EU court upholds booze tax rules

The Treasury will still be able to charge tax on cigarettes and alcohol bought over the internet or the phone from cheap European suppliers, a court has ruled today.

The European Court of Justice (ECJ) rejected an attempt to exempt people buying goods in countries where tobacco and alcohol taxes are low from paying UK excise duty.

A ruling in favour of the Dutch wine club which brought the case could have cost the Treasury and other European governments millions of pounds in lost taxes, and today a source described the decision as a “commonsense judgment”.

The ECJ upheld a 1992 law saying duty can be charged by the country where goods are bought for personal use, but only if transported home by the person buying them.

People will still be able to go on “booze cruises”, where they travel to France or other EU countries to stock up on cheap wine and beer, as long as this is for personal use.

But they will not be able to order goods over the internet from a European country, where tobacco and alcohol are much cheaper than in the UK, and have them delivered home.

The chancellor expects to collect about £16 billion in duties on tobacco and alcohol this financial year, and the reaction from his department today was one of relief.

A Treasury spokesman said: “The government is pleased that the ECJ has accepted the arguments which it and other member states put forward in support of the current arrangements.

“The government continues to strongly support the right of individuals to benefit from the freedoms of the EU single market but remains determined to crack down on those who seek to abuse those rights.”

The decision is expected to be welcomed by retailers, who feared a major drop in bulk orders if the ECJ had decided to back the Dutch wine club.

In its ruling, the ECJ said made clear that under EU law, products could only be exempt from excise duty if they were for personal use and “transported personally by the private individual who purchased them”.

It added: “Were this not so, the effect, for the competent authorities of the member states, would be an increased risk of fraud as the transport of products covered by the exemption requires no documentation.”