Tax Administration’s and Customs’ intensified control of webstore alcohol – duties must be collected in Finland
Tax Administration Bulletin, 10/12/2022Delivery of alcoholic beverages from international webstores causes a tax gap reaching tens of millions of euros. Starting November, the Tax Administration and Customs intensify their rule enforcement concerning purchases of alcohol at webstores in order to make sure that all excise duties are collected. The Customs will detain a number of alcohol transports. Not only the sellers but also buyers will have to pay duties.
According to recent estimates, the State of Finland loses some 80 or even 100 million euros a year in excise-tax revenue due to international webstore deliveries of alcohol for which Finnish duties are neglected. To buy alcohol online became very popular especially during the coronavirus pandemic.
As a result, the Customs and the Tax Administration will focus on enforcing the rules more strongly as of November.
In spring 2022, the Ministry of Finance gave the Tax Administration and Customs a 3-million-euro apportionment for financing intensified control action in 2022 to 2023 and later.
"It has become obvious that the increased popularity of online alcohol is almost entirely based on easy avoidance of excise duty payments. More intensive control will be our way to ensure that all required taxes and duties are paid when customers buy spirits online” says Sami Peltola, Head of Compliance Control at the Tax Administration.
The Tax Administration is responsible for administering excise taxation in Finland. The Finnish Customs is responsible for practical arrangements of import control.
“Our control activities directed towards alcohol are based on our risk analysis, and they also are part of the Custom’s usual enforcement work at border control points. Because we are the public authority in charge of execution, our job is to make sure that enforcement is as efficient as possible. Naturally, we detain all the transports that do not comply with the rules” says Sami Rakshit, Director of the Finnish Customs’ Enforcement Department.
During the pandemic, online alcohol increased threefold
Statistics from Finland’s Institute for Health and Welfare (THL) indicate that the total volume of webstore-bought alcoholic beverages reached 33 million litres in 2021. Whereas a steady growth in the years just before the coronavirus pandemic had already been observed, the statistics for the years 2019, 2020 and 2021 show a threefold increase.
Starting November, the Customs detains deliveries of alcohol, and tax decisions are issued to buyers
From November, the Customs will detain the alcohol captured during the intensified control action at ports and other borders, checking with the Tax Administration to ascertain that the advance notices are submitted and guarantee amounts are paid. When a transport is detained, it is not released until the necessary information is received.
If the advance notice and guarantee are neglected, and official record shows that the seller is responsible for duties, the Tax Administration seizes the products. Delivery will continue to be detained until duties are paid. If no payment arrives from the seller within 6 months, the Customs has the right to destroy the seized products.
Seizure of alcoholic beverages is an enforcement measure to secure the seller’s duty payments to Finland.
In cases where responsibility for excise duties on alcohol is carried by the buyer, the transport will not be detained until payment. Instead, after the necessary further information is obtained, the Customs allows these transports to be forwarded to buyers. Later, if excise duties continue to be outstanding, the Tax Administration sends the buyer a tax demand.
“Webstore-bought beer becomes approximately twice as expensive when not only the beer but also the duties are included in the price”, notes Sami Peltola.
Send your enquiries to the online webstore
If a transport is detained, the authorities in charge send a notice to the transportation company and to the seller company of the alcoholic products.
Customers who have placed orders for alcoholic beverages are urged to contact the webstore to ask about delays, instead of contacting Finnish Customs or the Tax Administration.
“Legal rules prevent authorities from informing the customers of any delays in their deliveries when the seller is responsible for taxes and duties, because the issue only concerns the Tax Administration and the seller. For these reasons, we recommend all customers to send their enquiries to the online webstore if the order is not delivered on time”, notes Sami Peltola.
Who pays the duties? It depends on the transportation contract
There are two different excise duties that concern alcohol: excise duty on alcohol, and excise duty on beverage containers.
If you buy alcohol online from a webstore situated in an EU country, responsibility for payment of duties depends on how transportation is arranged. If you buy from a non-EU country, you the customer must submit a customs declaration to have the products cleared and pay VAT on imports, customs duties if applicable, and the above excise duties immediately.
1. If the seller participates in transportation arrangements, duty liability lies on the seller
If the webstore situated in an EU country organises transport to Finland for the products, the transaction is treated as distance selling. Accordingly, the seller must pay the above excise duties. The seller is also responsible for the duties in a situation where the seller recommends that the customer should turn to certain transport companies or where the seller participates in transportation arrangement in some other way.
"This means that the mere presence of a link on the webstore’s site referring to a transport company would cause the liability to pay the excise duties to lie on the webstore. I would like to remind all consumers to be careful: if the webstore advertises low prices on alcohol, it generally means that no taxes and duties are paid,” says Sami Peltola.
In some circumstances that involve distance purchase, the liability to pay the taxes and duties lies with a transport company that participated in transport arrangements
2. If the buyer arranges transportation, duty liability lies with the buyer
If instead, you the customer send an order for alcoholic beverages to a webstore outside the EU, and you organise the transport, the transaction is a distance purchase and you become responsible for paying the taxes and duties. In this case, you must log into MyTax to submit an advance notice and pay a guarantee, i.e. pay an amount matching your upcoming excise duty beforehand.
Information on duties:
24-can cart (cans of 0.33 liters) (4.6%) is priced at €13,90 at the international webstore. Excise duty on alcohol on beer (4.6%) is €13.86 and the excise duty on beverage containers is €4.03 for the cans. Excise duties total €17.89 making the 24-can cart’s price rise to €31.79 with duties included.
3-litre box of red wine (12.5%) is priced at €11,90 at the webstore. For wine, the excise duty on alcohol is €12.63 and the excise duty on beverage containers equals €1.53. Excise duties total €14,16 making the box wine cost €26,06 with duties included.