C-32/67

JUDGMENT OF THE COURT 8 FEBRUARY 1968 1

I. G.F. Van Leeuwen v City of Rotterdam

Case 32/67

Summary

1. EEC Officials — Privileges and immunities — Exemption from national taxes and levying of a Community tax — Complementary nature of the provisions relating thereto — Scope of the exemption from national taxes (Protocol on Privileges and Immunities of the EEC, Article 12)

2. EEC Officials — Privileges and immunities — Charge or due representing the considera­ tion for a service rendered by public authorities — Exemption not justified (Protocol on the Privileges and Immunities of the EEC, Article 12)

I. G.F. Van Leeuwen , residing at Wezembeek-Oppem (Belgium)

1 — Language of the Case: Dutch.

JUDGMENT OF 8. 2. 1968 — CASE 32/67

and

City of Rotterdam

on the interpretation of the second paragraph of Article 12 of the Protocol on the Privileges and Immunities of the European Economic Community,

Issues of fact and of law

I — Summary of the facts and the law provides for the payment of the levy procedure to be related to the amount of income tax and wealth tax. When this amount is less The facts may be summarized as follows: than Fl. 100, the school levy is not payable; The action pending before the Netherlands when it is equal to Fl. 100, the school levy court was brought against the charge im­ is Fl. 8, and it increases by 2% for each posed by the City of Rotterdam on the Fl. 50 above Fl. 100. As has been said, the plaintiff by way of school levy ('schoolgeld') maximum is Fl. 200 and it is reached when for the year 1964-1965. On 1 October 1963 personal taxation is Fl. 9 000. the plaintiff was established as an official at the Commission of the European Commu­ Articles 8 and 9 of the law provide as follow: nities and he is resident in Belgium. Article 8: Any person resident in the It appears from the documents that under Netherlands and liable to pay school levy the Netherlands Law on school levy of 20 who is exempted in whole or in part from May 1955 (Staatsblad 223), as amended on income tax and wealth tax by virtue of legal 8 December 1955 (Staatsblad 558), the levy provisions relating to the said taxes shall is payable in respect of pupils of schools pay the maximum school levy, unless he which are, wholly or in part, financed from proves that he would have been liable to pay public funds. It is payable almost exclusive­ a lesser sum if he had not been entitled to ly in respect of children attending school such exemption. In such case he shall be who have not yet reached or who have liable to pay the lesser sum. passed the age of compulsory school attendance (Articles 1 to 3). Article 9: Any person not resident in the The maximum school levy per annum for Netherlands and liable to pay school levy each pupil is Fl. 200. In order to take shall pay the maximum school levy, unless account of the parents' ability to contribute, he proves that he would have been liable to

pay a lesser sum if he lived in the adminis reached the Registry on 19 October, the trative district where the school is situated. City of Rotterdam stated that it adopted the In such case he shall be liable to pay the same view as that of the Netherlands lesser sum. Government. The plaintiff, to whom these provisions Oral observations were made by the Com were applied, claimed that he was not liable mission of the European Communities at to school levy, since by virtue of Articles 12 the hearing on 12 December 1967. and 13 of the Protocol on the Privileges and The Advocate-General delivered his opinion Immunities annexed to the EEC Treaty he on 18 January 1968. did not pay income tax in the Netherlands. He takes the view that the judgment of 16 II — Observations submitted under December 1960 in Case 6/60, Humblet, Article 20 of the Protocol on confirms his view that the salary which he the Statute of the Court of receives as an official of the EEC must not be Justice taken into account in assessing his income and the tax relating thereto. These observations may be summarized as

It appears from imposed in proportion to the ability to pay the judgment in the case of Humblet that and the salary of the person liable is taken salaries paid by the Community cannot be into account, it cannot be regarded as a tax taken into account either directly or on the salary paid by the Community. indirectly in assessing Netherlands income The Gerechtshof of The Hague takes the tax. The plaintiff takes the view that this view: principle holds not only when Article 8 of 'That the dispute between the parties the Law on school levy is directly appli depends ultimately on a question of law, cable, but also when it is indirectly appli namely whether the expression "national cable in conjunction with Article 9. taxes on salaries, wages and emoluments He concludes that the answer to the question paid by the Community" (second paragraph put must be the following: although the of Article 12 of the Protocol) likewise covers school levy payable under the law is not to school levy payable under the Netherlands be regarded as coming under the description Law on school levy.' 'national taxes on salaries, wages and This is the question which the Gerechtshof emoluments paid by the Community', of The Hague has put to the Court of Articles 12 and 13 of the Protocol may Justice. nevertheless affect this lability, since it The application for a preliminary ruling depends on national taxes on salaries. reached the Court Registry on 21 August

main action; a due and a tax must be decided exclusively — on 25 October 1967 by the Commission by the law of the Member State concerned. of the European Communities. By letter dated 18 October 1967 which The Netherlands Government takes the view

that the school levy does not come under the ity itself. Relying on the definition of the description of 'national taxes' referred to in concept of a due, as stated by various Dutch the second paragraph of Article 12 of the writers, which stresses the connexion Protocol. According to the practice com­ existing between the payment and consider­ monly followed, the exemptions from tax of ation provided by the public authorities, the the staff of diplomatic and consular corps Netherlands Government concludes that in and of that of international organizations the present case there can be no question of does not cover charges and contributions taxes, as it deduces further from the fact that generally called 'dues'. In this respect the when private schools are involved the school Netherlands Government refers, inter alia, levy is not paid to the public authorities but to the third paragraph of Article 3 of the to the private schools concerned. The fact Protocol granting the Community itself no that in assessing the amount of the school exemption from taxes 'which amount levy the amount of income tax is taken as a merely to charges for public utility services'. basis cannot lead to the erroneous conclu­ If dues are not expressly excluded from the sion that the levy must as a result be regard­ exemption of officials from taxes it is ed as a tax on income. The essential differ­ because no tax exemption save that from ence lies in the fact that the payment of national income tax is granted to them and income tax is not consideration for a special it goes without saying that dues do not come service and income tax applies equally to under this category. every citizen. The school levy does not arise According to a second practice commonly as a result of the payment of a particular followed, privileges are granted to inter­ salary but from the fact that children go to national organizations exclusively in the schools maintained out of public funds. interests of these organizations and are Finally the Netherlands Government stresses limited by this objective (cf. as regards the the relationship existing between the first EEC, Article 17 of the Protocol). In Case and second paragraphs of Article 12 of the 6/60 the Court considered that as regards Protocol. The exemption provided for in the exemption from income tax the interest the second paragraph is obviously given to of the Community lay in the fact that only avoid a double charge. This is never the case exemption in actual fact enabled the Com­ as regards the payment of school levy, first munity effectively to determine the income because such payment cannot be made of its officials. The possible payment of a under the first paragraph, and second be­ school levy does not have to be taken into cause a child attends only one school at a account in calculating net salaries. The non- time.

VAN LEEUWEN v ROTTERDAM

Protocol intended to refer to charges con­ ed from these levies because in their stituting the consideration for a service calculation regard is had to the income rendered in the public interest which citizens which is paid to them as officials, whereas are free to use or not. In this respect the under the third paragraph of Article 3 of Commission states: the Protocol no exemption from these — as a rule the word 'tax' is not used in charges is granted to the Community international fiscal language when it is a itself. question of a levy of the nature of the one The Commission concludes that the ques­ in question; tion put must receive a negative answer — Exemption from these levies is rarely irrespective of whether or not, in the cal­ granted to diplomatic agents accredited culation of the levy, regard is had to the to Member States; income received by an official of the Com­ — It can scarcely be maintained that offi­ munity in that capacity. cials of the Community must be exempt­

Grounds of judgment

By letter dated 18 August 1967 which reached the Court Registry on 21 August 1967 the Gerechtshof of The Hague (First Tax Chamber) referred for a preliminary ruling under Article 177 of the EEC Treaty the question whether the exemption 'from national taxes on salaries, wages and emoluments paid by the Community' provided for in the second paragraph of Article 12 of the Protocol on the Privileges and Immunities annexed to the EEC Treaty likewise refers to the school levy charged under the Netherlands Law on school levy (Schoolgeldwet).

JUDGMENT OF 8. 2. 1968 — CASE 32/67

It is as a result of this provision that the second paragraph exempts salaries, wages and emoluments subject to tax for the benefit of the Community from national taxes, so that the Article taken as a whole ensures a uniform treatment of the said salaries, wages and emoluments for all the officials and servants of the Community, preventing, first and chiefly, their effective remuneration from differing according to their nationality or fiscal domicile as a result of the assess­ ment of different national taxes, and secondly preventing this remuneration from being inordinately taxed as a result of double taxation. It appears from this context that the second paragraph of Article 12 refers, like the first paragraph, to national taxes on salaries, no matter what form such taxes take or whatever they are called.

As regards the interpretation of the provisions referred to it is proper to distinguish between a tax intended to provide for the general expenses of public authorities and a due constituting a consideration for a given service. The national law of various Member States recognizes this distinction in different forms and under various names. Moreover the Protocol on the Privileges and Immunities of the Community itself recognizes the distinction, since the first paragraph of Article 3 thereof pro- v vides that the Community, its assets, revenues and other property shall be exempt from all direct taxes and the last paragraph that no exemption shall be granted in respect of taxes and dues which amount merely to charges for public utility services.

VAN LEEUWEN v ROTTERDAM

Costs

The costs incurred by the Commission of the European Communities and the Governments of the Member States, which have submitted observations to the Court, are not recoverable, and as the proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the Gerechtshof of The Hague (First Tax Chamber), the decision on costs is a matter for that court.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the observations of the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Protocol on the Privileges and Immunities of the EEC, especially Articles 3 and 12; Having regard to the Protocol on the Statute of the Court of Justice of the European Communities, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities;

THE COURT

Delivered in open court in Luxembourg on 8 February 1968.

A. Van Houtte R. Lecourt

Registrar President