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Tax alert no. 12– Judgement of the Court in case C 567/17 ‘Bene Factum’ UAB

In this issue:

     Is ethyl alcohol contained in cosmetic and hygiene products exempt from excise duty?

     Judgement of the Court in case C567/17 ‘Bene Factum’ UAB

On 15 April 2019 it was published in the Official Journal of the European Union a request for a preliminary ruling on the applicability of the exemption from excise duty to ethyl alcohol not intended for human consumption (found in cosmetics or personal care products) but consumed as such by people as alcoholic beverages.


Facts of the case - In a nutshell

A Lithuanian-based company that manufactures and sells cosmetics and personal care products has introduced between 2009 and 2014 on the Lithuanian territory mouthwash and cosmetic alcohol for commercial purposes.

The ethyl alcohol contained in these products was denatured according to the requirements established by that Member State with isopropyl alcohol, a toxic substance. Consequently, the company did not pay excise duty on denatured ethyl alcohol contained in cosmetic products.

The State Tax Directorate carried out a tax audit at the company, where it found that the imported and supplied products were sold in various stores and their marketing was mainly focused on a public consuming them as alcoholic beverages that induce the state of drunkenness, and therefore ordered the payment of the excise duties due and the sums of accessories.

In the end, the Court stated that the exemption from excise duty applies to denatured ethyl alcohol, in accordance with a Member State's requirements, in cosmetic or oral hygiene products which, although not intended for human consumption, are still consumed by certain persons as alcoholic beverages.


The impact of the decision

By this decision, the Court established that the exemption from excise duty on ethyl alcohol is granted when the legal requirements are met (it is denatured and used in the manufacture of products not intended for human consumption), even if those products containing alcohol are used for an other purpose, namely as alcoholic beverages.


Prepared by:
Daniela Neagoe, Senior Manager, Indirect Tax


For additional information, please contact:

Alex Milcev, Partner – Head of Tax&Legal


Ernst & Young SRL

Bucharest Tower Center Building,

22nd Floor, 15-17 Ion Mihalache Blvd.,

Sector 1, 011171, Bucharest, Romania

Tel: (40-21) 402 4000, Fax: (40-21) 310 7124

Email: office@ro.ey.com

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