Judgment of the Court Grand Chamber of 8 March 2022, Commission v United Kingdom Lutte contre la fraude à la sous-évaluation, C-213/19

Date08 March 2022
Judgment of the Court (Grand Chamber) of 8 March 2022, Commission v United Kingdom
(Lutte contre la fraude à la sous-évaluation), C-213/19
Link to the complete text of the judgment
Failure of a Member State to fulfil obligations Article 4(3) TEU Article 310(6) and Article 325 TFEU Own
resources Customs duties Value added tax (VAT) Protection of the financial interests of the European
Union Combating fraud Principle of effectiveness Obligation for Member States to make own
resources available to the European Commission Financial liability of Member States in the event of
losses of own resources Imports of textiles and footwear from China Large-scale and systematic
fraud Organised crime Missing importers Customs value Undervaluation Taxable amount for VAT
purposes Lack of systematic customs controls based on risk analysis and carried out prior to the release
of the goods concerned No systematic provision of security Method used to e stimate the amount of
traditional own resources losses in respect of imports presenting a significant risk of undervaluation
Statistical method based on the average price determined at EU level Whether permissible
The European Union has abolished all quotas on imports of textiles and clothing including from China
since 1 January 2005.
In 2007, 2009 and 2015, the European Anti-Fraud Office (OLAF) sent mutual assistance messages to
Member States, informing them in particular of the risk of extreme undervaluation of imports of
textiles and footwear from China by shell companies registered for the sole purpose of giving
fraudulent transactions the appearance of legitimacy. OLAF asked all Member States to monitor their
imports of such products, to carry out appropriate customs checks and to take adequate safeguard
measures if there was any suspicion of artificially low invoiced prices.
To that end, OLAF developed a risk assessment tool based on EU-wide data. That tool, involving the
calculation of an average derived from ‘cleaned average prices’, produces a ‘lowest acceptable price’
that is used as a risk profile or threshold enabling Member States’ customs authorities to detect
values declared on importation that are particularly low, and thus imports presenting a significant risk
of undervaluation.
In 2011 and 2014, the United Kingdom participated in monitoring operations conducted by the
Commission and OLAF to counteract certain risks of undervaluation fraud, without however applying
the lowest acceptable prices calculated in accordance with OLAF’s method or enforcing the additional
payment demands issued by the United Kingdom authorities following such operations.
In several bilateral meetings, OLAF recommended that the competent United Kingdom authorities use
EU-wide risk indicators, namely the lowest acceptable prices. According to OLAF, fraudulent imports
were increasing significantly in the United Kingdom on account of the inadequate nature of the
checks carried out by the United Kingdom customs authorities, encouraging the shift of fraudulent
operations from other Member States to the United Kingdom. However, according to OLAF, the
United Kingdom did not follow its recommendations, instead releasing the products concerned for
free circulation in the internal market without conducting appropriate customs controls, with the
result that a substantial proportion of the customs duties due were not collected or made available to
the European Commission.
Consequently, taking the view that the United Kingdom had failed to enter in the accounts the correct
amounts of customs duties and to make available to the Commission the correct amount of
traditional own resources and own resources accruing from value added tax (‘VAT’) in respect of
certain imports of textiles and footwear from China, the Commission brought an action for a
declaration that the United Kingdom had failed to fulfil its obligations under EU legislation on control
and supervision in relation to the recovery of own resources and under EU legislation on customs
duty and on VAT.

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