Edited by Francesco Pizzo, Lorenzo Ontano, Marta Marrapodi, Anna Tripodi
On November 21, 2024, the Court of Justice of the European Union, in the case C-297/23, addressed the anti-abuse provision referred to in article 33 of the Delegated Regulation (EU) 2015/2446 (hereinafter also referred to as DR), concerning the attribution of origin following transformation or processing operations that are not economically justified.
In particular, the Court of Justice rejected the appeal filed by Harley-Davidson Europe Ltd and Neovia Logistics Services International NV against the European Commission’s decision, which had requested the Belgian customs authorities to revoke the binding origin information that confirmed the Thai origin for certain motorcycles produced in Thailand by Harley-Davidson and intended for the EU market.
The EU Commission concluded that the processing operations carried out in Thailand were not economically justified, as their primary or predominant purpose was solely to avoid the application of additional duties imposed by the EU on imports of motorcycles produced in the United States.
In particular, the Court interpreted the article 33 of the DR, stating that processing operations conducted in one country or territory should not be considered economically justified if, based on the available facts, it appears that the main or predominant objective of moving the production from one country (i.e., the US) to another (i.e., Thailand) was to avoid the application of trade policy measures introduced by the EU.
The Court established that it is up to the economic operator to prove that there is a valid reason to believe that the main or dominant purpose of the operation was not to achieve duties saving.
In support of its arguments regarding the existence of an “elusive” practice, the Court highlighted the presence of a “timing coincidence” between Harley-Davidson’s decision to relocate operations to Thailand and the EU’s imposition of additional duties; this circumstance, in the Court’s view, suggests that the relocation was implemented solely to avoid the application of such duties measures.
In light of the above, the decision to relocate production activities into another country, if it results in a savings of duties, should be carefully evaluated and supported by a defensive file that can demonstrate the existence of specific economic reasons other than mere tax benefits, to avoid the risk of being challenged for an elusive practice under the article 33 of the Delegated Regulation.
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