Judgment – A Member State is in breach of its obligations under Article 95 of the EEC Treaty if, in connection with value added tax, it applies to spirits a system of differentiated rates arranged so that all products produced domestically fall within the most favourable tax category, whereas imported products, in respect of which there is no national production, fall, with a few exceptions, under the most heavily taxed category.
With regard to Article 95, there is either a similarity between, or sufficiently marked characteristics common to, spirits such as to enable it to be said that they are at least partly or potentially in competition.
As far as the possible degree of substitution between beverages is concerned, it is immaterial that those benefiting from the favourable rate are regarded as traditional national drinks and consumed extensively in the country concerned, whereas those taxed more heavily are regarded by the consumer as luxury products. For the purpose of measuring the possible degree of substitution it is impossible to restrict oneself to consumer habits in a Member State or in a given region. Those habits, which are essentially variable in time and space, cannot be considered to be immutable; the tax policy of a Member State must not therefore serve to crystallize given consumer habits with a view to consolidating an advantage acquired by national industries concerned to comply with them.
Citations:
C-230/89, [1991] EUECJ C-230/89
Links:
Statutes:
European, VAT
Updated: 01 June 2022; Ref: scu.160311