Swedish alcohol monopoly down the hatch

Swedish alcohol monopoly down the hatch
Mark Majzner looks at how two landmark EU decisions have affected the alcohol retail trade in Sweden.

It is one year since Systembolaget lost its complete monopoly on alcohol sales to consumers. The June 5th 2007 Rosengren decision by the EU Court of Justice legalized our right to import wine from other EU countries using a freight transport service.

It took Klas Rosengren and crusading lawyer Ulf Stigare seven years to win the right for Swedish consumers to choose where and how they buy alcohol within the EU. One year on and a lot has changed but it is not widely understood exactly what.

Systembolaget retains its retail store monopoly, but as it sells less than 50% of all alcohol consumed in Sweden, it is no longer a true monopoly. Swedes can now shop online, order a case of wine and have it home delivered. A few e-commerce companies such as mine have started offering a range of mid to high priced wines and quality of service that far surpasses Systembolaget’s.

The legitimate wine e-commerce companies pay all the taxes for their customers and arrange the transport for them. Buying wine from them is as easy as ordering a book or CD from Amazon in the UK. This is good news for wine lovers and connoisseurs who will gladly pay a delivery fee to avoid visiting a Systembolaget store. But for the budget conscious wine, beer and spirit drinker the decision was inadvertently much more exciting.

The Swedish National Tax Board’s (Skatteverket) interpretation of the Rosengren and earlier Joustra decision was that all the taxes on the alcohol should be paid in Sweden and not in the country where it was ordered from (often countries where alcohol taxes are low such as Germany and Spain). Alcohol tax on a bottle of vodka is around 150 kronor ($24) and 16.18 kronor for a normal bottle of wine. The legal change should therefore not have opened up the market for cheaper booze. In practice, though, this is exactly what has happened.

A large number of Swedish language websites have re-emerged offering alcohol at tax free prices, putting the responsibility to pay the alcohol tax and VAT on the customer. Skatteverket has not made it particularly easy for law abiding shoppers to pay the taxes and despite a booming cross-border trade in alcohol, only around 200 people have voluntarily paid tax on their privately imported alcohol.

So why aren’t Skattverket and Swedish Customs targeting tax cheats as they were before the Rosengren decision, when at the height of the smuggling 60,000 litres of alcohol a month were being confiscated? The answer, according to legal experts, is how the Joustra decision by the EU Court of Justice is interpreted.

Skatteverket is confident that all taxes should be paid in Sweden so the legitimate e-commerce wine sites have registered with the tax authorities to pay the taxes on behalf of their customers. But the tax collectors in Solna are not keen to have their decision challenged in the EU Court of Justice, where Brussels and Swedish EU legal experts believe that the outcome could be that tax should be paid in the EU country where the products are purchased. Afraid of such a case, it appears that Swedish authorities are turning a blind eye to the flood of “tax free” booze streaming across the border.

The current uncertainty is neither fair nor safe for Swedish consumers and we hope that the authorities will have considered this as they marked Rosengren with a drink on June 5th.

Full disclosure: Mark Majzner is an Australian and the founder of Antipodes Premium Wines, a partner of The Local, which operates wine clubs including Australian Wine Club and Fine Wine Society.