Finland: Excise taxation in alcohol distance selling

Excise tax liability for distance selling to Finland is legislated arises from the Finnish Excise Tax Act (182/2010, section 79 on distance sellers tax liability). Distance selling, is a sale, in which other than authorized warehousekeeper, registered or unregistered trader buys excise goods from other member state, which are transported or dispatched by the seller. Distance seller is liable pay excises from its sales. If a buyer uses other means other means to buy excise product from other member state (e.g. via internet) and organizes the transport the applicable rule is § 74, provided that the seller doesn’t take any part in transport.

According to the Council Directive (2008/118/EC) Excise goods already released for consumption in one Member State, which are purchased by a person, other than an authorized warehousekeeper or a registered consignee, established in another Member State who does not carry out an independent economic activity, and which are dispatched or transported to another Member State directly or indirectly by the vendor or on his behalf shall be subject to excise duty in the Member State of destination. (art. 36 para. 1.)

The ECJ’s ruling in the Man in Black case (C-296/95) clarifies the interpretation on Directive. The court ruling (old directive): “Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products, as amended by Council Directive 92/108/EEC of 14 December 1992,must be interpreted as not precluding the levying of excise duty in Member State A on goods released for consumption in Member State B, where the goods were acquired from a company, X, for the use of private individuals in Member State A, through a company, Y, acting in return for payment as agent for those individuals, and where transportation of the goods from Member State B to Member State A was also arranged by company Y on behalf of those individuals and effected by a professional carrier charging for his services.”

The Finnish Tax Administration currently enforces interpretation that vendor should not take any part in transport in order not to have tax liability for the sales to Finland. With high alcohol tax and this strict interpretation results that basically every sale to Finland is to be taxed in Finland. It’s also disputed that the distance sales of alcohol products to Finland could be criminal offence even though our view is that the fundamental freedoms in EU-law would hinder this interpretation which for example Finnish Ministry of Social Affairs and Health has.

Alcohol tax rates for the year 2019 are listed below. Additionally, the tax on beverage containers is 0,51 euro per liter of drinks.

Ethanol percentage by volume Amount of tax
0,5 to 2,8 9,60 cents per centilitre of ethanol
over 2,8 36,50 cents per centilitre of ethanol
Wines and other fermented alcoholic beverages
1,2 to 2,8 27,00 cents per litre of total amount of drink
over 2,8 to 5,5 191,00 cents per litre of total amount of drink
over 5,5 to 8 275,00 cents per litre of total amount of drink
over 8 to 15 397,00 cents per litre of total amount of drink
over 15 to 18 397,00 cents per litre of total amount of drink
Intermediate products
over 1,2 to 15 478,00 cents per litre of total amount of drink
over 15 to 22 738,00 cents per litre of total amount of drink
Products under Taric-code 2208:
over 1,2 to 2,8 9,60 cents per centilitre of ethanol
over 2,8 48,80 cents per centilitre of ethanol
Others 48,80 cents per centilitre of ethanol

Source: Finnish Tax Administration

The alcohol tax on the products sold to Finland can be refunded in the vendors home country. The products subject to excise duty sold to an individual are also always subject to VAT.

Currently the issue of distance selling is under a political debate. Government is pursuing maximal tax receipts by securing Finnish monopoly company (Alko Oy) and keeping the tax rate high. Several administrative officials have been comparing distance sellers as a criminals and tax fraudsters. We at Tax Fenix know that vendors are poorly informed by Finnish authorities and the lack of knowledge is one part of the story of evaded excises. We also can help your company with its declarations to the Finnish Tax Administration.