Finland: Landmark Ruling on Distance Alcohol Sale
The District Court of Helsinki in Finland dismissed all charges against Vironviina, a website allowing consumers to order alcohol from Estonia and Latvia.
The Finnish owner of the business was charged with aggravated tax fraud and aggravated alcohol offence for neglecting to pay around €1.65 million in taxes for the sales of more than 235,000 litres of alcohol between 2014 and 2016.
The court also dismissed demands from the prosecution to impose a business prohibition on the owner, after ruling the defendant had not engaged in illegal activity.
The company sold alcoholic beverages, tobacco products and non-alcoholic beverages in Tallinn, Estonia. Customers paid online and could either pick up from the shop, at a pick up point in Matkahuolto or get it delivered to home.
The charges were dropped because of the ambiguity of distinction between distance sale and distance purchase. While distance sale is prohibited according to the Alcohol Act, distance purchase is not prohibited.
The court was unable to provide further clarity on the issue of distance sales as it was unable to establish, whether the transaction met the criteria for unlawful distance sale or not. Furthermore, there had been no rulings on tax-related matters that clarify the distinction between distance sales and distance purchases by the Supreme Administrative Court. This makes the legal framework ambiguous especially in regards to deliveries.
The charges were dismissed by the court as reasonable doubt remained about the defendant’s intent in the act. The court also pointed out, the defendant (business owner) had organised transactions in a way that the seller was liable for neither excise nor value-added tax in Finland. According to EU law, priority is placed on rectifying the tax system in cases involving unjustified value-added tax deductions and avoidance.
This case poses a challenge and weakens the alcohol retail monopoly in Finland. Currently, alcoholic beverages over 5.5% alcohol content can only be sold by Alko, the government-run alcohol retail monopoly. However, the above ruling means Finnish business owners can bring in alcohol from countries where alcohol is cheaper without being subjected to taxes in Finland. So people can buy alcohol online from such websites for cheaper than within Finland. This threatens the alcohol retail monopoly and its purpose of controlling the availability of alcohol.