Working group makes a unanimous proposal for the regulation of cross-border sales of alcoholic beverages
The working group set by the Ministry of Social Affairs and Health has investigated, as required by Parliament, how the provisions on cross-border distance sales, especially online sales, of alcoholic beverages could be clarified. In its unanimous proposal, the working group proposes that provisions on restricting distance selling of alcoholic beverages and provisions on definitions of the key concepts related to distance selling be included in the new Alcohol Act. At the same time, it investigated the monitoring of distance sales of alcoholic beverages and surveyed means that would enhance the collection of excise duty payments in cross-border sales of alcohol in Finland.
The new Alcohol Act as a whole entered into force on 1 March 2018. When voting on the Alcohol Act in December 2017, Parliament required that the Government still separately clarify the provisions concerning distance selling of alcoholic beverages. Finnish and foreign vendors of alcoholic beverages are in an equal position in the working group's proposals, as required by Parliament.
From the point of view of the Finnish alcohol industry, it is important that competition be fair. The Act should secure an operating environment in which vendors operating outside Finland's borders are expected to comply with similar rules as Finnish vendors when products are sold to Finland and to Finnish consumers.
In distance selling, the vendor pays all taxes on alcoholic beverages, such as the excise duty on alcohol and alcoholic beverages, the excise duty on beverage containers and VAT, and takes care of the transport of the products, while in distance purchases, the purchaser is the party responsible for the taxes and the transports.
The working group proposes that certain aspects of distance selling be more clearly restricted. Rules and mechanisms, on the other hand, would be created for distance purchasing to make distance purchasing possible in practice also in the future. This would help to ensure that the consumer can continue to buy alcoholic beverages abroad, for example, online, but also that a higher amount of taxes would lawfully be received by Finland. Currently, it is estimated that about EUR 10 million in tax revenue is lost every year.
Sale of beverages containing up to 5.5% alcohol by volume would be permitted online
According to the working group's proposal, both Finnish and foreign operators would be able to sell alcohol online as long as the alcohol content by volume would not be more than 5.5%. Such alcoholic beverages would be distributed from retail premises.
Distance sales to Finland of alcoholic beverages containing more than 5.5% alcohol by volume would still be prohibited, but it would be possible to distance purchase such products.
Possibility to register as an approved distance vendor
According to the proposal, the possibility would be provided for a vendor of alcoholic beverages located abroad to register as an approved distance vendor by submitting a notification. The vendor would register with the National Supervisory Authority for Welfare and Health (Valvira). After that, the distance vendor would have the right to sell and import to Finland alcoholic beverages containing up to 5.5% alcohol by volume by delivering the products to the purchaser from retail premises approved in advance by Valvira. The distance vendor, i.e. the online shop, would have to pay the excise duty on alcohol and alcoholic beverages, the excise duty on beverage containers and the VAT on the alcoholic beverages it sells through distance sales.
A new notification procedure in which a vendor could be entered to the alcohol trade register in Finland in the same way as other retail licence holders would be created for foreign distance vendors.
Alcohol beverages containing up to 5.5% alcohol by volume would be delivered to the purchaser from retail premises with a licence for the retail sale of alcoholic beverages. It would also be possible for the authority to cancel the registration of a distance vendor and prohibit the operator concerned from supplying alcoholic beverages to be delivered in Finland. This could be done if the distance vendor failed to pay taxes or other charges.
Distance purchasing from Finland would be permitted
Finnish purchasers – including private persons – could buy from abroad alcoholic beverages containing more than 5.5% alcohol by volume (distance purchase) on the condition that the purchaser would be responsible for both paying the taxes and organising the transport.
It is proposed that a new provision be added to the Alcohol Act, according to which private persons could order and obtain for their own use all alcoholic beverages from another EU country if the purchaser organises the transport of the products to Finland through another private person or a transport company without the vendor participating in the transport arrangements.
A document of the transport arrangements should accompany the transport and would have to be presented to Customs if requested. The purchaser and the party participating in transporting the products would be jointly liable to pay the excise duties payable by a private person on alcoholic beverages imported to Finland.
Parliament required clarification for distance sales of alcoholic beverages
Parliament required that the report must take into account the requirements of EU law and the upcoming decision of the Supreme Court in the so-called case Visnapuu. In addition, Parliament required that the monopoly on the retail sale of alcoholic beverages remain with Alko and that the equality of Finnish traders in relation to foreign vendors of alcoholic beverages be safeguarded. Parliament also required that the current licence needed for selling alcoholic beverages remain as it is.
Finland's unclear provisions concerning distance selling of alcoholic beverages have been interpreted in connection with a case (C-198/2014 Visnapuu) in the Court of Justice of the European Union. According to the Court of Justice of the European Union, the prohibition concerning cross-border distance selling of alcoholic beverages stated in the previous Finnish Alcohol Act is in line with EU law, under certain conditions. The Court of Appeal of Helsinki dealt with the matter in spring 2017 and because both parties appealed against the decision, the final decision now depends on the decision made by the Supreme Court.
Distance selling of alcohol has increased in the past few years
Distance selling of alcohol to Finland was rare at the beginning of the 21st century, but increased significantly between 2013 and 2015. Distance selling has increased along with the new sales channels of global online stores, advanced logistics networks and cheaper costs of transport.
Today, the customer can order alcoholic beverages from online stores through distance sales and the products are often delivered to the customer's front door. According to studies carried out by the Tax Administration and Customs, more than 200 distance vendors of alcohol have operated within the area of the EU in more than 20 member countries, most of them in Germany, Britain, France, the Netherlands, Luxembourg and Spain. About 99 per cent of distance sales of alcoholic beverages is cases in which the vendor has organised the transport of the alcoholic beverages to Finland. However, only a small proportion of distance vendors of alcoholic beverages make sure that all taxes are paid appropriately and take care of all their other obligations regarding Finland.
Kari Paaso, Director, tel. +358 2951 63340
Hanna-Maija Kause, Special Adviser to the Minister of Family Affairs and Social Services, tel. +358 50 5667949
N.B. Contact requests can also be left by text message!
- Report of the working group investigating the regulation of cross-border distance selling of alcoholic beverages (pdf, in Finnish)
- Appointment letter for the working group investigating the regulation of cross-border distance selling of alcoholic beverages (pdf, in Finnish)
- The Finnish Parliament has approved the Alcohol Act by 124 votes to 65 (Finnish Parliament press release on 19 December 2017, in Finnish)