C-127/75

on the interpretation of the first paragraph of Article 95 of the EEC Treaty relating to the application of a tax on beer imported into the Federal Republic of Germany coming from other Member States

THE COURT

composed of: R. Lecourt, President, H. Kutscher, President of Chamber, A. M. Donner, J. Mertens de Wilmars, P. Pescatore, M. Sørensen and F. Capotorti, Judges,

Advocate-General: J.P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

to DM 15 per hectolitre on quantities stay the proceedings and to refer to the exceeding 120 000 hectolitres. Court of Justice pursuant to Article 177 of the Treaty the following questions: The tax is charged at a lower or higher 1. was it compatible with the first rate, as the case may be, on beer of other paragraph of Article 95 of the EEC qualitites. Treaty in 1968 and 1969 for ordinary Tax is charged on ordinary imported beer ('Vollbier') imported into the beer at a flat rate of DM 14·40 per Federal Republic of Germany from hectolitre in accordance with Paragraph 6 the Member States to be subject to a (5) of the abovementioned Law as beer tax of DM 14·40 per hectolitre amended on 10 May 1968 (BGBl. I p. under Paragraph 6 (a) (5) of the 349). Biersteuergesetz (Law on Beer Tax) whilst the amount of beer tax 2. During 1968 and 1969 'Bobie imposed on home-produced beer at Getränkevertrieb GmbH' imported that time was only DM 13·897 or DM ordinary beer from Belgium into the 13·934 per hectolitre (DM 13·862 or Federal Republic of Germany, the 13·909 per hectolitre) and for some of approximate quantities being 52 700 the latter beer however to be subject hectolitres in 1968 and 45 260 hectolitres to a lower rate of tax than imported in 1969. It did not import any other beer beer because of the graduated from the Community during this period. taxation laid down in Paragraph 3 (1) of the Biersteuergesetz? These proceedings relate only to those 2. If not, is it compatible with the first imports through the customs office of paragraph of Article 95 of the EEC Horbach which were taxed at the flat rate Treaty if beer imports are charged at of DM 14·40 per hectolitre. the rates of tax laid down in Paragraph 3 of the Biersteuergesetz As the company concerned took the view and which arise on the basis of the that this form of taxation, which is yearly beer imports by the relevant applied without taking into account the importers from the Member States of quantities of beer imported, infringes the the Communities?

II — Written observations sub­ Levying such a tax on imported beer mitted under Article 20 of does not entail levying higher taxes on the Protocol on the Statute this beer than those borne by of the Court of Justice home-produced beer. On the contrary the tax burden on imported beer is not A — Observations submitted by the so heavy if the volume of imports is Government of the Federal small. Although it is true that the first Republic of Germany paragraph of Article 95 prohibits tax discrimination against imported The German Government takes the view products, nevertheless it does not follow that the first question must be answered that it prohibits imported products being in the negative. After recalling the given more favourable tax treatment. judgment of the Court in Case 45/75 it states that the German authorities have Accordingly the levying on imported up till now continued to charge the beer of the beer tax graduated according standard rate applicable to beer imports to quantity referred to in Paragraph 3 of — in the same way as Belgium, the the 'Biersteuergesetz' is entirely Netherlands and Luxembourg — so as compatible with the first paragraph of not to anticipate the outcome of the Article 95 of the Treaty in so far as it harmonization of taxes on consumption leads to a system of taxation which within the Community. The favours imported beer. Commission, by a recommendation of 29 July 1966, suggested that the Member However, German positive law does not States which subject beer production to provide for levying the tax referred to in graduated taxation should maintain for the abovementioned Paragraph 3 on the the time being a standard flat-rate tax on basis of the yearly imports of beer. On imported beer. According to this the contrary this tax is only applied to suggestion the Member States concerned home-produced beer. had to tax imported beer at an average rate corresponding to the average amount The German Government takes the view of tax borne by a typical brewery, that is on the other hand that it is not possible to say, a brewery producing each year to infer from the first paragraph of 300 000 hectolitres of beer having a Article 95 of the Treaty that such a tax is density of 12·5° Balling (the standard applicable to imported beer. The effect of with which ordinary German 'Vollbier' levying on imported beer the tax complies). The Commission was at that graduated according to quantity on the time obviously of the opinion that such a basis of the volume of yearly imports is set of rules could be reconciled with the that small importers obtain a tax first paragraph of Article 95 of the advantage. Even though the tax on beer Treaty. graduated according to quantity is intended to procure for small and With regard to the second question the medium-sized undertakings, on the German Government states that the first national territory, the equivalent of the paragraph of Article 95 should be more favourable conditions which the interpreted as meaning that it allows the large breweries enjoy and in this way to beer tax graduated according to quantity counteract the mergers which are a

feature of the brewing industry, the requirements of Article 177 of the Treaty application of this system to imports such a question is admissible to the causes tax discrimination between the extent to which its is interpreted as large and small marketing undertakings, asking whether, in appropriate cases, the without its being possible to discern the levying of the tax graduated according to justification for such a rule. As the quantity on foreign breweries where the German Government will submit in beer delivered to the Federal Republic connexion with the third question, it originates — the only alternative worth seems in any event possible to accept, in considering along with that of levying the context of importations, the the said tax on the imports themselves application to the 'breweries' of other — is compatible with Article 95 of the Member States of the basic principle of a Treaty. tax on beer graduated according to quantity. The German Government takes the view that there is nothing in the Further, the effect produced by levying beforementioned Article to preclude the the tax in question on imported beer extension of the tax on beer graduated may in practice be that all the imports of according to quantity to include the beer from the Community are taxed at breweries of other Member States which the lower rates of the graduated tax deliver beer to the Federal Republic and whatever the yearly production of the declares that it will forthwith adopt the brewery of origin. In fact, in so far as necessary measures for this purpose. As deliveries of beer from certain large such a tax is designed to compensate breweries are effected through a large small and medium-sized breweries for number of small importers, the whole of the additional charges which they bear as these imports can reach the Federal compared with the large breweries, the Republic at the lowest rate for each effect of extending it so as to include the importation. This result also makes it breweries of other Member States which quite impossible to infer from the first supply the market of the Federal paragraph of Article 95 of the Treaty that Republic with beer would be to eliminate the tax on beer graduated according to the discrimination which has so far been

paragraph of Article 95 of the EEC levied on imported products which does Treaty is also aimed at flat-rate taxation not conclusively rule out the possibility affecting products imported from another that a higher tax may be charged on Member State and corresponding more imported products than on similar or less to the average of the domestic tax. domestic products. The effect which the application of a burden of tax based on average figures Accordingly Article 95 precludes inter has on the products affected by it is alia the levying of a flat-rate tax on invariably that some of them receive imports if similar domestic products are favourable and others unfavourable subject to a graduated tax, unless the said treatment. It does not guarantee that in flat-rate corresponds to the lower limit of intra-Community trade the tax levied on the graduated tax applied in the country products imported from other Member in question. States is not higher than that imposed upon similar domestic products. Nor is Article 95 therefore also precludes the such a charge the kind of tax which is application of the graduated tax on likely to guarantee the neutrality of home-produced products to imports on Member States in the field of the basis of the quantities thereof which competition. are imported.' Naturally the prohibition in the first paragraph of Article 95 does not go so far as to stipulate that Member States must III — Oral procedure apply to imported products a method of taxation identical to that applicable to 'Bobie Getränkevertrieb GmbH', similar domestic products. However, if a represented by Horst Maiwals, the Member State decides to apply in the Government of the Federal Republic of case of imported products a different Germany and the Commission of the method of taxation, that method would European Communities submitted their only be accepted to the extent to which oral observations at the hearing on it guarantees that the mandatory limits of 20 May 1976. Article 95 are observed.

Law

1 By an order of 26 November 1975 which was received at the Court on 19 December 1975 the Finanzgericht, Düsseldorf, referred three questions to the Court under Article 177 of the EEC Treaty relating to the interpretation of the first paragraph of Article 95 of the Treaty establishing the European Economic Community.

These questions were raised during an action brought before that court in connexion with the taxation in the Federal Republic of Germany of imports of ordinary beer from Belgium in 1968 and 1969.

It is apparent from the file that a flat-rate tax of DM 14·40 per hectolitre as provided for in Paragraph 6 of the Biersteuergesetz was levied in the Federal Republic of Germany in 1968 and 1969 on imports of ordinary beer, whereas home-produced beer is subject under Paragraph 3 of this Law to a graduated tax increasing from DM 12 per hectolitre on the first 2 000 hectolitres per year up to DM 15 per hectolitre on quantities exceedings 120 000 hectolitres per year.

The first question

2 The first question is whether it is compatible with the first paragraph of Article 95 of the EEC Treaty for a flat-rate tax of DM 14·40 per hectolitre to be applied under German legislation to ordinary beer imported into the Federal Republic from other Member States whilst the average rate of the tax on the similar domestic product is approximately DM 13·90 per hectolitre and part of the latter product is in any event subject to a lower rate of tax than that applied to imported beer because of the graduated taxation laid down in the abovementioned legislation.

for the taxation of the similar domestic product, for example a flat-rate amount in one case and a graduated amount in the other, would be incompatible with the first paragraph of Article 95 of the EEC Treaty if the latter product were subject, even if only in certain cases, by reason of graduated taxation, to a charge to tax lower than that on the imported product.

The second question

5 The next question is whether the first paragraph of Article 95 of the Treaty precludes the taxation of beer imports into the Federal Republic of Germany at the rates laid down in Paragraph 3 of the 'Biersteuergesetz', applied to the quantities of beer imported yearly from other Member States by each importer and not to the quantities of beer produced every year by each brewery.

BOBIE v HAUPTZOLLAMT AACHEN-NORD

6 A system of taxation such as the one presently in force in Germany as regards home-produced beer and based on the application of a graduated rate of tax varying according to the quantities produced by a single brewery, is clearly different from a system of taxation based on the application of the same graduated rate of tax according to the quantities which are imported by a single importer but which may come from several breweries of other Member States.

This difference may result in beer imported from a specific country being at a disadvantage as compared with the similar domestic product, if the foreign beer is subject to a tax calculated on the total quantity imported by a single importer in one year which may include beer from several breweries of other Member States, whereas home-produced beer is subject to a tax calculated on the total quantity produced by each brewery.

However, it is the system of taxation chosen by each Member State in relation to a specific domestic product which constitutes the point of reference for the purposes of determining whether the tax applied to the similar product of another Member State complies with the requirements of the first paragraph of Article 95 or not.

10 If therefore a Member State has elected to apply to home-produced beer a graduated tax calculated on the basis of the quantity which each brewery produces in one year, the first paragraph of Article 95 is only fully complied with if the foreign beer is also taxed at a rate, the same or lower, applied to the quantities of beer produced by each brewery during the period of one year.

Costs

11 The costs incurred by the Government of the Federal Republic of Germany and by the Commission of the European Communities which have submitted observations are not recoverable and, since the proceedings are, 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, costs are a matter for that court.

On those grounds,

THE COURT

Lecourt Kutscher Donner

Mertens de Wilmars Pescatore Sørensen Capotorti

Delivered in open court in Luxembourg on 22 June 1976.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL WARNER