Online Wine Sales: Tax and Excise Duties

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The online sale is a particular type of transaction in which the sale of goods or services is completed electronically, and the delivery of the goods is made through the traditional distribution channels.

The exchange of the goods takes place after the characteristics, the delivery conditions and prices have been made known by the seller through an online publication, so as to allow the buyer to complete the purchase order through a website.

In EU goods are in free circulation which implies, for the Member States, the prohibition of customs duties on imports and exports and any tax having equivalent effect, with the creation of a customs union and the adoption of a common customs tariff in trade with third countries (Article 28 of the Treaty on the Functioning of the European Union).

In the wine sector in particular, however, three main tax burdens must be considered in tax matters:
  • Value Added Tax (VAT)
  • Excise duties
  • Environmental fees on packaging
Before focusing on every single point mentioned above, it is important to note that:
  • For e-commerce sales of wine to European consumers, VAT, excise duties and environmental fees on packaging are always due in the EU country of destination of the products
  • In the B2C e-commerce the shipment/transport is in the name and on behalf of the seller

Value Added Tax (VAT)

Value added tax is a tax harmonized at European level: all EU countries apply the same principles on VAT and the laws of the Member States are interconnected.
For this type of sale subject to excise duty, there is a European discipline "ad hoc", different from the VAT rules on distance selling applicable to other products (e.g. clothing, electronics, etc.).
Dealing with the specific case of remote sale of wine for European consumers, in fact, the VAT is always due in the EU state of destination of the products, since the first sale, without applying any threshold of annual turnover, as happens, instead, for the other categories of goods (art. 41 of Legislative Decree 331/1993).

When selling in European countries, you are required to qualify for VAT, that is:
  • Obtain a VAT number in the relevant European countries, which must be valid in the European database VIES (VAT Information Exchange System)1. In addition, the seller must indicate your VAT number (art. 35, first paragraph of Dpr 633/1972) on the home page of the website
  • Submit periodic VAT returns, following the foreign regulations on invoicing and VAT accounting
  • Pay the declared foreign VAT

Excise duty on alcoholic products

Enforcement of European excise duty rules is probably the most sensitive issue for alcohol sellers in the European Community. Moreover, despite partial harmonization in the EU, excise duty rules still show differences between countries.
Article 3 of Italian Legislative Decree no. 504/1995 states that the classification of products subject to excise duty is that established by the customs tariff of the European Community.
As for VAT, the applicable EU legislation requires to declare and pay excise duty always in the EU state of destination of the products.

Environmental contributions on packaging

In most cases, the sale of e-commerce products to EU consumers implies the payment of environmental fees on packaging by sellers in the EU state of destination of the products.
Many European states impose an environmental fee (so-called "green dot") on packaging that is introduced into their territory, even by non-resident companies, including e-commerce.
It is therefore necessary to register with the competent body in the foreign country and submit the annual declarations, in addition to paying the related environmental fee.

Consumer Protection

Whatever goods are sold, three important regulatory aspects must always be taken into account when dealing with online transactions:
  • Right of withdrawal
  • Warranty
  • Privacy

1) The VIES is a system of exchange of information between member countries of the European Community established as a result of the birth of the Single Market in order to allow a correct taxation and a reduction of bureaucratic burdens for companies).