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Schoenherr Advises on Important EU-Turkey Customs Union Case

Schoenherr Advises on Important EU-Turkey Customs Union Case

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Schoenherr has successfully advised the association of Turkish freight forwarders and Istanbul Lojistik on an EU law infringement case against Hungary, which requires Turkish freight forwarding companies to obtain a transit permit — some issued at no charge, most requiring the payment of a vehicle tax — to transport goods across its territory. 

Turkish freight forwarders (UND) retained Schoenherr to challenge trade barriers such as road quotas that Turkish freighters face when transporting goods into the EU under the EU-Turkey Customs Union (CU). According to Schoenherr, "the CU rests upon, as one of its central pillars, the principle of free movement of goods."

Schoenherr reports that, "in a test case initiated before the Hungarian Administrative Authorities, Schoenherr challenged the Hungarian vehicle tax under the free movement of goods principles as a charge having the equivalent effect of a customs duty. The proceedings were escalated to the Hungarian courts, which referred the case to the European Court of Justice for a preliminary ruling. In its judgement handed down on 19 October 2017, the CJEU held Schoenherr's view. The CJEU confirmed that ;a tax on motor vehicles such as that at issue in the main proceedings, which must be paid by persons operating heavy goods vehicles registered in Turkey and in transit through Hungarian territory, constitutes a charge having the equivalent effect of a customs duty within the meaning of that article."

Schoenherr describes the judgement as "ground-breaking for the CU in many ways," noting that "it confirms that the free movement of goods principles laid out in the CU must be interpreted in accordance with the CJEU’s 'free movement of goods' precedents rooted in the respective principles of the Treaty on the Functioning of the European Union. In addition, the judgment concludes that, even though the tax in question is not levied on products as such, it is imposed on the goods transported by vehicles registered in Turkey when they cross the Hungarian border, not on the transport service. As such, the vehicle tax violates the free movement of goods principle."

Schoenherr's team advising UND and Istanbul Lojistik in Luxembourg included Brussels Partner Volker Weiss, Budapest Associates Sandor Haboczky and Andras Nagy. Dispute Resolution Partner Christoph Lindinger, Istanbul-based Partner Levent Celepci, and Istanbul-based Attorney at Law Burke Serbetci are overall project leads.