Criminal proceedings against Rainer Drexl. (Tax Provisions ) [1988] EUECJ R-299/86 (25 February 1988)

Criminal proceedings against Rainer Drexl. (Tax Provisions ) [1988] EUECJ R-299/86 (25 February 1988)

Article 95 EEC requires that, when a private individual imports goods from another Member State without tax relief or exemption, the VAT charged on importation must account for the residual VAT paid in the exporting state, so that double taxation is avoided. National legislation imposing more severe penalties for VAT offences on imports than for comparable domestic offences is incompatible with Article 95 EEC if the difference is disproportionate to the dissimilarity between the offences.

Citation
[1988] EUECJ R-299/86
Parties
Defendant: Rainer Drexl; Prosecution: Italian Republic (Prosecution)
Jurisdiction
European Union
Judgment Date
25 February 1988
Procedural Posture
Preliminary Ruling (reference for Interpretation) / Preliminary Reference From Corte D'appello Di Genova to ECJ
Outcome
Preliminary ruling issued; national law must comply with Article 95 EEC as interpreted.
Legal Topics
Value Added Tax (vat), Internal Taxation, Discrimination Between Imported and Domestic Goods, Proportionality of Penalties, Free Movement of Goods
European Union Law Tax Law Criminal Law Value Added Tax (vat) Internal Taxation Discrimination Between Imported and Domestic Goods Proportionality of Penalties Free Movement of Goods

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Parties

Rainer Drexl

Defendant

Italian Republic (Prosecution)

Prosecution

Procedural Posture

Preliminary Ruling (reference for Interpretation) / Preliminary Reference From Corte D'appello Di Genova to ECJ

Legal Issues

  1. 1 Whether Article 95 EEC prohibits a Member State from levying VAT on imports from another Member State without deducting residual VAT paid in the exporting state
  2. 2 Whether VAT on imports, without accounting for residual tax, constitutes a prohibited internal tax under Article 95 EEC
  3. 3 Whether more severe penalties for VAT offences on imports than for domestic transactions are compatible with Article 95 EEC and EU law principles

Ratio Decidendi

Article 95 EEC requires that, when a private individual imports goods from another Member State without tax relief or exemption, the VAT charged on importation must account for the residual VAT paid in the exporting state, so that double taxation is avoided. National legislation imposing more severe penalties for VAT offences on imports than for comparable domestic offences is incompatible with Article 95 EEC if the difference is disproportionate to the dissimilarity between the offences.

Court Disposition

Preliminary ruling issued; national law must comply with Article 95 EEC as interpreted.

Orders

  • VAT on importation must deduct residual VAT paid in the exporting Member State from the taxable amount and from the VAT payable.
  • National legislation imposing more severe penalties for VAT offences on imports than for domestic transactions is incompatible with Article 95 EEC if the difference is disproportionate.