C-111/75

JUDGMENT OF THE COURT 20 MAY 1976 <apnote>1</apnote>

Impresa Costruzioni Comm. Quirino Mazzalai v Ferrovia del Renon

(preliminary ruling requested by the Tribunale di Trento)

Case 111/75

Summary

1. Questions referred for a preliminary ruling — Jurisdiction of the Court — Limits. (EEC Treaty, Article 177)

IMPRESA COSTRUZIONI COMM. QUIRINO MAZZALAI

and

FERROVIA DEL RENON

1 — Language of the Case: Italian.

JUDGMENT OF 20. 5. 1976 —CASE 111/75

on the interpretation of Article 6 (4) of the Second Council Directive of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes — Structure and procedures for application of the common system of value-added tax (67/228/EEC), OJ, English Special Edition 1967, p. 16,

Facts

The facts of the case, the procedure and as from 1 January 1973 in accordance the observations submitted under Article with the provisions of the third 20 of the Protocol on the Satute of the paragraph of Article 6 and Article 76 of Court of Justice of the EEC may be Decree No 633 of the President of the summarized as follows: Republic of 26 October 1972, which provides that: — Services shall be deemed to have I — Facts and procedure been provided at the moment when the consideration is paid' (third In 1964, Impresa Costruzioni Comm. paragraph of Article 6) Quirino Mazzalai entered into a contract — The tax shall be applicable … to the with Ferrovia del Renon SpA to carry out supply of goods and the provision of certain works. These were completed in services after 32 December 1972.' 1967, but because of a difference between (Article 76). the parties as to the total cost of the works carried out, the final balance was It therefore asked Ferrovia del Renon for not paid until 1973. reimbursement of the value-added tax. Ferrovia, however, contested both the fact The Mazzalai undertaking took the view that value-added tax was applicable in that this payment should be made liable the present case and the corresponding to the value-added tax introduced in Italy reimbursement.

MAZZALAI v FERROVIA DEL RENON

By an order of 30 June 1975 entered in According to the Mazzalai undertaking the Court Registry on 24 October 1975, the Court of Justice has no jurisdiction the Tribunale di Trento stayed the to give judgment on the question proceedings and referred the following submitted for a ruling in this preliminary question to the Court of Justice for a case.. If the Tribunale di Trento has preliminary ruling under Article 177 of doubts as to the constitutionality of the the EEC Treaty: national provisions in question, it must bring the matter before the constitutional 'Is Article 6 (4) of the Second Council court. Directive of 11 April 1967 (OJ, English Special Edition 1967, p. 16) to be Furthermore, the question raised in the interpreted as meaning that, in the case present case is irrelevant. According to of the provision of services and, in the rules on turnover tax, as regards the particular, contracts for works, the provision of services, the tax should have chargeable event occurs at the moment been paid when the consideration was when the service is provided and that paid and to the extent to which that each of the Member States has payment was made. Since turnover tax continuing authority to identify the was abolished on 1 January 1973, chargeable event with the issue of an subsequent payment for a service invoice or with a payment on account, provided before that date cannot be whether the issue of the invoice or the subject to that tax and must therefore be payment on account takes place before made liable to value-added tax. completion of the work or, as in the present case, they take place after the In substance, the doubt expressed by the said completion?' Tribunale di Trento is unfounded. The

only contradiction between Article 6 of 'Liability, even though it be of a formal the Decree of the President of the nature, arising from contractual relations Republic with the Community directive entered into prior to 1 January 1970 [the lies in the fact that the latter does not date of the entry into force of Decree No permit the chargeable event to be 633 of the President of the Republic, as deferred until the moment of payment, laid down by Article 94] shall remain after the service has been provided. unaltered for the taxes referred to in the present article'. It seems clear that the purpose of the directive was above all to enable These taxes include turnover tax. value-added tax to be charged on payments on account made before The statement that, as regards turnover services have been provided and to tax, liability to pay the tax arises at the enable value-added tax to be charged moment when payment for the services when invoices are issued, regardless of is made does not appear justified. In fact, whether the services invoiced have been a distinction must be made between the completed. But the directive certainly moment at which the liability to pay the does not prohibit the moment when the tax arises and that at which the liability liability to pay the tax arises, that is to of the taxpayer actually to pay the tax to say, the moment when the service is the public revenue takes effect. The deemed to have been provided, from chargeable event giving rise to turnover being the same as the moment when the tax occurred at the moment when the consideration is paid and does not contract was made and the services were therefore prohibit the solution laid down provided, even if that tax had to be paid in the Italian rules. at the moment when payment for the Nor would it be contrary to the directive services provided was made. The date on to charge the new tax at the moment which payment of the tax becomes due must not be confused with the reason when payment is made, even if it were to be considered essential for Community which gives rise to the payment. purposes for the chargeable event to occur at the actual moment when the The entry into force of a new tax cannot service is provided and for the liability to alter the substance of a liability which pay tax for the services provided before has already arisen. This principle is 31 December 1972 to arise from that conformed specifically by the last moment. The legislature could, inter paragraph of Article 90 of the abovementioned Decree No 633 of the alia, have made such a situation wholly liable to value-added tax. It also chose President of the Republic: liability to pay turnover tax which arose before 1 that solution in order to prevent complications and easy tax evasion. January 1973 must in any case be discharged when the taxpayer's liability Lastly, Article 6 (4) of the directive refers actually to pay the tax to the public only to contractual relations after the revenue arises, on the basis of the rules entry into force of the implementing on turnover tax which have been provisions in the various countries. expressly kept in force as a transitional measure.

interpretation. First, the date for the considers, relying upon the general application of the system of value-added structure and function of Article 177, tax in Italy was fixed at 1 January 1973. that in such a case the interpretative As regards the provision of services, judgment of the Court must do no more Article 6 (4) of the Second Directive than state that the rule is not directly makes the chargeable event coincide applicable. with the moment when the service is provided, but this moment may in As regards, especially, coordinating certain cases be deferred or moved to a directives, it may happen that the later date. As regards services provided national law implementing the directive after 1 January 1973 that directive gives the court a margin of therefore enables the moment when the interpretation. In that case, an chargeable event occurs to be fixed at interpretation of the directive by the different dates but that possibility may Court of Justice may be helpful to the never be applied to services provided national court 'so as to ensure that the before 1 January 1973. law adopted for the implementation of that directive … should be applied in a The Government of the Italian Republic manner which conformed to the considers that the conclusion may de requirements of Community law' (see the drawn from the case-law of the Court of judgment in the Haaga Case, 32/74, Justice, especially in its judgments in [1974] ECR 1201). Cases 9/70 Franz Grad v Finanzamt Traunstein [1970] ECR 825 and 41/74, On the other hand, if the interpretation van Duyn v Home Office [1974] ECR of the Court reveals that a national law is 1337, that on the one hand, the Court, incompatible with the directive, the relying upon Article 177 of the EEC national court must nevertheless apply Treaty, confirms that Community the national law. In such a case, the measures other than regulations may, in interpretation given by the Court is of no certain cases, be directly applicable and, help in solving the problem before the on the other hand, that it states that the national court.

(Article 5 (2) (e)) are considered as First of all, that rule is not intended to supplies of goods. It is true that the impose duties or prohibitions on Italian Republic has used the power Member States, still less duties or given in paragraph (5) of Annex A, that is prohibitions to which subjective rights to say, to classify such transactions in the for individuals correspond. Further, the category of provision of services. But provision is neither clear nor precise. It Article 6 (2) specifies that the rules laid states an obvious principle, that is to say, down with regard to the taxation of the that the chargeable event occurs at the provision of services shall be moment when the service is provided. compulsorily applicable only to services However it leaves uncertain and does not listed in Annex B, which do not include specify when that moment occurs in those which stem from contracts to each of the contractual or legal situations execute works or to execute works and from which a provision of a service and supply materials therefor. consequently a transaction which must be made liable to value-added tax may Consequently, if the services do not fall result. The rule contained in Article 6 (4) within either Article 5 or Article 6, it is amounts only to a guiding principle necessary to conclude that the Second requiring several supplementary details. Directive does not apply to the services in question. Consequently, since that rule is not Although that statement makes any directly applicable in the sense that it further analysis futile, the Italian does not confer subjective rights on individuals which national courts must Government nevertheless continues to examine the problem of the direct protect, the Court must merely state that applicability of the rule in question. the question referred by the Tribunale di Trento has no purpose. The directives on value-added tax based Nor would that conclusion be different if on Articles 99 and 100 of the EEC the fact were taken into consideration Treaty constitute coordinating directives which, in general, do not contain directly that the 'Community rules' are applicable rules. The Member States may mentioned in Article 5 of Delegating Law No 825 of 9 October 1971 as rules lawfully achieve the objective of a rule contained in a coordinating directive by with which the legislative body to which employing various means. What matters delegation is made must comply. is therefore that the result attained by the national rules as a whole is in conformity As a result of this reference provisions of the directives concerned have become with the objective of the directive and not that each national rule is in provisions of national law and it is therefore for the national court alone to conformity with the corresponding rule examine whether and within what limits contained in the directive. the provisions contained in the directives Consequently general appraisal of their have been incorporated into the national conformity or otherwise can be reviewed legal system and to interpret the contents only during, for example, a procedure of those provisions. such as that referred to in Article 169 of

value-added tax as constituting the based on the fundamental criterion set provision of services has made it out in Article 6 (4) of the directive in extremely difficult, if not impossible, to question but it goes further than this fix in an abstract provision, the final criterion in order to overcome the moment at which each type of relation difficulties which have already appeared giving rise to the performance of a and to include in addition among the service is completed. factors which determine the chargeable event payment of the consideration. Secondly, the chargeable event, which is linked to the date when payment of the The Commission observes that under tax falls due, should have been specified paragraph (8) of Annex A to the directive at the moment when the taxable event is in question, the 'chargeable event' means

provision is enough to make clear that in President of the Republic). the cases which have been restrictively prescribed, the Member States can only Further, the Italian Government observes bring forward the moment when the that the execution of Article 6 (4) of the liability to pay tax arises, by linking it to directive has not been uniform or easily the issue of an invoice or the receipt of a accomplished. In fact the matter in payment on account in relation to the question, which is under review, has moment when the service is actually given rise to several disputes. provided.

1 By an order of 30 June 1975, received by the Court Registry on 24 October 1975, the Tribunale di Trento referred to the Court of Justice for a preliminary ruling the question whether 'Article 6 (4) of the Second Council Directive of 11 April 1967 (OJ, English Special Edition 1967, p. 16)' must be interpreted 'as meaning that, in the case of the provision of services and, in particular, contracts for works, the chargeable event occurs at the moment when the service is provided and that each of the Member States has continuing authority to identify the chargeable event with the issue of an invoice or with a payment oh account, whether the issue of the invoice or the payment on account takes place before completion of the work or, as in the present case, they take place after the said completion'.

2/3 The question has been raised in proceedings concerning the amount due either in respect of turnover tax or in respect of value-added tax on the balance paid in 1973 by Ferrovia del Renon, the defendant in the main action, to the Mazzalai undertaking, the plaintiff in the main action, for works in relation to the construction of the Bolzano-Sopra Bolzano cable railway completed in 1967. The plaintiff in the main action who had paid value-added tax at the rate of 12 % on the sum charged pursuant to the national legislation which entered into force on 1 January 1973, applied to the defendant in the main action for reimbursement of the tax paid, but encountered the objection that because the works had been carried out as

MAZZALAI v FERROVIA DEL RENON

10/11 In addition, regardless of the effects of the directive, in cases such as the present, an interpretation of the directive may be helpful to the national court so as to ensure that the law adopted for the implementation of the directive is interpreted and applied in a manner which conforms to the requirements of Community law (Friedrich Haaga GmbH, Case 32/74, [1974] ECR 1201). The same may be true of the problems of transitional law raised by the proceedings.

JUDGMENT OF 20. 5. 1976 —CASE 111/75

Costs

18 The costs incurred by the Government of the Italian Republic and the Commission of the European Communities, which submitted their observations to the Court, are not recoverable.

As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

MAZZALAI v FERROVIA DEL RENON

On those grounds,

THE COURT

Registrar President

OPINION OF MR ADVOCATE-GENERAL REISCHL DELIVERED ON 6 APRIL 1976 <apnote>1</apnote>

Mr President, completed in 1967; moreover, some of Members of the Court, the instalments were paid until completion. Differences later arose The Ferrovia del Renon in Bolzano and concerning inter alia the total costs and the Mazzalai firm in Trento entered into the outstanding balance thereof. The an agreement in 1964 pursuant to an dispute was settled by an enforceable invitation to tender for the construction decision of the Appeals Court in Trento of a suspension cable railway near of 10 December 1972, in which the Bolzano. The construction work was outstanding balance was quantified. This

1 — Translated from the German.