On 5 March, the European Court of Justice delivered a judgment that found the sales tax imposed from 1 June 2010 to 31 December 2011 in Tallinn, Estonia, to be a violation of EU law and the excise duty directive. This means that illegally collected sales tax must be returned to companies, with interest.

Our partner Carri Ginter, who represented Statoil Fuel & Retail Eesti in the dispute, considers that the judgment is of great importance. “The judgment will affect the court practice and legislation of all 28 EU Member States“, comments Ginter.

Illegally collected sales tax

On 19 November 2010, Statoil filed an appeal with the Tallinn Administrative Court against the Tallinn City Enterprise Board regarding collection of sales tax. The EU excise directive prohibits imposition of additional taxes on excise goods unless such tax has a special purpose. The Tallinn City Enterprise Board argued that the sales tax was charged for a specific purpose – development of public transport.

The case was brought before the Tallinn Circuit Court, which turned to the European Court of Justice for clarification. The Court of Justice ruled in favour of the entrepreneur, which means that illegally collected sales tax can be reclaimed from Tallinn City, with interest. In addition to Statoil, many other entrepreneurs have filed claims for repayment of sales tax. The decision of the Court of Justice affects only those goods that are subject to excise duty, and the sum in dispute may amount to EUR 1.6 million.

Our client team

Our team representing the client in this complex court dispute, working in close cooperation with the client’s head of legal, Nele Laidvee, included partner Carri Ginter, senior associate Veikko Puolakainen, and associate Kadri Härginen.

Preliminary ruling in dispute Statoil v Tallinn available here.