EU reform will open net to cut-price drink

Published on Sunday 12 November 2006 01:05

DRINKERS and smokers will be able to buy cut-price alcohol and cigarettes from the Continent without leaving home under a new EU ruling likely to come into force next week.

The law is expected to be changed so that consumers in Britain can buy goods over the internet in other parts of the EU and ship them back to this country without paying extra duty.

It means that it will be possible to buy alcohol and cigarettes from countries where duty is low, making vast savings in the process.

In Latvia - one of the countries from where purchases would be acceptable - 200 cigarettes cost 7.20, a saving of around 43 on British prices.

The reform will be felt most in countries like the UK, where excise duty is among the highest in the world.

Shoppers are expected to start buying online in their thousands if the new ruling is enacted, starving the Treasury of much of the 15bn it earns every year from duty on alcohol and cigarettes.

The change has come about as a result of an appeal by a Dutch group to have wine they bought in France brought back to their country without having to physically accompany it.

Presently, EU consumers can bring cheap goods back in from other parts of the continent, but they have to carry it and prove it is for personal use.

The advocate-general of the European Court of Justice ruled in favour of the Dutch group. The full court is expected to rubber-stamp his adjudication next week, paving the way for everyone to follow suit.

The ruling is due on November 23 and tax experts are predicting the change will happen. Already, businesses are preparing for the move, which is expected to see a massive increase in exports from the EU's newer nations.

The losers are expected to be retail outlets in Britain which may suffer a major drop in their own sales.

Legal advice drawn up by Ernst and Young on the ruling declared: "The judgement is likely to allow individuals to purchase alcohol over the internet or by telephone from other EU member states and to have their purchase delivered to them at home, while still paying low duty rates in the country of purchase."

Jeremy Beadles, the chief executive of the Wine and Spirits Trade Association, confirmed the main change. "The key distinction until now has been that you have to travel with the goods," he said.

Euro MP Charles Tannock said: "This is going to be a huge embarrassment to Gordon Brown and his tax-raising attempts. It will also increase pressure on member states to harmonise excise duty. If we are going to have a single market this must be permitted."

HM Revenue and Customs refused to comment on the case last night.