The common external tariff on goods imported

The establishing of a Customs Union and an internal market are
fundamental features of the European Union. Both policies complement each other
in removing the obstacles to trade within the EU. The internal market consists
of the ‘Four Freedoms’, which seek to assure the free movement of goods,
services, labour and capital.1
The Customs Union established the free movement of goods and provided the
concept of a ‘free trade area’ and a single external tariff. Whereby, there is
a common external tariff on goods imported from a third country and once
admitted in the customs union it can travel freely throughout Member States
without further fiscal barriers.2 The
concept of a common market was primarily introduced in the European Coal and
Steel Community Treaty 19513, and
could be considered the foundational element in establishing the free movement
of goods in the Treaty on the Functioning of the European Union. Articles 30
and 110 of the TFEU consist of the prohibition of fiscal barriers to the
movement of goods in the EU. These involve goods ‘which can be valued in money…
forming the subject of commercial transactions.’,4
Commission v Italy. The Court of Justice have sustained these Articles in the majority
of their judgements, however in various cases have also interpreted the Articles
in ways which have weakened the pivotal aim. In this essay, we will further explore
Articles 30 and 110 and discuss the key cases which have impaired their


Article 30 of the TFEU is concerned with the prohibition of
customs duties and charges having equivalent effect. It states ‘customs duties
on imports and exports and charges having equivalent effect shall be prohibited
between Member States. This prohibition shall also apply to customs duties of a
fiscal nature.’ In Van Gen den Loos, the Court of justice found that Article 30
had direct effect.5
This strengthened the abolition of customs duties and secured the idea of an
absolute prohibition. The Court of Justice exercised this interpretation in
Commission v Italy, where it was found that the purpose of the duty is
irrelevant when the effect is to hinder trade by imposing a pecuniary burden.
The customs union also prohibits charges having equivalent effect to that of a
customs duty. It has been defined by the Court of Justice in Commission v Italy
(‘Statistical Levy’) as ‘any pecuniary charge… which is imposed unilaterally on
domestic or foreign goods by the reason of the fact that they cross a frontier and
which is not a customs duty in the strict sense…’.6 The
Court of Justice has contrasted a CEE from customs charges by deciding that whether
the charge was discriminatory, protective in effect, not imposed for the state
benefit or the charge imposed is not in competition with any domestic product
is irrelevant. This provides a strict direction on any pecuniary charges
imposed, by a Member State, for the sole purpose of goods crossing a frontier.7 In
the case of Sociaal Fonds voor de Diamantarbeiders v Chougol Diamond Co, the
Court of Justice decided that a charge on imported diamonds into Belgium for
the purpose of providing a social fund for diamond workers was a CEE even
though it was not protectionist in nature.8 

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Having discussed the exercise of absolute prohibition on Article
30 by the Court of Justice, it must be stated that the Courts have also
interpreted ways in which a charge does not constitute a customs duty or
charges having equivalent effect. In the case of Commission v Germany, the
Court of Justice examined that a charge will not fall into the scope of Article
30 in three certain circumstances.9
Firstly, where a payment is for a genuine administrative service with direct
benefit to the importer or exporter. In Commission v Belgium, the trader had
requested the specific service and therefore the charge was lawful.10 In
the case of Bresciani, the Court of Justice found that the charge was unlawful
as the service did not individually benefit the importers.11
In addition, to remain lawful the chargeable amount must be commensurate with
that service, Commission v Italy (Statistical Levy). Secondly, charges for
inspections carried out to effectuate EU law requirements. A charge imposed by
a Member State, with the purpose of covering costs of an inspection required by
EU law is not considered a CEE. In Commission v Germany, the German government
were entitled to charge a fee to cover the costs of inspections on imported
animals, which were required under Directive 81/389 in regulating the
protection of animals during international transport.12 In
this case, the Court of Justice established four requirements which must be
satisfied; 1) They do not exceed the actual costs of the inspections in
connection with which they are charged, 2) The inspections in question are
obligatory and uniform for all the products concerned in the Union, 3) They are
prescribed by EU law in the general interest of the Union and lastly 4) They
promote the free movement of goods.13 In
Commission v Netherlands, the Court of Justice held that a charge for an
inspection imposed by international treaties designed to encourage the free
movement of goods were also not considered a CEE. Lastly, the third
circumstance in which a charge excludes falling within Article 30 is where it
is an internal due. The charge will not fall within Article 30 because it is an
internal tax and will fall within Article 110 instead. In Lutticke, the Court
of Justice held that Articles 30 and 110 are mutually exclusive and cannot be
applied to the same case.14


Article 110 of the TFEU is compelled to eliminate
discriminatory and protectionist taxation. It prohibits forms of internal
taxation which discriminate against imported goods or have a protective effect
in favour of domestically produced goods. It was recognised by the Court of
Justice as having direct effect in the case of Lutticke.15 Internal
taxation has been defined in Commission v France (Levy on Reprographic
Machinery) as ‘a general system of internal dues applied systematically to
categories of products in accordance with objective criteria irrespective of
the origin of the products’.16 This
case concerned a levy imposed on reprographic equipment which was predominantly
imported, the Court of Justice held that the fact that the tax was applicable
unilaterally to both domestic and imported goods was conclusive in deciding
that it was not discriminatory. Firstly, Article 110(1) is concerned with the
prohibition of discriminatory taxation between imported and domestically produced
goods which are similar. It states, ‘No Member State shall impose, directly or
indirectly, on the products of other Member States any internal taxation of any
kind in excess of that imposed directly or indirectly on similar domestic
products.’. The test on similarity was derived from the case of Rewe-Zentrale v
Hauptzollampt, the Court of Justice interpreted ‘similar products’ as those
which have similar characteristics and meet the same needs from the point of
view of consumers. In Commission v Denmark, the Court decided that wine made
from grapes and wine made from other fruits share similar characteristics and
meet the same needs from the point of view of the consumer. In determining
similarity, the Courts take an objective approach in considering the methods of
manufacture, properties, the origin, meeting the same needs of consumers,
process of creation, organoleptic properties and impartial characteristics.17 In
addition, the taxation must not discriminate against the imports. The Court of
Justice has distinguished two types of discrimination, direct and indirect. Direct
discrimination involves favourable treatment towards domestically produced
goods in comparison to similar imported goods. As mentioned by Barnard, it is
‘less favourable treatment of the imported product on the ground of its
origin’.18 In
Lutticke GmbH v Hauptzollant, an internal tax was applicable on imported dried
milk only. As the tax did not apply equally to domestically produced dry milk,
the Courts found this to be directly discriminatory and a breach of Article
110(1) TFEU. Member States may also directly discriminate against imported
goods in a less obvious way, such as taxing imported goods at a higher rate
than the domestic goods or using different methods of calculating tax for the
domestic product and the imported product. In Commission v Italy, the benefit
of charging a lower tax on regenerated oil was only available to domestic
producers. The Court of Justice ruled that there was no justification for the
differential treatment and this was breaching Article 110(1) in the form of
direct discrimination. There are no defences to direct discrimination and in reparation
the Member State must remove the discriminatory element of the taxation policy
and so equalise the tax.19
Indirect discrimination makes no reference to origin but in reality, burdens
imported goods. In Humblot v Directeur des Services Fiscaux, the French law
imposed a higher level of taxation on vehicles with a higher power rating
exceeding 16 CV. Although the distinction was not based on origin, the Courts
held that this system of taxation was discriminatory and protective since it
has been fixed to a level that would only be applicable to imported cars,
proving to be beneficial to domestic manufacturers.20 Similarly,
in Commission v Denmark, all wine made from grapes were subject to a higher
rate of tax. As Denmark only produced wine made from other fruit, this higher
rate was only applicable to imported wine and the Court of Justice held that it
was indirect discrimination and a breach of Article 110(1). It is also
essential to discuss Commission v Greece, a similar case with a different judgement.
The Court of Justice held that the two-tier taxation system was not
discriminatory or protectionist solely because only imported products came
under the higher tax bracket, as it did not have a discouraging effect on
consumers from purchasing all imported cars. The Court successfully allowed
Greece to justify tax arrangements which distinguished between certain products
on the grounds of objective measures. The second section, Article 110(2) TFEU,
states ‘…No Member State shall impose on the products of other Member States
any internal taxation of such a nature as to afford indirect protection to
other products.’ In contrast to Article 110(1), it applies to products which
are not similar but the effect of the tax is to incur indirect protection to
competing domestic products. In Commission v France, the Court held that
determining similarities of the products was not necessary if there was partial
or potential competition between them, which would undeniably result to
protectionism. The Court of Justice further strengthened this application in
Commission v UK. Firstly, the Court established that there was a competitive
relationship between beer and lighter wines as both drinks were capable of
meeting identical needs. Having done so, it was subsequently manifested that the
contrasting rates had a protective effect on domestically produced beer.21 Where
a Member State has violated Article 110(2), amendment must be made in the form
of removing the protective effect.


The Court of Justice has interpreted Article 110, in
particular Article 110(1), in ways which hinder its effectiveness. It has
permitted indirect discrimination in some cases, where it can be legitimately
justified on an objective non-discriminatory basis.22 The
Court set out a number of principles in Chemial Farmaceutici, in determining
this defence. Firstly, the tax must differentiate between products on the basis
of objective criteria. Thus, provided that the national interest is unattached with
the origin of the product, and that it pursues an objective recognised by the
EU as legitimate along with taking steps to protect that interest are
proportionate, then there is no breach of Article 110 TFEU. In this case, the
tax was applicable to both importers and national producers, however, it mainly
affected the importers as there was very little domestic production of the
goods. It is likely to be indirect discrimination, nonetheless, the Court of Justice
held that it was not discriminatory as the reasoning behind the imposition of
the tax, which was to encourage the manufacture of fermented ethyl alcohol for
preservation purposes, was legitimately and objectively justified.23 Consequently,
it must pursue economic policy objectives compatible with EU law. In Commission
v France, the Court held that due to factors regarding economic assistance, a
higher tax rate on naturally sweeter wines was justifiable. It was acknowledged
in Chemial Farmaceutici, that Member states have the freedom to impose tax
affairs which contrast between certain products on the grounds of objective
criteria, such as the nature of the raw components. It is also fundamental that
the detailed rules must not discriminate. In Commission v Greece, the Court of
Justice recognised that social policy can also amount to valid justification.   


The internal market is one of the treasures which belong to
the EU and is an essential ingredient in the triumph of the European Union. Given
all of the above statements, it is crucial to acknowledge the accomplishments
of the Court of Justice in reinforcing Articles 30 and 110 and establishing
instrumental case law, and respectively, interpreting these articles in a
manner to abstain from overstepping harshness. The Court of Justice has
justifiably created defences to Articles 30 and 110 relating to the free
movement of goods. For example, in certain circumstances, such as where the
rationale behind a taxation system is to inspire importers and domestic
producers in a way which is permitted by EU economic policies. Likewise, where
Member States are providing services requested by and which benefit the
importer, it is justifiable that they must be charged for this service. Through
case law, the Courts have befittingly practiced the element of direct effect.
The Courts aim to achieve the objectives of the Articles contained in the TFEU,
and intend to interpret it in the most lawful manner, where complexities arise.