1 General Court of the EU scrutinises national direct delivery involving goods under excise duty law
In its judgment of 1 July 2026 (T‑361/25 – Brenntag), the General Court of the European Union (GCEU) ruled on two crucial issues under excise duty law: The admissibility under Union law of the German ‘direct delivery’ scheme (so-called Streckengeschäfte) and the significance of formal defects for the granting of tax exemptions.
The national regulations on direct delivery arrangement involving excise goods (eg sec. 33 para 5 of the German Energy Tax Regulation (EnergieStV), sec. 33 para. 7 of the German Alcohol Tax Implementing Ordinance (AlkStV)) concern supplies of goods subject to excise duty under an excise tax suspension procedure involving more than two parties. The regulations enable the goods to be transported, within the fiscal territory, directly from the first supplier’s tax warehouse to the end customer’s tax warehouse. With the authorisation of the main customs office, the goods are deemed to have been admitted to the intermediary’s tax warehouse and, at the same time, to have been removed from it merely by taking possession of them, without them actually physically entering the intermediary’s tax warehouse. The first supplier must issue an electronic administrative document (e-AD) naming the intermediary as the consignee. The intermediary, for their part, must close the first e-AD and immediately issue a new follow-on e-AD to the end customer.
The General Court clearly rejected this legal fiction and the associated requirement for a follow-on e-AD. Movement under an excise tax suspension arrangement only ends upon the actual physical receipt of the goods by the consignee. The mere act of the intermediary taking possession is not sufficient for this purpose. Consequently, the failure or delay on the part of the intermediary to issue a new e-AD, in the context of the fictitious removal of the goods from their tax warehouse, cannot give rise to the chargeability of excise duty.
The second question referred for a preliminary ruling concerned the refusal of an exemption from excise duty (in this specific case for alcoholic products) on the grounds of formal deficiencies. The GCEU made it clear that, in principle, an exemption may not be refused solely on the basis of documentation deficiencies – such as missing or incorrect accompanying documents. The crucial factor is as to whether the substantive conditions for the exemption are met and whether there are any indications of abuse or tax evasion.
In practice, the GCEU’s decision is a double-edged sword for taxable persons. On the positive side, it reaffirms that formal deficiencies do not automatically lead to the loss of tax advantages, provided that the substantive conditions are met. The GCEU has, once again, strengthened the position of taxable persons in this regard. However, the far more significant implications lie in the GCEU’s rulings on direct delivery arrangements. The legal fiction of the simultaneous entry into and removal of goods from the intermediary’s tax warehouse violates EU law. This may have both advantages and disadvantages for taxable persons. Businesses that have established corresponding supply structures and hold authorisation from the main customs office to carry out direct delivery arrangements should review their processes and ongoing facts without delay and monitor further developments. In the event that excise duty has already been assessed due to follow-up e-ADs not having been submitted or not having been submitted on time, businesses may invoke the GCEU’s decision. It is currently unclear how the customs authorities and the German legislators will respond to the judgment. In the future, the existing practice may prove to no longer be tenable. However, one thing is already certain: the judgment fundamentally challenges the current German approach to direct delivery arrangements.
2 Provision of a security deposit not a prerequisite for excise tax suspension procedures
In its judgment of 18 November 2025 (Ref. VII R 30/24), the German Federal Fiscal Court (BFH) held that the complete absence of a security does not affect the validity of an excise tax suspension procedure where the customs authorities had not previously determined that a security was required. In its judgment of 24 June 2025 (Ref. VII R 33/22), the BFH already clarified that a security assessed at too low a level does not affect the validity of the excise tax suspension procedure (see KMLZ Customs Newsletter 12 | 2025). The BFH has now confirmed and clarified this jurisprudence by generally not classifying the provision of security as a constitutive prerequisite for the validity of the excise tax suspension procedure. It is therefore not possible for excise tax to be incurred solely on the basis of a lack of or insufficient security. Affected taxable persons should challenge any such assessments. For appeal proceedings already pending, a claim for interest under Union law, at a rate of 6% per annum, may be considered, where applicable.
3 Simplified accompanying document when transporting taxed goods to another Member State
In a reference for a preliminary ruling dated 18 March 2026 (T-253/26), the BFH, in case VII R 19/23, referred the question to the GCEU as to whether the carrying of a simplified accompanying document is strictly necessary for the granting of tax relief under excise duty law (eg pursuant to sec. 46 para. 1 of the German Energy Tax Act (EnergieStG) or sec. 30 para. 1 of the German Alcohol Tax Act (AlkStG)). Currently, the customs authorities require such a document to be carried when goods that are demonstrably taxed and released for consumption are transported to another Member State. Can the absence of this document lead to the refusal of tax relief as a formal requirement, even though the substantive conditions for tax relief are met? It remains to be seen whether the GCEU will continue along the path already taken by the ECJ to prevent VAT from being incurred solely on the basis of formal deficiencies. Affected taxable persons should keep any relevant tax assessment notices open.
