Prior to Brexit, the UK failed to comply with its obligations under EU customs and tax law by failing to apply effective controls on certain imports of textiles and footwear from China, and by failing to take into account the correct amounts of customs duties on those products, the Court of Justice of the EU ruled in a judgment handed down on Tuesday 8 March (Case C-213/19).
The European Commission brought an action for a declaration that the UK authorities had failed to fulfil their obligations under EU rules on control and surveillance of own resources recovery, customs law (Regulations 952/2013 and 2913/92) and VAT (Directive 2006/112), in relation to imports of textile and footwear products from China.
Despite repeated warnings from the European Anti-Fraud Office (OLAF), the UK did not always apply the minimum prices calculated according to the OLAF methodology to these imports and, when it did, it did not execute the additional payment notices issued by its authorities. Instead, it allowed these imported products to be released on the internal market, with the result that a substantial part of the customs duties due were not collected nor transferred to the EU budget. This practice has also led to a diversion of fraudulent Chinese textile imports to the UK.
The Commission is claiming almost €2.7 billion from London over the period 2011-2017 (see EUROPE 11977/26).
In its judgment, the Court partially allowed the appeal. It considers that the United Kingdom, by failing to carry out sufficient controls and by not applying the correct customs duties, did not make available to the EU institution the correct amount of VAT due on the disputed imports.
On the other hand, the Court partially rejects the Commission’s calculation of the loss of own resources to the EU budget, considering that the Commission has not demonstrated to the requisite legal standard the full amount claimed. However, it approves the method used to estimate the amount of the loss of own resources for part of the infringement period, considering it sufficiently accurate and reliable not to lead to a manifest overestimation of the amount of the loss.
However, it is up to the Commission to recalculate the remaining losses of EU own resources, taking into account the findings of the Court’s judgment.
See the judgment: https://aeur.eu/f/n3 (Original version in French by Mathieu Bion)