Weber successful in a case of general public importance about grill covers
07 September 2016
The Danish Supreme Court has made a final ruling in a case involving tax liability under the Danish PVC Act by establishing that loose, fitted grill covers are not taxable under the Act. Plesner represented Weber-Stephen Nordic ApS in the case.
The case was about Weber-Stephen Nordic ApS which imports and sells loose, fitted grill covers and the issue was whether such covers were taxable under the PVC Act which imposes tax on "tarpaulins". The Danish Customs and Tax Administration (SKAT) had been successful in such claim before the National Tax Tribunal, the District Court and the High Court and leave to appeal to a third instance was consequently required before the Supreme Court could finally settle the case in favour of Weber-Stephen Nordic ApS.
It means that the majority of the Supreme Court overturned the judgments by the National Tax Tribunal, the District Court and the High Court as the Supreme Court did not agree that the grill covers were to be considered to be "tarpaulins" within the meaning of the PVC Act. The result is that the covers are not taxable.
The majority of the Supreme Court took particularly into account that the legislative history described "tarpaulins" as covers for the protection against the weather of goods stored in the open air or loaded onto ships, railway carriages etc and that this wording differed significantly from the use of grill covers. The Supreme Court also ruled that even if the purpose of the PVC Act was to increase the incentive to use other softeners than phthalates and to reduce the PVC amount, it clearly appears from the legislative history that the number of taxable goods had been limited because of administrative and computational reasons. According to the Supreme Court, the legislative history did not support that loose, fitted grill covers were subject to the PVC Act. Against such background and considering the need for a high degree of certainty as to the types of goods subject to the tax liability, the Supreme Court found that there was no statutory authority to tax the loose, fitted grill covers.
The Supreme Court found that an amendment to the Act in 2004 did not increase the taxable area and the examples mentioned in the legislative history of this amending Act - covers in the construction sector and storage shelters - consequently differed considerably from loose, fitted grill covers.
With the judgment the Supreme Court has established that the Danish tax authorities may only impose tax on goods when it is very certain which types of goods are subject to the PVC Act. It means that a purposive construction of the PVC Act could not result in there being any statutory authority to impose tax on the grill covers.
The result of the judgment may be that other businesses that have paid tax on corresponding goods can demand repayment of the tax.
Attorney Jakob Krogsøe from Plesner conducted the case.
It means that the majority of the Supreme Court overturned the judgments by the National Tax Tribunal, the District Court and the High Court as the Supreme Court did not agree that the grill covers were to be considered to be "tarpaulins" within the meaning of the PVC Act. The result is that the covers are not taxable.
The majority of the Supreme Court took particularly into account that the legislative history described "tarpaulins" as covers for the protection against the weather of goods stored in the open air or loaded onto ships, railway carriages etc and that this wording differed significantly from the use of grill covers. The Supreme Court also ruled that even if the purpose of the PVC Act was to increase the incentive to use other softeners than phthalates and to reduce the PVC amount, it clearly appears from the legislative history that the number of taxable goods had been limited because of administrative and computational reasons. According to the Supreme Court, the legislative history did not support that loose, fitted grill covers were subject to the PVC Act. Against such background and considering the need for a high degree of certainty as to the types of goods subject to the tax liability, the Supreme Court found that there was no statutory authority to tax the loose, fitted grill covers.
The Supreme Court found that an amendment to the Act in 2004 did not increase the taxable area and the examples mentioned in the legislative history of this amending Act - covers in the construction sector and storage shelters - consequently differed considerably from loose, fitted grill covers.
With the judgment the Supreme Court has established that the Danish tax authorities may only impose tax on goods when it is very certain which types of goods are subject to the PVC Act. It means that a purposive construction of the PVC Act could not result in there being any statutory authority to impose tax on the grill covers.
The result of the judgment may be that other businesses that have paid tax on corresponding goods can demand repayment of the tax.
Attorney Jakob Krogsøe from Plesner conducted the case.
