With Irish consumers paying such high excise and VAT charges on alcohol and with the explosion of online retailing, a number of out-of-Ireland retailers are delivering wine and spirits at prices that are extremely attractive to consumers here.
Online retailers from countries such as Germany. Belgium and Spain often sell wine and spirits to consumers in Ireland and the UK – another high alcohol tax country – free from local alcohol tax thus encouraging out-of-State purchasing.
According to one UK retailer, a litre of gin can be purchased for as little as £5 so it’s worthwhile for the consumer to purchase in bulk to offset shipping costs.
These online retailers are specifically targeting Irish and UK consumers and paying the much lower taxes operating in the country of dispatch.
Here, NOffLA would like the Government to establish tighter control on out-of-state imports in terms of VAT and excise collection on these online retailers.
In its Budget submission the Association pointed out that “online sales are a feature of modern retailing resulting in a sharp rise in out-of-state importation direct to the consumer.
“Many of these websites’ Unique Selling Point is that their product is cheaper than its Irish equivalent – primarily due to these companies’ non-adherence to European taxation law.”
This tax evasion is generally achieved by the vendor labelling the shipment with non-alcoholic commodity codes such as ‘foodstuffs’, ‘collectables’, or ‘not for consumption’ items which would not attract duty or VAT in order to bypass customs, states NOffLA.
“While many sites do not make explicit reference to the fact they do not pay excise, others suggest their unique position places them outside the remit of domestic taxation. Such claims include the concept that the container itself is a ‘collectable’ item for sale, irrespective of the contents inside the bottle.”
NOffLA points out that adequate verification of these codes within Ireland is “obviously not taking place”.
It adds, “The payment of Excise and VAT is the responsibility of the person selling the alcohol (as opposed to the purchaser) and as they are not present in the country it’s difficult to track and prosecute. This tax evasion is generally achieved by labelling the shipment with an incorrect commodity code such as foodstuffs, which would not attract duty or VAT in order to bypass customs. Verification of such codes is not being enforced on arrival in Ireland, given the exponential growth in online sales; NOffLA expects this to increasingly become a major loss of taxes to the State”.
The submission goes on to state, “NOffLA members have made the appropriate authorities aware of these companies as they discover them, however this process of enforcement is both reactionary and realistically, only scratching the surface of what we believe to be a growing issue that is both costing the Exchequer and unfairly impacting compliant competitors”.
The Association has recommended that Government “establish tighter control on out-of-State imports in terms of VAT and excise collection”.
NOffLA’s submission calls on the Minister for Justice to introduce a ‘Remote Off-Trade Licence’ in the upcoming Sale of Alcohol Bill. This would ensure that online retailers are “fit for purpose”, tax compliant and meet the same licensing obligation as domestic retailers.
The licence would be obtainable through the acquisition (and presentation) of a Certificate of Personal Fitness from the Department of Justice and a Tax Clearance Certificate (or similar verifiable documents of tax adherence) from the Office of the Revenue Commissioners.
Such a regime would ensure that:
- all remote retailers of alcohol are fit to retail safe product that matches the description of the product purchased
- all remote retailers are tax compliant and brought within the scope of the relevant authorities who can impose sanctions on infractions
- equal parity is created between land-based retailers and remote retailers in terms of obligations to hold off-licences.
“Retailing of alcohol into Ireland should therefore be strictly closed to all operators without this licence,” concludes NOffLA.
“Something needs to be done and fast as this activity will continue to grow alongside the growth of online retailing,”commented NOffLA Chairman Gary O’Donovan.
He told Drinks Industry Ireland, “It’s very frustrating in an already volatile Irish drinks industry where retailers are already hit with draconian excise duties and a very high VAT regime at 23% which are vigorously policed and collected by the Revenue Commissioners that the powers-that-be are so slow to fix this anomaly.
“All rules of the responsible retail of alcohol are being broken and the already-battered Irish taxpayer loses out once again. Better policing and awareness of online goods entering the country and thorough verification of all goods is badly needed in this instance.
“A remote off-trade licence must be introduced at the earliest opportunity and all online companies selling alcohol must be forced to comply or face penalties/convictions for this commercially criminal activity.”