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Created on Wednesday, 14 February 2007 00:00

Last Updated on Friday, 28 December 2012 18:53

You Owe Tobacco Tax upon Import

– Even if You Were Unaware that You had the Goods

The BFH had to decide a case on July 20, 2004 (re VII R 38/01). A Lithuanian driver was caught inadvertently smuggling 3,000 cigarette boxes into Germany. Since he could not win in court he had to pay import tax on something he did not willfully bring into Germany.

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To make a long story short: This Lithuanian truck driver had loaded wooden pallets onto a semi-trailer to be brought to Germany. Customs officers found some 3,000 cartons of cigarettes in a specially constructed hiding place. As the investigation showed, the driver really did not know anything about these extra goods. He was ordered to pay import tax but since his boss refused, this case was brought to court.

The district tax court dismissed the case because §8 cl. 2 of the ZK clearly says that whoever imports goods beyond the tax-free limit must pay import tax. The Federal Tax Court doubted the consistency of the legal opinion of the district tax court with European law and presented this case to the European Court of Justice.

The European Court of Justice (March 4, 2004 re C-238/02, C-246/02) ruled that European tax law requires persons carrying goods into another country to declare them at the border – even if they do not know that they are carrying more than they expected.

The Federal Tax Court therefore had to set aside its doubts and dismiss the case and thus the order to the plaintiff to pay the countermanded import tax.

You may find this ruling unfair. This guaranteed liability of every transporter is intended to ensure effective surveillance of trans-border transportation. If you should be caught with smuggled goods, have your attorney or tax advisor apply to exempt you for hardship reasons. There is no right to demand such exemption since it is only a matter of discretion. In any case you will have to prove that you really had no idea and could not have known that you were transporting things without your knowledge.

Let us assume that the fiscal authority refuses to exempt you from payment. There still might be a chance to recover this tax. If you were professionally transporting goods for your customer you might be able demand damages on the grounds of breach of contract. If somebody added something to your luggage, car or whatever without your knowledge, it will be a matter of the individual case to determine any grounds for repayment.