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EU nations can tax alcohol, tobacco bought abroad

Drinkers and smokers in the European Union won't be able to take advantage of cheaper tax rates on cigarettes and alcoholic drinks in other EU countries unless they travel and bring them home themselves, Europe's top court ruled.

The European Court of Justice in Luxembourg said consumers can't ask someone else to bring back products for them because such transport requires no documentation and would increase the risk of fraud. “The products in question must be transported personally by the private individual who purchased them,” the court said in a statement today. The decision will save millions of pounds in tax revenue for countries where cigarette and alcohol duties are high, according to Marc Welby, head of the value added tax practice at London- based tax consultants Chiltern Plc. Cigarettes in Latvia cost the equivalent of 43 euro cents ($0.56) a pack, compared with €5.23 in the UK, according to Merrill Lynch & Co., which compared prices of the most popular brands in each country. The ruling goes against an opinion issued to the court by its adviser, Advocate General Francis Jacobs, last year. “There is always an element of surprise when the ECJ doesn't follow an advocate general's opinion,” Welby said in an interview before the judgment. “National governments will be pleased with the decision, but I am sure there will be many wine buffs who will be disappointed by the outcome,” he said. (Bloomberg)