AA v Allmänna ombudet hos Tullverket (C-125/24)

Contents

Judgment of the Court (Sixth Chamber)12 June 2025^note(Reference for a preliminary ruling — Taxation — Common system of value added tax (VAT) — Directive 2006/112/EC — VAT exemption — Article 143(1)(e) — Reimportation of goods — Condition relating to exemption from customs duty on the importation of returned goods — Regulation (EU) No 952/2013 — Article 86(6) and Article 203 — Incurrence of a customs debt as a result of failure to comply with a formal obligation laid down in the customs legislation — Cases where such a debt is incurred)In Case C‑125/24 [Palmstråle],^noteREQUEST for a preliminary ruling under Article 267 TFEU from the Högsta förvaltningsdomstolen (Supreme Administrative Court, Sweden), made by decision of 13 February 2024, received at the Court on 15 February 2024, in the proceedingsAAvAllmänna ombudet hos Tullverket,THE COURT (Sixth Chamber),composed of A. Kumin, President of the Chamber, I. Ziemele and S. Gervasoni (Rapporteur), Judges,Advocate General: J. Kokott,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– the European Commission, by P. Carlin and A. Demeneix, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 6 March 2025,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 143(1)(e) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (‘the VAT Directive’) and of Article 86(6) and Article 203 of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (OJ 2013 L 269, p. 1) (‘the Customs Code’), as regards the conditions for exemption from value added tax (VAT) applicable to a transaction involving the reimportation of goods.

2The request has been made in proceedings between AA and the Allmänna ombudet hos Tullverket (General Representative of the Customs Authority, Sweden) concerning the VAT liability of a transaction involving the reimportation of horses into the territory of the European Union.

Legal context

European Union law

The VAT Directive

3Under Article 2(1)(d) of the VAT Directive:‘The following transactions shall be subject to VAT:…(d) the importation of goods.’

4The first paragraph of Article 30 of that directive reads as follows:‘“Importation of goods” shall mean the entry into the [European] Community of goods which are not in free circulation within the meaning of Article [29 TFEU].’

5Under Article 70 of that directive:‘The chargeable event shall occur and VAT shall become chargeable when the goods are imported.’

6Article 71(2) of the VAT Directive provides:‘Where imported goods are not subject to any of the duties referred to in the second subparagraph of paragraph 1, Member States shall, as regards the chargeable event and the moment when VAT becomes chargeable, apply the provisions in force governing customs duties.’

7Article 143(1) of that directive provides:‘Member States shall exempt the following transactions:…(e) the reimportation, by the person who exported them, of goods in the state in which they were exported, where those goods are exempt from customs duties’.

The Customs Code

8Recital 38 of the Customs Code states:‘It is appropriate to take account of the good faith of the person concerned in cases where a customs debt is incurred through non-compliance with the customs legislation and to minimise the impact of negligence on the part of the debtor.’

9Article 1(1) of that code provides:‘This Regulation establishes the [Customs Code], laying down the general rules and procedures applicable to goods brought into or taken out of the customs territory of the Union.’

10Under Article 79(1) of that code:‘For goods liable to import duty, a customs debt on import shall be incurred through non-compliance with any of the following:(a) one of the obligations laid down in the customs legislation concerning the introduction of non-Union goods into the customs territory of the Union, their removal from customs supervision, or the movement, processing, storage, temporary storage, temporary admission or disposal of such goods within that territory;…’

11Article 86(6) of that code reads as follows:‘Where the customs legislation provides for a favourable tariff treatment of goods, or for relief or total or partial exemption from import or export duty pursuant to points (d) to (g) of Article 56(2), Articles 203, 204, 205 and 208 or Articles 259 to 262 of this Regulation or pursuant to Council Regulation (EC) No 1186/2009 of 16 November 2009 setting up a Community system of reliefs from customs duty [(OJ 2009 L 324, p. 23)] such favourable tariff treatment, relief or exemption shall also apply in cases where a customs debt is incurred pursuant to Articles 79 or 82 of this Regulation, on condition that the failure which led to the incurrence of a customs debt did not constitute an attempt at deception.’

12Article 139(1) of the Customs Code provides:‘Goods brought into the customs territory of the Union shall be presented to customs immediately upon their arrival at the designated customs office or any other place designated or approved by the customs authorities or in the free zone by one of the following persons:(a) the person who brought the goods into the customs territory of the Union;(b) the person in whose name or on whose behalf the person who brought the goods into that territory acts;(c) the person who assumed responsibility for carriage of the goods after they were brought into the customs territory of the Union.’

13Article 203 of that code provides:1. Non-Union goods which, having originally been exported as Union goods from the customs territory of the Union, are returned to that territory within a period of three years and declared for release for free circulation shall, upon application by the person concerned, be granted relief from import duty.…5. The relief from import duty shall be granted only if goods are returned in the state in which they were exported.6. The relief from import duty shall be supported by information establishing that the conditions for the relief are fulfilled.’

Swedish law

The Law on VAT

14Chapter 1 of the mervärdesskattelagen (1994:200), in the version applicable to the dispute in the main proceedings (Law 1994:200 on value added tax; ‘the Law on VAT’), contains point 3 of the first subparagraph of Paragraph 1, which provides:‘[VAT] is payable to the State in accordance with this Law:…3. on the importation of goods into the country which is liable for tax.’

15Chapter 2 of that law includes Paragraph 1a, which reads as follows:‘Importation means that goods are brought into Sweden from a place outside the European Union.’

16In Chapter 3 of that law, Paragraph 30 provides:‘Imports which are exempt under the lagen [1994:1551] om frihet från skatt vid import, m.m. [(Law (1994:1551) on exemption from tax on, inter alia, importation; “the Law on exemption from tax on importation”)] shall be exempt from tax.’

The Law on exemption from tax on importation

17Chapter 2 of the Law on exemption from tax on importation includes Paragraph 5, the first and second subparagraphs of which provide:‘Union goods which, after having been exported from the European Union to a third country, are brought into Sweden by the person who had exported them, without having been processed during the time they were exported from the European Union, shall be exempt from tax.Tax exemption under the first subparagraph shall be granted only if the goods are exempt from customs duty under Articles 203 to 205 of the [Customs Code]. Goods which are exempt from customs duty under [Council] Regulation (EEC) No 2658/87 [of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1)] shall be treated as if they were subject to customs duty.’

The dispute in the main proceedings and the question referred for a preliminary ruling

18AA is the owner of horses which are used in competitions in various countries. After exporting two of her horses to Norway to participate in such competitions, she brought them back into the European Union through a border crossing between Norway and Sweden, without presenting them to customs. Shortly after passing the customs post, she was stopped by a road patrol of the Tullverket (Customs Authority, Sweden).

19In the light of Article 203 of the Customs Code, AA was not subject to import duty in respect of that reimportation transaction, but the Customs Authority took the view that she was liable for VAT in the amount of 41178 kronor (SEK) (approximately EUR 3750). According to that authority, although Paragraph 5 of Chapter 2 of the Law on exemption from tax on importation, transposing Article 143(1)(e) of the VAT Directive into Swedish law, provides for an exemption from VAT in the event of the reimportation of goods, that exemption could not be granted to AA, who had not declared the horses for release for free circulation or applied for exemption from import duty.

20The Förvaltningsrätten i Karlstad (Administrative Court, Karlstad, Sweden) dismissed the action brought by AA against that authority’s decision. That court found that the horses had not been presented to customs on their return to the territory of the European Union. It took the view that a customs debt had been incurred and that that situation had led to the chargeability of VAT. It then pointed out that, in order to be entitled to the VAT exemption where goods are reimported, those goods must be declared for release for free circulation and an application for exemption from customs duty must be made by the customs declarant. Since those conditions were not met in the present case, that court held that the VAT exemption could not be granted.

21AA and the General Representative of the Customs Authority both appealed against the judgment of the Förvaltningsrätten i Karlstad (Administrative Court, Karlstad) to the Kammarrätten i Göteborg (Administrative Court of Appeal, Gothenburg, Sweden) and sought the annulment of the decision making AA liable to VAT. Those appeals were dismissed.

22AA brought an appeal before the Högsta förvaltningsdomstolen (Supreme Administrative Court, Sweden), which is the referring court.

23As regards the consequences to be drawn from the fact that AA crossed the customs post without the horses concerned having been presented to customs and without making a declaration or applying for exemption from customs duty, the referring court states that it has difficulty in applying Article 86(6) of the Customs Code. According to that provision, where an exemption from import duty is provided for pursuant to, inter alia, Article 203 of that code, that exemption is also to apply in cases where a customs debt is incurred pursuant to Article 79 of that code as a result of failure to comply with the obligation to present the goods brought into the territory of the European Union, on condition that that failure does not constitute an attempt at deception.

24In that regard, that court wonders whether it is appropriate to interpret Article 86(6) of the Customs Code restrictively, requiring that the conditions laid down in Article 203 of that code be met in all cases in order for the VAT exemption to be granted, or whether that exemption must apply even where the formal conditions laid down in Article 203 are not satisfied.

25In those circumstances, the Högsta förvaltningsdomstolen (Supreme Administrative Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Must Article 143(1)(e) of the VAT Directive and [Article 86(6) and Article] 203 of the [Customs Code] be interpreted as meaning that both the substantive and the procedural conditions laid down in Article 203 must be fulfilled in order for relief from import duty – and thus exemption from VAT – to be granted on [reimportation] where a customs debt under Article 79 of [that code] has been incurred through non-compliance with the presentation obligation laid down in Article 139(1) of [that code]?’

Consideration of the question referred

26By its question, the referring court asks, in essence, whether Article 143(1)(e) of the VAT Directive and Article 86(6) and Article 203 of the Customs Code must be interpreted as meaning that non-compliance with formal obligations such as the presentation of goods to customs provided for in Article 139(1)(a) of that code and the declaration for release for free circulation provided for in Article 203 of that code precludes the entitlement to the VAT exemption provided for in Article 143(1)(e) of that directive in respect of the reimportation into the territory of the European Union of goods in the state in which they were exported.

27Under Article 143(1)(e) of the VAT Directive, Member States are to exempt from VAT ‘the reimportation, by the person who exported them, of goods in the state in which they were exported, where those goods are exempt from customs duties’.

28It is apparent from the very wording of that provision that the VAT exemption for the reimportation of goods in the state in which they were exported is subject inter alia to the condition that those goods ‘are exempt from customs duties’. The EU legislature thus expressly chose to align the conditions for the application of the VAT exemption provided for by that provision with the conditions, both substantive and formal, to which the Customs Code makes subject the entitlement to exemption from import duties applicable to returned goods.

29As regards those conditions, Article 203 of the Customs Code, relating to returned goods, provides that goods exported from the customs territory of the European Union which are, within a period of three years, returned to that territory in the same state as that in which they were exported and which are declared for release for free circulation are, upon application of the person concerned, to be granted relief from import duties.

30In the present case, according to the information provided by the referring court, it is common ground that the substantive conditions laid down in that provision are satisfied. However, that is not the case with regard to the formal conditions required by that provision. It is apparent from the request for a preliminary ruling that AA returned her horses to the territory of the European Union without, inter alia, making a declaration for their release for free circulation. Moreover, contrary to the obligation set out in Article 139(1)(a) of the Customs Code, AA did not present her horses to customs either.

31In that regard, it is true that, under Article 79(1)(a) of the Customs Code, a customs debt may be incurred in the event of non-compliance with ‘one of the obligations laid down in the customs legislation concerning the introduction of non-Union goods into the customs territory of the Union, their removal from customs supervision, or the movement, processing, storage, temporary storage, temporary admission or disposal of such goods within that territory’.

32However, Article 86(6) of the Customs Code extends the exemption provided for in Article 203 of that code to cases in which a customs debt has been incurred pursuant to, inter alia, Article 79, on condition that the failure which led to that debt did not constitute an attempt at deception.

33Article 86(6) would be largely deprived of practical effect if it were to be interpreted as not applying in a situation such as that at issue in the main proceedings, on the ground that the formal conditions required for the entitlement to relief from customs duty are not satisfied. It must be stated that, as the European Commission pointed out, in essence, in its observations, the application of Article 79(1)(a) of that code and, therefore, the application of Article 86(6) thereof, specifically presupposes non-compliance with such conditions.

34It follows that, unless it constitutes an attempt at deception, the fact that returned goods have not been presented to customs as required by Article 139(1)(a) of the Customs Code or have not been the subject of the declaration for release for free circulation provided for in Article 203 of that code does not preclude, under Article 86(6) of that code, the entitlement of those goods, by virtue of their return to the territory of the European Union, to the relief from customs duties provided for in Article 203.

35That reading is supported by recital 38 of the Customs Code, which states that ‘it is appropriate to take account of the good faith of the person concerned in cases where a customs debt is incurred through non-compliance with the customs legislation and to minimise the impact of negligence on the part of the debtor.’

36Since the failure, by negligence, by an operator acting in good faith to comply with formal obligations such as the presentation to customs of the goods and the declaration for release for free circulation does not preclude the entitlement to relief from customs duties, it also does not preclude, in the light of the clear wording of Article 143(1)(e) of the VAT Directive, the application of the VAT exemption provided for in that provision.

37It follows from the foregoing, specifically, that the fact that a taxable person such as AA has disregarded formal obligations such as the presentation to customs and the declaration for release for free circulation of horses upon their reimportation into the territory of the European Union does not preclude, unless an attempt at deception is established, the application, in respect of that transaction, of the VAT exemption provided for in Article 143(1)(e) of the VAT Directive.

38In the present case, it is apparent from the order for reference that AA did not make any attempt at deception. It will be for the referring court to satisfy itself on that point and thus to determine whether AA’s failure to comply with such formal obligations, assuming that failure to be established, is the result of mere negligence on her part which does not call into question her good faith.

39In the light of the foregoing considerations, the answer to the question referred is that Article 143(1)(e) of the VAT Directive and Article 86(6) and Article 203 of the Customs Code must be interpreted as meaning that, except where there is an attempt at deception, non-compliance with formal obligations such as the presentation of goods to customs provided for in Article 139(1)(a) of that code and the declaration for release for free circulation provided for in Article 203 of that code does not preclude the entitlement to the VAT exemption provided for in Article 143(1)(e) of the VAT Directive in respect of the reimportation into the territory of the European Union of goods in the state in which they were exported.

Costs

40Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Sixth Chamber) hereby rules: Article 143(1)(e) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 86(6) and Article 203 of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Codemust be interpreted as meaning that, except where there is an attempt at deception, non-compliance with formal obligations such as the presentation of goods to customs provided for in Article 139(1)(a) of that regulation and the declaration for release for free circulation provided for in Article 203 of that regulation does not preclude the entitlement to the VAT exemption provided for in Article 143(1)(e) of that directive in respect of the reimportation into the territory of the European Union of goods in the state in which they were exported.