Article 10(6) of the Directive defines an irregularity as “a situation occurring during a movement of excise goods under a duty suspension arrangement, other than the one referred to in Article 7(4), due to which a movement, or a part of a movement of excise goods, has not ended in accordance with Article 20(2).” Irregularities may occur in the form of interruptions, rejection of a consignment, shortages, excesses, or losses.
Currently, certain ambiguities remain at the end of the movement of excisable goods in distinguishing between errors stemming from human mistakes and/or negligence and those resulting from fraud. These ambiguities persist despite the judgment of the Court of Justice ruling in case C-64/15 BP Europa, which clarified the uncertainties related to levying of excise duty at delivery of goods under duty-suspension arrangements. Furthermore, how claims for excise duties facing the above-mentioned irregularities should be treated, and how this relates to the Recovery Directive provisions, remains unclear.
3.7.2 Problem Analysis Interruptions
Article 12 of the Commission Implementing Regulation 2016/323, introduced 24 February 2016, makes the exchange of information mandatory in the case of a definitive interruption of a movement. MSAs are required to send an “Interruption of movement” to their counterparts in relevant MS within one day of learning about the definitive interruption. Situations when a movement needs to be interrupted are listed
10,00% 15,00% 20,00% 25,00% 30,00% 35,00% 2011 2012 2013 2014 2015
Bulgaria Cyprus Czech Republic
Germany Luxembourg Malta
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in Article 15(1) of Regulation (EU) No 389/2012 (the list of reasons for the interruption available in the EMCS includes suspicion of fraud, destruction of the goods, loss or theft of the goods, and other; the interruption may also be requested at control).
Rejection of a Consignment
Rejection of a delivery by a consignee is currently possible should they receive goods they did not order or in the case of data errors in the e-AD. If the goods reached the consignee and they refused to accept them, a report of receipt (IE818) describing reasons for such a decision must be submitted. If, on the other hand, the goods have not reached the consignee, but they disagreed with the e-AD, an alert message (IE819) must be submitted in order to inform all involved parties; both practical mistakes on the part of the consignor or an attempt of fraud might be the cause of such a situation.
Should the consignee choose to reject the movement, the consignor must issue a change of destination or a splitting. Following this, the relevant MSA might decide to apply a risk assessment; in such a case, the consignor should submit a splitting operation or a change of destination. They may also cancel the e-AD if the goods have not yet been dispatched.
The above-mentioned regulations do not specify when the consignor needs to change the destination in the EMCS should the consignee reject a delivery. Some MS, like Germany, reported that this lack of deadline creates opportunities for fraud, as between the report of rejection by the consignee and the change of destination by the consignor, the authorities can control what happens with the goods only to a limited extent.
Shortages, Excesses, and Losses
If goods are “totally destroyed or irretrievably lost” during transport, they are considered “lost” and no excise duty is charged on them. How losses are determined by various MS was considered a major source of uncertainty by 75% of stakeholders interviewed for the purpose of the Evaluation of Current Arrangements for the Holding and Moving of Excise Goods under Excise Duty Suspension (2015). This is caused by the fact that each MS determines when missing goods are considered a “loss” and when they begin to constitute a “shortage”. For instance, some MS calculate set loss tolerances as a percentage value, depending on the type of the product in question or the mode of transport used, while others do not have set limits of tolerances.
If there is a discrepancy between the amount of goods reported in the e-AD and those actually delivered, a shortage (if the amount delivered is less than that identified in the e-AD) or excess (if the amount delivered is greater than that identified in the e- AD) occurs. The procedure for dealing with the already identified shortages and excesses is outlined in the functional specifications (FESS). However, each MS not only has its own rules regarding how to measure potential shortages and excesses, but also determines the point in which the missing goods identified are considered a “loss” and when they become a “shortage”.
For instance, Bulgaria, the Czech Republic, Estonia, Ireland, Lithuania, Luxembourg, Hungary, Romania, and Slovenia, while recording the accuracy of measuring instruments, make use of respective national legislations transposed from the Metrology Directives. Cyprus and France, additionally, have specific directions stated in their national legislations. In the Netherlands, it is an EO that is responsible for the measurement, while in Slovenia, rules are defined for tax warehouses, but not for the EO. At the same time, Malta, Finland, Sweden, and the United Kingdom do not have standard estimates of allowable losses. Moreover, out of all the MS that provided an
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answer to the question, two (Luxembourg and Slovenia) did not take measurement accuracy into account in the estimation of shortages, and four (Ireland, Malta, Sweden and the United Kingdom) did not take into account allowable losses through subtracting them from the measured shortage.
In terms of handling excesses, Bulgaria, Estonia, Ireland, France, Latvia, Lithuania, Malta, Portugal, Slovenia, Slovakia, Finland, and Sweden record them, but allow for the movement of goods to be held under duty suspension if the consignee is an authorised warehouse-keeper. Some MS (the Czech Republic, Germany, Cyprus, Luxembourg, Hungary, the Netherlands, Slovenia, and Slovakia) also require issuing a payment for the registered excesses (none reported confiscating the excessive amount of goods).
Chasing Other MS Duties
The rules governing cooperation between MS in the field of recovery of unpaid taxes were set out in Council Directive 2010/24/EU and are supplemented by the implementation of Commission Regulation (EU) 1189/2011. However, it is believed that MS currently lack incentives to invest their resources in investigating whether or not an EO from their territory owes duty to another MS, despite the fact that the EU Tax Collection Platform was created to reinforce this implementation. Other issues related to chasing other MS duties, such as ambiguities regarding which MS—that of dispatch or that of arrival—may claim excise duties recovered in cases of the fraudulent clearance of an EMCS movement (i.e. a situation whereby—even though the excisable goods never reach the declared destination—the movement is closed in the EMCS by a consignee participating in the fraud scheme) will not be addressed in this exercise. Currently, in order to deal with claims for shortages, seven MS (the Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania, and Slovakia) reserve part of the guarantee when the EMCS indicates a shortage. At the same time, 11 MS (Estonia, Ireland, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Romania, Slovenia, and Sweden) do not start an intervention in debt recovery unless there is an explicit request from another MS referring to the Directive.
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Source: own elaboration, based on the Commission’s working documents. 3.7.3 Magnitude of the Problem
Value and Volume of Movements Where Exceptional Situations Occur
Only scarce data is available regarding the various types of regularities. The information presented below was extracted either from the EMCS or provided directly by the MSAs (for instance, Slovakia was able to provide an aggregate number of movements that ended in any kind of irregularity for 2016—17,979). However, unfortunately, it is by no means complete and should not be treated as an exhaustive overview of the situation.
Interruptions
Notification on an interruption of a movement (IE807) is reportedly one of the least often used functionalities of the EMCS; in 2016, IE807 messages were recorded 495 times in the common domain of the EMCS.
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Table 24: Number of reported time notifications on the interruption of a movement (IE807) IE807 Jan 2016 54 Feb 2016 87 Mar 2016 46 Apr 2016 51 May 2016 37 Jun 2016 34 Jul 2016 27 Aug 2016 32 Sep 2016 47 Oct 2016 43 Nov 2016 20 Dec 2016 17 Source: EMCS.
Shortages and Excesses
The number of movements where excesses or shortages were reported varied among MS (at least among those that provided answers to the question) from 0 reported by Latvia, to 17,879 in Slovakia.
Table 25: Number of movements where excesses or shortages were detected, by country Number of movements where excesses/shortages were detected Amount of shortages in terms of value of goods
(EUR million /year)
Bulgaria 1215 - Czech Republic 7470 - Latvia 0 0 Hungary 3075 - Netherlands 4500 0.5-1 Romania 13246 - Slovenia 17000 1.5 Slovakia 17879 -
Source:own elaboration, based on information provided by MSAs.
If we extrapolate the data to the entire EU, the share of movements where excesses/shortages were detected in all movements (including B2B movements and outbound and inbound national movements, estimated using data available from the EMCS) was approximately 4.6%.
To estimate the number of all movements per MS, we used data from the EMCS system on the number of IE801 messages sent; since only two countries, the Czech Republic and Portugal, provide information on the number of national movements sent via Common Domain (while the rest provide information on the number of IE801 and
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IE818 messages sent without national movements), we estimated the total number of movements for the remaining MS using weights. Subsequently, we added an estimated number of B2B movements for each MS (3.2% of all movements; for details, see Chapter 3.5.3).
In terms of the value of the goods missing, Latvia reported a value of 0, while the Netherlands and Slovenia estimated the values of EUR 0.5-1 million and EUR 1.5 million, respectively. In the Czech Republic, in 2016, the authorities found that shortages amounted to 2,264,378 litres of energy products, 34,777 litres of beer, 279 litres of intermediate products, 4,543 litres of alcohol, 60,443 litres of wine, 2,081 pieces of cigarettes, 81 kg of tobacco products, and 4,091 kilograms of energy products. Extrapolating the data again (attaching weight to each MS based on the abovementioned calculations and using Intrastat data on the values of all excise movements per MS), it may be estimated that the amount of shortages in terms of value of goods amounted to 0.02% of the value of the entire intra-EU supply of excise goods.
Values of all excise movements per MS were derived from Intrastat.
Table 26: Forecast of the number of movements where excesses or shortages are expected to be detected in the next five years
2021 vs. 2016 (forecast) Number of excesses/shortages detected/year 2021 vs. 2016 (forecast) Amount of shortages in terms of value of goods
(EUR million /year)
Czech Republic increase .
Germany increase .
Hungary decrease decrease
Ireland 0 0
Latvia 0 0
Netherlands +1% +1%
Romania +46% +46%
Slovakia +5-7% +5-7%
Source:own elaboration, based on information provided by MSAs.
Concerning the predictions regarding the number of excesses and shortages, five MS expected an increase in the number of detections, two predicted no changes, and one (Hungary) reported it envisaged a decrease. Extrapolating these predictions to all MS, it may be estimated that the number of detected cases of shortages and/or
excesses will increase by approximately 5% (our methodology is explained in the
two paragraphs above). Calculations were made by attaching weights to each MS based on their reported current and expected number of cases of excesses/shortages and the total number of movements with excesses/shortages estimated at 4.6% of the value of the entire intra-EU supply of excise goods (see the beginning of this Chapter). In terms of the expected change in the value of the goods missing in the upcoming five years, two MS forecast no changes, one (Hungary) forecasts a decrease, while three MS expect an increase in line with the rise in the number of detected shortages/excesses themselves. Extrapolating these predictions to all MS, it may be estimated that the value of detected cases of shortages and/or excesses will
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increase by between approximately 13-29%. Calculations were made by
attaching weights to each MS based on their reported current and expected value of excesses/shortages and the total value of excesses/shortages estimated at 0.02% of the value of the entire intra-EU supply of excise goods—see the beginning of this Chapter.
Moving to the data provided by the EOs, the majority (57%) reported having less than 50 cases of movements where excesses or shortages were reported in a year. No cases exceeding more than 5,000 of such occurrences a year were reported. Concerning the amount of shortages in terms of value of goods, half of the EOs reported them to be under EUR 500 per year. However, 40% noted it exceeded EUR 10,000 per year and 15% noted it exceeded EUR 100,000 per year.
As the majority (60%) of SMEs did not provide information on the number or the value of movements where shortages/excesses were detected, it is difficult to draw any definite conclusions on the scale of the problem. Out of those that did provide an answer, all believed the number of such movements was under 500 a year. In terms of value of goods, three estimated the amount of shortages at below EUR 500,000, and one at between EUR 10 and 50 million.
Data provided by the EOs in questionnaires suggest that, on average, movements where excesses/shortages were detected constituted between 6.2% and
11.4% of all of their movements.
Table 27: Movements where excesses/shortages were detected (per EO, 2016)
Number of movements/year Value (EUR thousand/year)
0-50 12 0-500 10 50-500 6 500-5,000 2 500-1,000 - 5,000-10,000 - 1,000-5,000 3 10,000-50,000 4 5,000-10,000 - 50,000-100,000 1 >10,000 - >100,000 3
Source:own elaboration.
In terms of predictions for the future, only one EO expected both the number and volume of movements where excesses or shortages were detected to decrease, while the remaining EOs estimated that both the number and volume will not change in the upcoming five years.
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Figure 60: Predictions for the number and value of movements where excesses/shortages were detected (next five years)
Source:own elaboration. Chasing Other MS Duties
Eight MS reported experiencing difficulties while trying to recover duties from an EO residing in another MS (five others said they had never had such problems). Among those who did experience difficulties, seven MSAs blamed the lack of clarity regarding which MS had taxing rights, seven MS mentioned lack of familiarity with tools, three reported language problems (with the Czech Republic mentioning explicitly that it required costly official translations of documentation, which sometimes exceeded the amount of the debt itself), and two indicated lack of guarantees.