Levies should only be collected once in cross-border transactions, namely in the country of destination. Unfortunately, this is not always the case. Far too often, there are instances of double payments. Most Member States try to mitigate the problem by providing for systems that allow entities that have already paid the levy for a certain product in e.g. Member State A to be reimbursed upon the exportation of that product into Member State B.
The situation is, however, more complicated if the entity that has paid the levy in Member State A (e.g. the manufacturer) is different from the entity that exports the product into Member State B (e.g. a wholesaler). In such cases, the entity entitled to reimbursement (e.g. the manufacturer) can only prove its claim with the help of information and documentation provided by another party, namely the entity exporting the product (e.g. the wholesaler).
Most stakeholders engaged in cross-border transactions complain heavily about double payments. They claim that ex post reimbursement systems are extremely cumbersome or wholly non-functioning. Even if the reimbursement systems work, these stakeholders do not understand why they should pre-finance the levy until they get reimbursed – a process that may take months, or sometimes even years.
Accordingly, they favour a system whereby levies are collected exclusively at the point of final sale, i.e. at a level where the product will not be further moved across borders. Other stakeholders argue that the administrative effort for collecting and paying levies is significantly lower if they are collected mainly from manufacturers and importers, as opposed to from retailers (which are more numerous and spread out).
Some stakeholders also mentioned the possible introduction of a central administrative body at EU level. Notifications on cross-border sales could be sent to this single point, and would then be forwarded to the national bodies competent for collecting levies. Alternatively, such a central point could be directly responsible for the collection of levies. The costs associated with the introduction of such a complex administrative apparatus, probably including an IT system that is interoperable with all national systems, would be completely out of proportion to the amounts of levies actually collected in the EU.
From a regulatory point of view, system is preferable where the obligation to pay levies is limited to the final point of sale, i.e. to entities that sell to final users. First and as indicated above, shifting the liability to pay levies from the manufacturer’s or importer’s to the retailer’s level would ensure that, in cross-border situations, levies are only paid in the country where the consumers reside, as required by the CJEU.
Second, such a shift would drastically reduce the risk of double payments. If e.g. a product is imported from outside the European Union into Member State A, and it is exported from A to a retailer in country B which sells it there, the levy will only have to be paid once, namely in Member State B. The mere importation of the product into Member State A would not trigger the payment of a levy in Member State A. Questions regarding the possible reimbursement of the levy upon exportation would therefore simply not arise anymore.
The proposed shift of liability to pay a levy to a retailer’s level would eliminate the administrative burden associated with reimbursement procedures in cross-border cases, and the need to declare, collect and eventually reimburse levies every time a product crosses a national border.
Manufacturers and importers should be obliged, with due respect to competition rules, as appropriate, to inform collecting societies about their transactions that concern products subject to a levy (for example to which Member States they have been exported to or to which wholesaler or retailer their products have been sold). This would help collecting societies to track these goods and allow them to collect levies efficiently from the final retailer.
This information obligation could be strengthened by making manufacturers and importers liable to pay the levies themselves if they are not able to demonstrate to whom goods subject to a private copying or reprography levy had been sold. In addition, retailers could be obliged to declare their sales of products that are subject to a levy periodically to collecting societies.
Finally retailers could, to a certain extent, also benefit from such a shift. Under the current system they are required to pay the levy upfront as part of the price of the product that they acquire. This means that they bear the financial burden of the levy until they pass it on in the price, when selling the product to the final customer. Conversely, when only the sale of a product by a retailer to the final customer could trigger a levy, they would not be required to pre-finance the levy as long as the product is part of their inventory.
Shift the liability to pay levies from the manufacturer’s or importer’s level to the retailer’s level while at the same time simplifying the levy tariff system and oblige manufacturers and importers to inform collecting societies about their transactions concerning goods subject to a levy.