Analysis

Favourable judgement of ECJ regarding interest on customs duty refunds

Customs Duty Express 1/2017

The European Court of Justice (further called: ECJ) adjudicated that the EU Member States are obliged to repay with interest amounts of tax levied in infringement of EU law. The judgement applies to all customs dues and levies imposed in line with the EU law that has been pronounced defective.

One of the importers effectively demanded a refund of the anti-dumping duty imposed on its import transactions based on the regulation which ECJ annulled. The customs administration refunded the duty collected, but refused to pay interest on the refunded amounts arguing that based on the EU Customs Code interpreted together with the provisions of the German customs regulations, the applicant was not entitled to receive the interest.

Finally, the case was submitted to ECJ which adjudicated that in the case of reimbursement of import duties imposed in breach of the EU law, Member States are obliged to pay interest on reimbursed import duties from the time of payment of those duties up to the time of their reimbursement. ECJ indicated that Article 241 of the EU Customs Code, which expressly excludes the repayment of interest on reimbursed duties by authorities, is restricted to the situations when the customs authorities carry out an a posteriori review of the customs declarations and there are errors in calculation of the said duties.  Conversely, if the customs duty or a different tax is imposed based on regulations that are not consistent with the EU legislation, then the reimbursement needs to include payment of the accrued interest.

Considering that the judgement passed by ECJ relies on the EU legislation, it should (at least theoretically) influence the refunds of unduly collected customs duties under the EU Customs Code.

What does this mean in practice?

Reimbursement of customs duties levied in infringement of EU law (based on legislation that is not consistent with the EU law) triggers the obligation to pay the associated interest on the side of the customs administration.  Companies are entitled to demand payment of such interest on any reimbursement of unduly levied taxes (both in the past and in the future). Hence, it is worthwhile to check whether over the past few years your company received any reimbursement of duties levied in infringement of EU law and the authorities refused to pay the attendant interest. However, please keep in mind the national rules of procedure, limitation periods as well as the possibility of a potential dispute with the customs authorities.

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