C-31/67

JUDGMENTOF THECOURT 4APRIL 1968 1

Firma August Stier y Hauptzollamt Hamburg-Ericus (Referencefor apreliminary rulingby the Finanzgericht,Hamburg)

Case 31/67

Summary

1.Policy ofthe EEC —Common rules — Tax provisions — Taxation — Taxation forming partof a general taxapplying withoutdistinctionto domestic andimported products — Nature ofinternaltaxation (EECTreaty, Article95)

2. Policy ofthe EEC —Common rules— Tax provisions— Internal taxation imposed by a Member Stateon products fromMember States— Absence of similar domestic products orother productscapable of being protected— Permissibility— Limits of rightof Member State toimpose taxation (EEC Treaty,Article95)

and

HAUPTZOLLAMT (PrincipalCustomsOffice)Hamburg-Ericus,

onthe interpretation oftheTreaty establishing the EEC, especially Article 95 thereof,

THECOURT

composedof: R. Lecourt,President, A.M. Donner and W. Strauß(Rapporteur), Presidents of Chambers, A.Trabucchi, R. Monaco,J. Mertens de Wilmars and P.Pescatore, Judges,

Advocate-General:J. Gand

STIER v HAUPTZOLLAMTHAMBURG

tion, itmatters little whether it actually has omic Community? Ifthe answer is in an equalizingeffect or not. However, it the affirmative, towhat restrictions?' seems 'atleast interesting' to deduce by B — Onthis subject theFinanzgericht analogy'fromthe objectives of the Treaty, points out in particular thatthe wording of fromthe tasks assignedto the Community Article 95of the Treaty is limitedtopro and in particularfrom the rules of the hibitingMember States from imposing on Treaty guaranteeing free movementof products importedfrom otherMember goodswithin the European Economic Com Statesinternaltaxation in excess ofthat munityand prohibiting all restrictions on imposed directlyor indirectly onsimilar tradebetween Member States (in particular domestic productsorones which maybe Articles 9, 12 et seq., 30 et seq.,36 et seq. and substituted for them;on the other handit 95 etseq.)' the ruleof law which the Stier doesnot contain any provision applicable to undertaking wishes tohave accepted. the lemons importedby Firma Stierin view of thefact thatin theFederal Republic there- II —Procedure exists nosimilardomestic productor one which maybe substituted forit.

hearings on 5, 6 and 7 December 1967. ceto the Court'is always justifiedto the The Advocate-General delivered his reas extent to which aparty concerned presents oned, oral opinion at the hearing on 25 in support of the legal argument whichis January 1968. favourable to itvalidarguments based upon The Stierundertakingwas represented by theEEC Treaty'. Messrs Wendt and Drager,advocates of the In itsopinion thatis soin this case.In fact Hamburg Bar, the Government of the the opinion of the Stierundertakingthat the Federal Republic of Germany by Messrs importationof products which are notin Everling, Ministerialrat,Hahnfeld, Minis- competitionwith any similarproduct or one terialrat, andBühlow, Oberlandesgerichts- which maybesubstituted for itcannot give rat andthe Commission of the European rise to theimpositionof internal taxation Communities by its LegalAdviser, Mr may be defended.However,the under

JUDGMENTOF 4.4.1968 — CASE 31/67

In cases such as the prohibition butalso anauthorization. How present one the turnover equalization taxin ever,the latter isclearly limited to the case fact fulfils the criteria fora customs duty of in questionso that, in thecontrary case, the a fiscalnature as its sole object is toprovide prohibition on imposing afiscal charge finance for the State. flows directlyfrom Article 95. One mayalso agree that the turnover equal The sameconclusion may be drawnfrom a ization tax is acharge having an effect comparisonbetween the first paragraphof equivalent to a customs duty whichis by Article 95 and thecorresponding provisions way of exception lawfulto the extent to of GATT andthe HavanaCharter. It which it fulfils the conditions of Article 95. follows in fact from these provisions that Inthe course of its consistent case-law the internal taxationmust be consideredas a Court hasconcentrated upon the effect in customs duty when the imported products herent in the charges which it hashad to subjected to atax are notin competition examine. with domestic products. Thejudgment of the Court in Case 57/65 Butthe objectivesof theEEC Treatygo (Rec.1966, p. 293) does not invalidatethis even furtherthanthose ofthe agreements opinion; it simply states that a charge under mentioned abovesince,at the presenttime, Article 95 must be evaluated according to it isa questionnotonly of facilitatingtrade this rule.However,as regards charges not ingeneral, but also of ensuring the'freedom comingunder Article 95it must be con of movement of goods'. cluded that they are subject to thegeneral Anegative answer to(Question (a) would rules contained in Article 9 et seq. permit thenational legislatureto charge The observationsof the Federal Government equalizationtaxes and to fix their level just may be summarized asfollows: as itwished. Like theFinanzgericht ittakes the view that A ''turnover equalization tax' imposed on Article 95 does not apply to the case referred products whichare not manufactured in the to in thequestionput but it rejects the sug importing State isabsurd since logically gestion ofa 'gap'. In its opinionthe Treaty there isnothing to 'equalize'. does notform a system which is perfect in This opinion iseven more clearlyconfirmed itself put provides forlimitations on the

Member States

chargedthe turnoverequalization taxlong theCommission in the direction of the before theEEC Treaty wasconcluded. harmonizationof national fiscal duties, in Allthe Member Statestax imported particularby theintroduction of a uniform products accordingto theprincipleofthe system of value added taxes, contribute country for whichthey are intended. It muchmore to the attainmentof that object. matters little whether theimported product Ifproducts which are not manufactured mayhappen tobe incompetition with any within the countries concerned were exempt similardomestic productor one which may fromindirecttaxation the principle of be substitutedfor it. Itis difficult to under equality oftreatment in fiscal matters would stand whythe fiscalsovereignty of Member beinfringed. Statesshould bereduced precisely in such Thisinterpretation is confirmed by Article cases. 17(3) ofthe EEC Treaty.

pose. In factit is the veryabsenceof such 57/65. competitionwhich is typical of products on In the eventof thecharges in question being whichcustoms dutiesofa fiscal nature are considered ascharges having an effect charged. equivalentto acustoms duty, Article 13(2) The Commission pointsout that Member of the EECTreaty would have tobe taken States have in principlethe right to impose into consideration. In fact this Article has taxes in caseslikethe present onesubject to no directeffect to theextent to which it the reservation which will be further dis obligesthe Commission to determine by cussedunder point(c)below. meansof directivesthe timetable for the Article95limits this rightonly with a view abolition ofthe charges and confers upon it toensuring equality of competition. This thus a discretionary power. It isnevertheless

sweredin the sense of the first alternative pingesonly toa limited extent upon the (seeabove). sovereignty of MemberStates in financial and fiscalmatters, although theposition is Question(c) differentwith regard to customssovereign ty. In the fiscal sphere the objective with Firma Stiertakes the view that this question regard tothe total realization ofconditions hasno purpose in view of the answer which analogous tothose of an internal market itis appropriate to give to Question (a). cannot beattained by the helpof the few The FederalGovernment explains that the provisions contained inArticle 95 et seq. replyfollows from the arguments put The considerable labours ofthe Council and forward on the subject of Question (a).

JUDGMENT OF 4. 4.1968 —CASE 31/67

themost it would be possible toinquire effect when, in thecases mentioned in the whether the impositionof prohibitive ordermaking the reference, a Member charges,that is to say, ofcharges completely State imposes a charge on an imported paralysingthe movement of goods, isnot product 'in an exorbitant manner', that is to prohibited.However, thisquestion onlyhas say,beyond thegeneral level of indirect a theoreticalimportance becausesuch a taxation, for such a charge has the same casehas neverarisen and will neverarise effect as a customs duty added to a normal havingregard tothe economic inter- indirect charge. penetration in Member States.Meanwhile, However, this question does not arise in the this questionmay be leftaside forit is clearly present actionbecause the turnover equal­ not acase ofthiskind which is atthe basis ization tax charged in Germany onlemons of the decision to makethe reference. remains within the limits of theusual rates The Commission isof the opinion thatthe of taxationunder the turnover tax on prohibition on imposing chargeshaving an ordinary and tropical fruits. effect equivalent to a customs duty takes

Groundsofjudgment

By order of11 August 1967,which reachedthe Courton 18 August 1967,the Finanzgericht, Hamburg, byvirtue ofArticle177 of the Treaty establishing the EEC, askedseveral questions relating to theinterpretationof the said Treaty and in particular Article 95 thereof.

(1) Question (a) inquiressubstantially whetherthe Treaty must be interpreted as prohibiting aMember State from imposinginternal taxation onimported products originating in another Member State 'which compete neither with similar domestic products within the meaning ofthefirst paragraph of Article 95 of theTreaty establishing theEEC nor withdomestic products which maybe substituted for them within themeaning ofthe second paragraph of Article 95 ofthe Treaty'.

Member Statedoes not have theeffect of imposing on products originating in otherMember Statestaxation in excessof thatimposed on similar domestic products ortaxation ofsuch a nature as to protect other domestic products referredtoin the second paragraph ofthe sameArticle.

Although in essenceArticle 95, bothby the precision ofthe first paragraph and by the general natureofthe terms of the secondparagraph,contributes to the creation of a Common Marketensuring thefree movement of goods, nevertheless its ambit would beextended beyond its proper objective if onewere to deduce from ita prohibitionon the imposition of internal taxationon importedgoods which do not compete with a domestic product.

Internal taxation andespecially the turnover tax havean essentially fiscalobjective.

Hence thereare noreasons why certain imported products should benefit from a privileged systemby reason of the fact thatthere are nonational products capable of being protected.

Infact such a tax,when charged on importation,evenonproducts notcompeting withdomestic products, isintended toplace in a comparable fiscalsituation all categories of products, whatever their origin.

Accordingly itis appropriateto reply to thefirstquestion by a finding thatArticle 95 doesnot prohibit Member States from imposinginternal taxation on imported products whenthere is no similardomestic productor other domestic product capable of being protected.

as theparties to the main action areconcerned, a step in the action pending before theFinanzgericht,Hamburg, the decision oncostsis a matter for that court.

On those grounds,

Upon reading the pleadings; Upon hearing thereport of the Judge-Rapporteur; Upon hearing the observations of the Government ofthe Federal Republic of Germany, the Commission of the European Communitiesand the applicant in the main action; Upon hearing theopinion of the Advocate-General; Havingregard to the Treaty establishingtheEuropean Economic Community, especially Articles 95and 177; Having regardto the Protocol on the Statute of theCourt of Justice of the EEC, especially Article 20; Having regardto the Rules of Procedureof the Courtof Justiceof the European Communities,

THE COURT

in answer tothe questions referredto it bythe Finanzgericht, Hamburg,by order of that court dated 11August 1967, hereby rules:

1.The provisions of Article95 of theTreatyestablishing the European Economic Community do not prohibitMember States from imposing internal taxation on imported products originatingin other Member States when thereis no similar domestic product or otherdomestic products capable of being pro­ tected;

A. Van Houtte R.Lecourt

Registrar President