Decoders with a hard disk drive – such as the Sky+ box – are to be exempted from customs duties following a landmark ruling from the European Court of Justice.
The devices are to be classified for customs purposes as set-top boxes with a communications function and not as recording apparatus. It means that they will now be exempt from customs duties rather than being subject to a rate of 13.9%.
Rates of custom duties imported from third countries into the European Union are set out under European law. A list of goods classification and the tariff applicable under each category is published each year.
BSkyB had challenged the ruling on the import of the Sky+ personal video recorder, at the time manufactured on behalf of Pace, which joined Sky in the action. They argued that Sky+ receivers should be counted as a set-top box with a communications function, freeing them from the rate.
The case was referred to the Court of Justice by the First-tier Tribunal (Tax Chamber). “Consumers subscribe to service-providers such as Sky principally to be able to access the television programmes offered and, in order to do so, they need a box such as the Sky+ box. The television programme recording function, which is also available on that model, is merely an additional service,” said the Court. “Consumers who choose that product are seeking, primarily, not a recording function, but rather a function of decoding television signals, although their choice may be influenced by the fact it has a recording function or by the number of hours of programming that can be recorded”.
The Court said the conclusion was borne out by the fact that the Sky+ box cannot record video content from any other external source and cannot play video content from external media – such as DVDs or videotapes – and is not capable of recording video content onto external media.
An HMRC spokesman said: “HMRC are studying the ECJ judgement carefully, and will respond more fully in due course. In the meantime, the decision will be useful in the future classification of a range of set-top boxes”.
The Sky+ HD box is now the standard product given to new customers.
