NETTING OF EXCISE GOODS IN THE NETHERLANDS

Source: Excise Duties, policy rules on excise legislation

5.7 Conditions for offsetting excesses and shortages in a Registered Consignee's Warehouse.

 

If the actual stock of excise goods in the Registered Consignee's Warehouse is smaller than the stock that should be present according to the records, it constitutes a shortage. If the actual stock of excise goods in the Registered Consignee's Warehouse is greater than indicated in the records, it constitutes an overage.

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The Supreme Court (number 34,000 of December 23, 1998, BNB1999/126) considers that a reasonable application of the law allows for the offsetting of differences within groups of excise goods. All excise goods may be included in the comparison, provided they are subject to the same excise rate. The excesses and shortages must not result from other differences such as production losses, production surpluses, or transport differences.

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The Supreme Court further stated that it cannot be required of the party concerned, who maintains an undisputedly reliable administration, to specify the causes of the differences. These differences solely stem from that administration and are inexplicable.

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Consequently, according to the Supreme Court, the shortage of excise goods will only be considered as consumed after the excess excise goods at the same excise rate have been deducted. The shortage and excess must relate to differences between the stock according to the records and the actual stored stock. The administration of a Registered Consignee's Warehouse forms the basis for assessing compliance with excise duty obligations.

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Approval

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In a Registered Consignee's Warehouse, products can be mistakenly swapped. This exchange leads to a shortage in one article and an excess in another article. In such cases, it is reasonable, under certain conditions, to allow offsetting a shortage with an excess. Considering the case law, it has been approved under the following conditions that overages and shortages are offset.

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The conditions for applying netting are:

• Reliable administration

• Netting can only occur when dealing with goods subject to the same excise rate.

• The Supreme Court has not ruled on the period over which offsetting may be applied. In practice, overages and shortages are determined during the inventory of the excise stock.

• Netting of excesses and shortages must therefore take place immediately after the inventories, regardless of the number of inventories.

• This implies that even companies that inventory their stock in parts (partial inventories) must offset the overages and shortages immediately after those partial inventories.

• Maintaining a separate list of overages and shortages after each partial inventory and then netting all overages and shortages once a year is not in accordance with this.

 

In practice, this means that the due excise amount is included in the monthly excise declaration in the case of a shortage.