Excise and company takeover
SRS ruling (No 10-10/4612) has been published regarding coffee capsules obtained as a result of a company transfer. The Applicant’s economic activities were basically office coffee services for which the Applicant had received the status of an excise warehouse holder. An agreement had been reached that the Applicant would purchase an independent part of company SIA EE – lease of coffee machines and supply of coffee capsules, including capsules purchased from excise product sellers registered in the EU who pay excise duty.
Regulations “Procedures for the Circulation of Excisable Goods” state that coffee can be sold if purchased from a business operator with a special permit (licence) for the operations of a warehouse holder with the particular type of excise goods, or if the business operator itself has brought the coffee from another member state or imported it. SIA EE does not have the status of an excise warehouse holder.
In this ruling, the SRS commented that the transaction described in the application was not an excise goods sales transaction – sale of coffee – it was rather a business transfer transaction whereby an independent unit of a company was transferred, including stocks of products (coffee capsules). In turn, the Applicant acquired the right to sell the coffee on which excise duty had been paid. So, coffee obtained as a result of the business unit transfer should not be accounted separately from other goods as it does not have to be stored in an excise warehouse.
EC reviews EU tax administration rulings
30.04.2020. The European Commission announced that it had expanded its investigation in relation to the ruling obtained in 2011 by the IKEA Dutch company. The EC considers that this ruling provided unlawful state support to IKEA. As the EC sees it, the ruling allows excessively high transaction prices for payments from the Netherlands to other related companies for use of IKEA intellectual property, thus enabling a decrease in the company’s tax burden in the Netherlands. Likewise, the EC indicated that it would assess the depreciation norms for IKEA’s intellectual property, which also decreased tax liabilities in the Netherlands. This action is an ongoing attack by the EC on rulings issued in various EU countries to various large international corporations. In essence – if unlawful state support is detected, the company will have to compensate it. Usually, the maximum permitted threshold of support for taxes may amount to EUR 200K. However, presently, as an exception, for measures whose purpose is to combat the virus, the EC allows an increase in the state support threshold for taxes, sometimes as high as EUR 1 million.