ECJ case Pohjanri: Transport responsibility plays an important role in e-commerce
Brigitte Jakoby
by Brigitte Jakoby
Facts of the case
B UG, a German company, operated a website through which its customers were able to purchase beverages of different brands, with a low or high alcohol content. At first glance, the company was not involved in the transport of the goods. As soon as an order was placed, advertisements for various transport service providers appeared on its website. The customer was free to choose the services of the suggested service providers or to organise independent transportation.
When a buyer wanted to use the transport service of one of the advertised service providers, he was then redirected to that third party’s website. Here, the buyer provided their contact details and paid separately for shipping. However, the buyer gave no information about the order to this carrier. The shipment data was automatically transferred to the transport service provider by the seller. In the present case C-596/23 (Pohjanri), the question was whether a cross-border consignment is a distance sale from an excise duty perspective. The answer to this question determines who owes the excise duty at the destination.
European Court of Justice (ECJ) decision
In its decision of 19 December 2024, the ECJ determined a vendor who assisted a purchaser in selecting a transport company could be considered as being indirectly involved in the transportation of the goods, because the vendor acted in such a way as to guide the purchaser’s choice of the company responsible for the dispatch and/or transport of those goods by suggesting and facilitating the use of certain transportation companies.
Therefore, the vendor is liable for excise duty in the country of destination. The decisive factor in the assumed assistance was, above all, the fact that the shipment data was automatically transmitted to the transportation companies.
Conclusion
Both the reasoning and the decision may be applied analogously to VAT.
Determining where business-to-consumer (B2C) business primarily takes place, and where to pay excise duties and VAT, is a high risk proposition in e-commerce cases. Businesses must calculate using gross prices. If the calculated VAT rate is not correct it will directly cause losses.
In other VAT or excise duty cases, the ECJ has already made clear that the civil law agreements existing between parties are not the only decisive aspects. A major role as played by the current business construct is a deciding factor. The ECJ also clarified in the case at hand that the economic reality, and not the formal legal structure of the transactions, determined the tax liability.
The ECJ emphasises that sellers may also be subject to excise duty or VAT if the transport contract is ordered and paid for separately. This applies even if the seller only supports the service of the transportation companies by forwarding data on the shipment to the carrier.
In conclusion, it can be said that, practically, the question of who arranges the transport in cross-border B2C business should be monitored more closely than in business-to-business (B2B) cases. A concept of non-relevant involvement in arranging transport does not exist.
If the vendor is not involved in the organisation of transport, then the legislation on distance sales for VAT and excise duties do not apply. However, this possibility makes no economic sense in cross-border e-commerce, since very few customers would place an order if they had to take care of the transport for themselves, especially from another EU member state. If, on the other hand, the seller participates in the transport in any way, even if it is only in the pure transfer of information, the place of taxation is in the country of destination, as the ECJ has ruled.
In 1987, Brigitte Jakoby started collaborating with her husband Eugen Jakoby, also a German chartered accountant and German certified tax advisor. Since 1996, she has been a senior partner at Jakoby Dr. Baumhof. Contact Brigitte.
GGI Member FirmJakoby Dr Baumhof – Wirtschaftsprüfer Steuerberater RechtsanwälteRothenburg o.d.T., Ebersberg, GermanyT: +49 98 619 40 50
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Jakoby Dr Baumhof – Wirtschaftsprüfer Steuerberater Rechtsanwälte is a medium-sized, interdisciplinary company located in the south of Germany, with offices in Rothenburg ob der Tauber, located in Northern Bavaria, and Ebersberg, near Munich.
