On 1 June 2017, the European Court of Justice decided the case C-571/15 (Wallenborn Transports SA) related to the importation of goods; free zones; time of supply.
Article in the EU VAT Directive
Articles 61, first subparagraph of Article 71(1) of Council Directive 2006/112/EC
Article 61 (Place of importation of goods)
By way of derogation from Article 60, where, on entry into the Community, goods which are not in free circulation are placed under one of the arrangements or situations referred to in Article 156, or under temporary importation arrangements with total exemption from import duty, or under external transit arrangements, the place of importation of such goods shall be the Member State within whose territory the goods cease to be covered by those
arrangements or situations.
Similarly, where, on entry into the Community, goods which are in free circulation are placed under one of the arrangements or situations referred to in Articles 276 and 277, the place of importation shall be the Member State within whose territory the goods cease to be covered by those arrangements or situations.
Article 71 (Chargeable Event and chargeability of VAT)
1. Where, on entry into the Community, goods are placed under one of the arrangements or situations referred to in Articles 156, 276 and 277, or under temporary importation arrangements with total exemption from import duty, or under external transit arrangements, the chargeable event shall occur and VAT shall become chargeable only when the goods cease to be covered by those arrangements or situations.
Article 156 (Exemption)
1. Member States may exempt the following transactions:
(a) the supply of goods which are intended to be presented to customs and, where applicable, placed in temporary storage;
(b) the supply of goods which are intended to be placed in a free zone or in a free warehouse;
(c) the supply of goods which are intended to be placed under customs warehousing arrangements or inward processing arrangements;
(d) the supply of goods which are intended to be admitted into territorial waters in order to be incorporated into drilling or production platforms, for purposes of the construction, repair, maintenance, alteration or fitting-out of such platforms, or to link such drilling or production platforms to the mainland;
(e) the supply of goods which are intended to be admitted into territorial waters for the fuelling and provisioning of drilling or production platforms.
2. The places referred to in paragraph 1 shall be those defined as such by the Community customs provisions in force.
Facts
- On 11 June 2009, goods which had been brought into the customs territory of the European Union and presented on the previous day at the airport in Frankfurt am Main (Germany), after having been placed in temporary storage for a short period, were declared under the external Community transit procedure.
- The consignee of those goods was an undertaking established in the free port of Hamburg (Germany), which, at the material time, was a free zone of control type I within the meaning of Article 799 of the implementing regulation, the limits of which were under customs supervision. The transit procedure was to be completed by 17 June 2009.
- Wallenborn, as the designated carrier, transported the goods in question by heavy goods vehicle to the free port of Hamburg, where they were unloaded on 11 June 2009 after the customs seal had been broken. However, the goods were not presented at the customs office of destination. During their time spent in the free zone, the goods in question were not released into free circulation, consumed or used.
- On 16 June 2009, the goods in question were loaded into a container and transported by ship to Finland, where they were placed under the customs warehousing procedure prior to being transported to Russia.
- On 2 September 2010, the Giessen customs office issued a notice of assessment of customs duty and import turnover tax both to the principal, which, as the consignor, had declared the goods in question under the transit procedure, and to Wallenborn, as the carrier.
- Payment, however, was sought only from the sole applicant in the main proceedings, on the ground that the principal had demonstrated that the goods in question and the transit document had been duly handed over, whereas Wallenborn had failed to conclude the transit procedure correctly. The consignee of those goods indicated that it had assumed that the goods had undergone customs clearance, and it also stated that the transit accompanying document had not been provided to it at the time of delivery.
- In support of its action before the referring court, Wallenborn acknowledges that a customs debt was incurred when the heavy goods vehicle transporting the goods in question was unloaded and the customs seal was broken. However, it claims that the free port of Hamburg, as a free zone, was not part of German national territory within the meaning of the Law on turnover tax. Wallenborn infers from this that the chargeable event in respect of the customs debt, within the meaning of Article 203(1) of the Customs Code, took place outside the fiscal territory of Germany and that accordingly there was no taxable transaction.
- The applicant in the main proceedings adds that, although customs duties and import turnover tax are different types of taxes, the customs debt and the debt relating to import turnover tax cannot be incurred on different dates. Likewise, the import turnover tax cannot be incurred on the basis of a chargeable event which differs from the chargeable event which gave rise to the customs debt.
- For its part, the Giessen customs office contends that the import turnover tax under Article 203(1) of the Customs Code became chargeable at the same time as the customs debt, irrespective of the fact that the chargeable event for the customs debt took place on the site of the free port of Hamburg. It maintains, furthermore, that it is irrelevant that the goods in question were shipped to Finland, and subsequently exported.
Questions
Question 1:
Is the VAT rule of a Member State which states that free zones of control type I (free ports) do not form part of the territory of the country one of the situations referred to in Article 156 as specified in the first subparagraph of Article 61 and in the first subparagraph of Article 71(1) of Directive 2006/112 on the common system of value added tax? 1
If this question is answered in the affirmative:
Question 2:
Where goods are subject to customs duties, does the chargeable event also occur and VAT also become chargeable in accordance with the second subparagraph of Article 71(1) of Directive 2006/112 on the common system of value added tax when the chargeable event in respect of those duties occurs and those duties become chargeable, if the chargeable event in respect of those duties and the chargeability of those duties occurs within a free zone of control type I and the VAT legislation of the Member State to which the free zone belongs provides that free zones of control type I (free ports) do not form part of the territory of the country?
If Question 2 is answered in the negative:
Question 3:
Where goods transported under the external transit procedure without that procedure ending in a free zone of control type I are removed from customs supervision in the free zone so that a customs debt is incurred in respect of the goods under Article 203(1) of the Customs Code, 2 does the chargeable event occur and VAT become chargeable in respect of goods at the same time in accordance with another chargeable event, namely under Article 204(1)(a) of the Customs Code, because, prior to the act by means of which the goods were removed from customs supervision, the goods were not presented to customs at one of the customs offices competent in respect of the free zone situated within the territory of the country and the transit procedure was not ended there?
AG Opinion
(1) The first paragraph of Article 61 and the first subparagraph of Article 71(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Directive 2007/75/EC, must be interpreted as meaning that:
(a) the reference to ‘the arrangements or situations referred to’ in Article 156 of the directive includes free zones in the sense of possible zones for the importation of goods into the territory of the European Union; and
(b) when a customs debt under Article 203(1) of the Community Customs Code is incurred due to the removal from customs supervision of goods in a free zone, this gives rise to the chargeable event and import VAT becoming chargeable if it is reasonable to presume that the goods were able to enter the economic network of the Union, which is a matter for the national court to determine.
(2) Where a customs debt has been incurred under Article 203 of the Community Customs Code and it has been established that, due to the circumstances of the case, VAT is not chargeable, Article 204 of the Community Customs Code cannot be applied in order to give rise to a VAT charge.
Decision
1. The first paragraph of Article 61 and the first subparagraph of Article 71(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2007/75/EC of 20 December 2007, must be interpreted as meaning that the reference to ‘one of the arrangements or situations referred to’ in Article 156 of that directive includes free zones.
2. Article 71(1) of Directive 2006/112, as amended by Directive 2007/75, must be interpreted as meaning that the removal of goods from customs supervision in a free zone does not give rise to the chargeable event or make import value added tax chargeable if those goods did not enter the economic network of the European Union, this being a matter for the referring court to determine.
3. The second subparagraph of Article 71(1) of Directive 2006/112, as amended by Directive 2007/75, must be interpreted as meaning that, when a customs debt arises by virtue of Article 203 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, as amended by Council Regulation (EC) No 1791/2006 of 20 November 2006, and no value added tax debt is consequently incurred, on account of the circumstances of the dispute in the main proceedings, Article 204 of the latter regulation may not be applied for the sole purpose of providing a basis for charging value added tax.
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