent tweet from Rikhard Sjöberg has highlighted a crucial distinction within European Union e-commerce regulations, specifically regarding the application of the "country of origin" principle for online sales and the "destination principle" for excise duties on goods like alcohol. Sjöberg's tweet served as a reminder that while the seller's country of establishment generally dictates the applicable law for online sales, excise duties on certain products, such as wine and spirits, are typically levied in the country of consumption.
"Muistutus: verkkomyynnissä noudatetaan EU:ssa myyjän sijoittautumisvaltion lainsäädäntöä. Italialainen viinitila myy juomat Italian lain alaisuudessa, ja suomalainen kauppa Suomen lain alaisuudessa. Suomen laki ei syrji, koska sitä ei sovelleta Italiassa," Rikhard Sjöberg stated in his tweet. This translates to: "Reminder: in online sales in the EU, the legislation of the seller's country of establishment is followed. An Italian winery sells drinks under Italian law, and a Finnish store under Finnish law. Finnish law does not discriminate because it is not applied in Italy."
The EU's e-Commerce Directive (2000/31/EC) establishes the "country of origin" principle for information society services. This means that online service providers are primarily subject to the laws of the Member State in which they are established, simplifying cross-border operations. However, this principle has specific limitations, particularly concerning goods subject to excise duties.
For distance sales of excise goods, including alcohol, to private individuals in another Member State, the principle of taxation in the Member State of destination applies. This mandates that excise duties must be paid in the country where the goods are consumed. Sellers engaging in such cross-border transactions are typically responsible for ensuring these duties are paid in the recipient country, often requiring registration and potentially a tax representative in that Member State.
This distinction is particularly significant for countries with high excise duties on alcohol, such as Finland, Sweden, and Ireland, where rates are among the highest in the EU. The European Commission emphasizes that excise duty is generally paid in the EU country of consumption, and goods can be transported under duty-suspension until they reach their final destination. A pending case before the Court of Justice of the European Union (CJEU), C-596/23 (Pohjanri), is expected to further clarify the obligations of sellers, particularly regarding their involvement in organizing transport, which can trigger excise duty responsibilities in the destination country.
The nuanced application of EU law ensures that while the freedom to provide services online is upheld, national tax revenues and public health policies related to alcohol consumption are maintained through the collection of excise duties at the point of consumption. This dual approach aims to balance the internal market's principles with Member States' fiscal and regulatory autonomy over specific product categories.