Int´l online alcohol purchase results €100m tax evasion annually

Delivery of alcoholic beverages from international webstores causes a tax gap reaching tens of millions of euros, said Finnish Tax Administration in a press release on Wednesday.

Starting November, the Tax Administration and Customs will intensify their rule enforcement concerning purchases of alcohol at webstores in order to make sure that all excise duties are collected.

The Customs will detain alcohol transports and impose duty on both the sellers and buyers.

According to recent estimates, the State of Finland loses some 80 or even 100 million euros a year in excise-tax revenue due to international webstore deliveries of alcohol for which Finnish duties are neglected.

To buy alcohol online became very popular especially during the coronavirus pandemic.

In spring 2022, the Ministry of Finance gave the Tax Administration and Customs a 3-million-euro apportionment for financing intensified control action in 2022 to 2023 and later.

"It has become obvious that the increased popularity of online alcohol is almost entirely based on easy avoidance of excise duty payments. More intensive control will be our way to ensure that all required taxes and duties are paid when customers buy spirits online” said Sami Peltola, Head of Compliance Control at the Tax Administration.

The Tax Administration is responsible for administering excise taxation in Finland. The Finnish Customs is responsible for practical arrangements of import control.

“Our control activities directed towards alcohol are based on our risk analysis, and they also are part of the Custom’s usual enforcement work at border control points. Because we are the public authority in charge of execution, our job is to make sure that enforcement is as efficient as possible. Naturally, we detain all the transports that do not comply with the rules” said Sami Rakshit, Director of the Finnish Customs’ Enforcement Department.

Statistics from Finland’s Institute for Health and Welfare (THL) indicated that the total volume of webstore-bought alcoholic beverages reached 33 million litres in 2021.

Whereas a steady growth in the years just before the coronavirus pandemic had already been observed, the statistics for the years 2019, 2020 and 2021 show a threefold increase.

From November, the Customs will detain the alcohol captured during the intensified control action at ports and other borders, checking with the Tax Administration to ascertain that the advance notices are submitted and guarantee amounts are paid. When a transport is detained, it is not released until the necessary information is received.

If the advance notice and guarantee are neglected, and official record shows that the seller is responsible for duties, the Tax Administration seizes the products.

Delivery will continue to be detained until duties are paid. If no payment arrives from the seller within 6 months, the Customs has the right to destroy the seized products.

In cases where responsibility for excise duties on alcohol is carried by the buyer, the transport will not be detained until payment.

Instead, after the necessary further information is obtained, the Customs allows these transports to be forwarded to buyers. Later, if excise duties continue to be outstanding, the Tax Administration sends the buyer a tax demand.

“Webstore-bought beer becomes approximately twice as expensive when not only the beer but also the duties are included in the price”, said Peltola.