Caribbean Islands Caught Evading EU Export Tax

The highest court of the European Union has ruled that the United Kingdom and the Netherlands must pay millions of euros in customs duties to the EU that their overseas territories wrongfully failed to collect.

The European Court of Justice, based in Luxembourg, ruled that the United Kingdom is accountable to the European Union for the actions and omissions of the tax authorities in Anguilla. The Court ruled similarly in the case involving the Netherlands with Aruba and Curaçao.

In both cases, those overseas territories wrongly claimed that goods exported to the EU were exempt from export duties. The EU allows the free movement of goods between its member states if the products originate from the country itself.

Between 1999 and 2000, Anguilla imported aluminum and then resold it tariff-free to Italy. Curaçao wrongly claimed that between 1997 and 2000 it produced milk powder and rice which it sold to both the Netherlands and Germany. Aruba did the same between 2002 and 2003 with semolina and flour. These arrangements were uncovered by the European Commission’s anti-fraud unit.
In 2010, the European Commission requested London and The Hague to still pay the lost tax revenues. Brussels held both countries responsible for the EU’s financial losses. Both the UK and the Netherlands refused to pay, and the European Commission brought both cases before the European Court of Justice in 2017.

The Netherlands and the United Kingdom argued that Anguilla, Aruba, and Curaçao had incorrectly exported the goods and that those former colonies should therefore bear responsibility themselves. Aruba and Curaçao are autonomous countries within the Kingdom of the Netherlands with their own constitution and responsibilities for issuing their own export certificates, the Netherlands contended. The United Kingdom took a similar stance regarding Anguilla.

The Court in Luxembourg disagreed. EU judges stated that the Netherlands and the United Kingdom are obliged to take all necessary measures to ensure compliance with the Treaties or the acts of the Union. Both countries are now required to compensate for the loss. For the Netherlands, the EU claimed it lost more than $20 million from Curaçao and $332,000 from Aruba. The European Commission did not specify an amount in the case of Anguilla.

The ruling in both cases is final and cannot be appealed.