In a landmark ruling, the EU’s highest court has ruled that EU and Member State authorities must pay interest on sums collected in violation of EU law, starting from the date on which the sums were collected. This rule applies to all types of duties and charges, including those collected pursuant to EU customs law. The judgment represents a remarkable departure from the provisions on interest payments contained in the EU customs legislation.

Background

The Court of Justice of the European Union (Court of Justice) today ruled in case C-365/15 Wortmann that EU and Member State authorities must pay interest on duties and charges collected in violation of EU law, including those collected pursuant to EU customs legislation.

In the case at hand, Wortmann had paid anti-dumping duties on certain footwear imported between 2006 and 2011. In February 2012, the Court of Justice (in case C-249/10 P) ruled that the EU had illegally imposed the anti-dumping duties. Upon Wortmann’s request, German customs repaid the anti-dumping duties it had collected. However, it refused to pay interest, relying on Article 241 of the Community Customs Code, according to which the repayment of duties “shall not give rise to the payment of interest.”

Wortmann considered that the refusal to pay interest violated general principles of EU law. It therefore asked the competent German fiscal court (Finanzgericht Düsseldorf) to refer the issue to the Court of Justice.

Key Determinations Made by the Court of Justice

1. Customs authorities must pay interest on duties and charges collected in violation of EU law. The Court of Justice ruled that the general principle according to which authorities must pay interest on sums collected in violation of EU law equally applies to duties and charges collected pursuant to EU customs law.

2. It is not necessary that the illegality was established in a court challenge brought by the company seeking the interest payment. The Court of Justice ruled that if a company is entitled to repayment of the principal, it is also entitled to payment of interest (regardless of whether the company was a party to the related court proceedings).

3. Interest must be calculated from the date of collection of the duties or charges. The Court of Justice rejected the argument that interest should be accrued only from the date on which the illegality was established through a court judgment or from the date of the repayment request.

4. The applicable interest rate is to be determined by the Member State. The Court of Justice held that the applicable rate of interest is a matter of the domestic law of the Member State in which the payment of interest is sought.

Key Implications

Companies should systematically request interest, even if the principal has already been repaid. Companies that invoke a violation of EU law to request repayment of import or export duties or charges henceforth also have a right to interest on those sums. Companies that have already been repaid duties or charges without interest can now, as a result of this judgment, request payment of interest on the recovered sums.

The EU must amend its customs legislation. Although this case concerned the Community Customs Code (the previous version of the EU’s customs rules), the Court of Justice’s reasoning equally applies to the Union Customs Code (the current EU customs rules). The EU will therefore need to amend its legislation to bring it in line with the Wortmann judgment.