The District Court of Helsinki dismissed the finance and insurance companies’ claims that value added taxes in postal services were disallowed by EU law

In its judgment of 18 September 2015, the District Court of Helsinki dismissed seven claims that had been filed by major finance and insurance entities against Posti and the State of Finland arguing that the imposition of value added taxes in postal services violated EU law. Merilampi represented Posti Group Corporation and Posti Ltd in the matter.

According to their claims, the plaintiff companies had been forced to pay value added tax for postal services that should have been exempted from value added tax in accordance with EU law. The total amount of the plaintiffs’ demands from Posti and the State of Finland was slightly over 100 million euros during the time periods mentioned in the claims (mainly during 1999-2011). According to the claims, Posti had primary liability towards the plaintiffs for the damage that was caused by the payments collected contrary to EU law and the State of Finland was secondarily liable towards the plaintiffs for the damage caused by the violations of EU law.

According to the claims, Posti continued to collect the value added tax in violation of EU law, which is why the plaintiffs have also demanded that Posti be prohibited from collecting the value added tax contrary to EU law from the plaintiffs in the future.

The District Court has stated in its judgment that, according to the Council Directive 2006/112/EC of 29 November 2006 on the common system of value added tax and the preceding directive from 1977, member states shall exempt from the tax the supply by the public postal services of services other than passenger transport and telecommunication services, and the supply of goods incidental thereto. The District Court in its judgment took into account the Court of Justice of the European Union’s judgment in C-357/07, TNT Post UK Ltd v. the Commissioners for Her Majesty’s Revenue and Customs, 23 April 2009, which clarified the area of exemption of value added tax enacted in Directive 2006/112/EC. In TNT Post, the Court of Justice held that the exemption does not apply to the supply of services of public postal services for which the terms have been individually negotiated. The District Court stated that, in Finland, postal services have been partly exempted from the value added tax after TNT Post due to an amendment to the Value Added Tax Act enacted on 1 June 2011 before which the postal services in Finland were in their entirety subject to the tax.

The District Court reasoned that the postal services in these claims were, as intended by the Court of Justice in TNT Post, individually negotiated, met the special economic needs of the plaintiffs, and were not a part of the exempted area defined in Directive 2006/112/EC. The inclusion of value added tax into the postal services referred to in the claim therefore did not violate EU law.

The District Court has ordered the plaintiffs to reimburse Posti’s and State of Finland’s legal expenses, including interest.