Forvis Mazars Sweden tax litigation group: case study

The European Court of Justice (ECJ) holds that the EU Customs Code does not require exceptional circumstances to extend a temporary admission of goods beyond the originally agreed term if the total period of admission does not exceed 24 months.

A company was charged duty and VAT for temporarily importing a racing car. On 12 December 2024, on a question from the Swedish Supreme Administrative Court, the ECJ ruled the duty and VAT were not chargeable. Forvis Mazars’ tax litigation group assisted the company in the dispute.

The company imported a racing car from the US to Sweden on 30 April 2019 under a temporary admission procedure, with the intention of using the car for competitions across various EU countries. The customs authority determined that the car should be exported from the EU no later than 30 July 2019, despite the competition season lasting until 8 September 2019. However, the car was not exported from the EU until 19 September 2019. As a result of this delay, the customs authority concluded that the company was liable for duty and VAT (customs debt) for importing the car.

The company appealed, arguing that Article 251 of Regulation (EU) No 952/2013, as amended by Regulation (EU) 2019/474, allows for an extended admission period. The company therefore requested the customs debt to be considered extinguished.

The ECJ has upheld the company’s interpretation of the EU Customs Code noting, that as the temporary admissions procedure is a derogation permitting an exemption from customs duties on importation of goods into the EU, it therefore needed to be interpreted strictly. This is a helpful decision for those wanting to import goods into the EU under the temporary import procedure for short periods, and who may unexpectedly need to extend that period to a length not exceeding 24 months.

Further detail

Article 251 of the Customs Code, headed ‘Period during which goods may remain under the temporary admission procedure’, states:

1.      The customs authorities shall determine the period within which goods placed under the temporary admission procedure must be re-exported or placed under a subsequent customs procedure. Such period shall be long enough for the objective of authorised use to be achieved.

2.      Except where otherwise provided, the maximum period during which goods may remain under the temporary admission procedure for the same purpose and under the responsibility of the same authorisation holder shall be 24 months, even where the procedure was discharged by placing the goods under another special procedure and subsequently placing them under the temporary admission procedure again.

3.      Where, in exceptional circumstances, the authorised use cannot be achieved within the period referred to in paragraphs 1 and 2, the customs authorities may grant an extension, of reasonable duration of that period, upon justified application by the holder of the authorisation.

4.      The overall period during which goods may remain under the temporary admission procedure shall not exceed 10 years, except in the case of an unforeseeable event.

The company submitted that Article 251(3) of the Customs Code should be interpreted as meaning that the existence of exceptional circumstances is only necessary when a request for an extension, would have the effect that the cumulative duration of that period and the extension period, exceeds the maximum duration of 24 months in Article 251(2). The facts of this case were that the car was only within the EU for less than five months.

By contrast, the Swedish customs authority considered that the requirement for exceptional circumstances applies in every case in which the authorised use cannot be achieved within the period initially granted, including situations in which that cumulative period is less than 24 months.

The Swedish Supreme Administrative Court considered the position was not clear and referred the question to the Court of Justice for a preliminary ruling:

In case C-781/23  the ECJ held that:

‘…. Article 251 of the Customs Code must be interpreted as meaning that an extension of the period during which goods placed under the temporary admission procedure, determined on the basis of paragraph 1 of that article, does not require the existence of ‘exceptional circumstances’, within the meaning of paragraph 3 of that article, where that extension does not mean that the overall period during which those goods may remain under that procedure exceeds the maximum duration of 24 months ….. ’

Forvis Mazars Sweden tax litigation group

Forvis Mazars Sweden tax litigation group is specialised in tax- and customs litigation. The group consists of Peter Klintsjö, Fredrik Rosén (Head of the group), Kristoffer Forsberg, Hanna Karlsson and Celia Kylesten.

In this particular case, the legal counsel of the company is Fredrik Rosén and Kristoffer Forsberg.