C-142/77

and, secondly, between

Flemming KJERULFF­ , goldsmith, having his place of business in Copenhagen,

and

Statens Kontrol med AEDLE Metaller

on the interpretation of the concepts of charge having an effect equivalent to a customs duty on exports within the meaning of Article 16 and of

internal taxation within the meaning of the first paragraph of Article 95 of

STATENS KONTROL MED AEDLE METALLER v LARSEN

JUDGMENT

Facts and Issues

The facts of the case, the procedure and the Statsguardein, inter alia the detailed the observations submitted under Article rules governing the assessment and

20 of the Protocol on the Statute of the collection of those levies. Court of Justice of the EEC may be Article 10 of the order introduces a summarized as follows: fixed annual charge of an annual sum of Dkr 200 payable by all owners of

registered marks; in addition, the I — Facts and written procedure owners of registered marks must pay a

own such a mark. as contract work, without applying their

own mark, do not include such Under Article 9 law every of the under­

consumption of precious metals in their taking which manufactures, imports or declaration. deals in articles of precious metal and

which is the owner of a registered mark On 21 May 1973, the Statens Kontrol is subject to the supervision of the Stats­ med AEdle Metaller asked Mr Preben guardein (National Assay Office) of the Larsen, goldsmith in Jyllinge, for Statens Kontrol med AEdle Metaller payment of the annual charge for use of (National Authority for the Control of the mark and of the (quarterly) levy Precious Metal) with regard to the title assessed on the basis of the estimated

of the precious metal in its possession value of the consumption of precious

and of the articles made of such metal. metals in 1972. When Mr Larsen

AEdle Metaller on the basis of the in order to meet the costs of the

declared value of his consumption of supervision of such undertakings by the precious metal in 1973, claimed authorities and which is calculated on

repayment thereof before Københavns the basis of the undertakings'

con­

Byret; he considered that he was not sumption of precious metals constitute a

obliged to levy in respect of pay the charge having an effect equivalent to a articles of jewellery bearing not his own customs duty on exports within the mark but the mark of the consignee and of Article 16 of the EEC meaning from Denmark. it is imposed exported Treaty when upon all

persons without applying their own manufactured for a Danish owner of a

mark are to include the consumption of mark since the latter includes such

precious metal in the value of precious precious metals in the account of his metals declared to the Statsguardein chargeable consumption whilst the

when the manufacture is carried out as consumption must be included when

contract for a foreign undertaking work is for foreign under­ manufacture a so that the articles do not bear the mark taking which is not subject to the of any Danish undertaking. charge in Denmark since such

Mr Preben Larsen and Mr Flemming consumption would not otherwise be Kjerulff claimed at first instance that included in the basis for the Danish there had been an infringement of levy, still irrespective of whether it is

The order of Københavns Byret was In accordance with the established

entered in the Court Register on 18 case-law of the Court the levy in November 1977. question cannot therefore be considered

In accordance with Article 20 of the as a charge having an effect equivalent to a customs duty. Protocol on the Statute of the Court of Justice of the EEC, written observations The levy is in fact charged without

were submitted by the Commission of regard to any charge which may be the European Communities on 24 imposed on the same product after its January 1978, by Mr Preben Larsen and export; the Danish system does not take

Mr Flemming Kjerulff on 9 February into consideration the fiscal or quasi-

and by the Government of the Kingdom fiscal system applicable to the goods

mitted to the Court article's being taxed twice when

exported is not contrary to the Treaty; The Statens Kontrol AEdle Metaller, the Court of Justice has ruled to this med effect, in particular in its judgment of having examined the system applicable

in European 22 October 1974 in Case 27/74 (Demag several countries with

to AG v Finanzamt Duisburg-Süd [1974] regard the control of articles of ECR 1037). precious metal and having explained the system applied in Denmark, in According to the case-law of the Court, particular as regards the application of a financial charge falling within a

the mark and the detailed rules for general system of internal taxation

financing, states that the levy in applying systematically to domestic and

frontier. first question as follows:

JUDGMENT OF 29. 6. 1978 — CASE 142/77

A levy which is imposed upon under­ the domestic market. The distinction takings manufacturing, importing or which the manufacturer is prompted to

dealing in articles of precious metal in make, amongst the goods to which he order to meet the costs of the does not apply his own mark, between supervision of such undertakings by the those which are exported and those

authorities and which is calculated on which are not exported, merely the basis of the undertakings'

constitutes a distinction of a technical

benefit from duty on exports is, in accordance with mark, those articles would

Article 37 of the Act the an unjustified advantage in terms of concerning Conditions of Accession, capable of competition as against articles exported

taking effect, in so far as the charges bearing a registered mark, since the

imposed in Denmark are latter are incontestably subject to tax. concerned,

only after 1 January 1974, and only The difference in treatment which has affects, where appropriate, exports to been observed is therefore merely other Member States of the European apparent.

Economic Community but not those to In practice, the detailed rules for the third countries. control do not enable a discrimination to be made between goods intended for (b) If a manufacturer does not apply export and goods bound to the his mark to the article which he has domestic market. produced it is for the trader who has The second question calls for the applied a Danish mark to it to include the value of the precious metal in the following answer: calculation of his basis of assessment to The fact that the consumption of

consumption. The manufacturer is to the charge in that country does not

the to be to therefore treated differently according affect answer given

to whether he exports his articles Question 1.

without applying a mark to them or

whether he sells them on the Danish (c) The fact that the manufacturer

market. The article is however not receives the precious metal from a

work carried out considered by itself It is likewise irrelevant whether under and do not have the opportunity of the circumstances the manufacturer the usual profit on the raw obtains a profit from the purchase of making material itself (gold) where the gold is the raw material or whether he merely receives remuneration for the work: the supplied by the foreign customer whose mark is applied to the finished produkt. levy is not a turnover tax on the The same applies if the Danish manu­

precious metal; it is charged on account facturer buys gold for a foreign of the supervision of the manufacturer's customer. undertaking.

In addition, in a certain number of As regards the financial charge of the countries to which the finished product levy, it is necessary to state that the is exported a charge is imposed for the remuneration paid to the manufacturer control carried out on the gold in the may be adapted to the size of the under­

country of destination; production is taking and that any imbalance between factors does therefore subject to double taxation. these two not in any case The latter is not however imposed on enable the conclusion to be drawn that the work carried out for Danish under­ the levy is a customs duty on exports. takings. The third question calls for the In Germany, one of the countries with following reply: which competition particularly keen, is It is irrelevant that the precious metal no charge comparable to the Danish which is made up in Denmark is levy is imposed. In order to remain supplied to the Danish manufacturer by competitive, a Danish manufacturer or the foreign customer in question to exporter must himself bear the costs of whom the finished product is re­

the same rate. connexion, it is necessary to state that

It is therefore necessary to reply to the the levy in question in this case was not introduced within the context of a fourth question as follows: Community system but unilaterally by The levy in question cannot be regarded one Member State. The supervision as internal taxation contrary to the first itself is not carried out on an identical paragraph of Article 95 of the EEC basis in all the Member States. The levy Treaty. is not reasonable remuneration for Mr Preben Larsen and Mr Flemming services rendered: the amount thereof is

Kjerulff take the view that the levy in not in proportion to the scope of the

question constitutes an obstacle to inter­ supervision carried out on a actually national trade. given manufacturer. The measures of

JUDGMENT OF 29. 6. 1978 — CASE 142/77

supervision are determined according to 4. In so far as the first three questions

exports; this would not be the case if he precious metals and explains in detail sold to a Danish wholesaler or retailer. the system of Law No 499 of 29 November 1972.

(c) The system in question may moreover be regarded as constituting a (a) In the light of the criteria laid quantitative restriction on exports, down in the case-law of the Court for to Article 34 of the EEC the of classifying a levy either purpose contrary Treaty. as a having an effect equivalent charge

to a customs duty on exports or as The in be internal taxation, the levy imposed in (d) levy may addition

regarded as internal taxation on the Denmark on precious metals can only be regarded as internal taxation. quantity of gold imported, contrary to

the first paragraph of Article 95 of the It is levied on the basis of the Treaty: it is not charged where the gold consumption of precious metals and not is worked for a Danish customer and on the basis of the of a crossing the registered mark of the latter is frontier. Its legal basis is a law applied. applicable both to exports and to sales

on the domestic market within the

manufacturer by the foreign For all those reasons it is necessary to customer in question since the effect reply to the first question in the

of the levy is the same. negative.

STATENS KONTROL MED AEDLE METALLER v LARSEN

(b) It the system of levies in question to impose it on the Danish manu­

were regarded as coming under Article facturer. This measure does not involve 16 of the EEC Treaty, it would be any discrimination against undertakings

necessary to make a distinction between exporting those goods. The latter are, exports according to the country of on the contrary, placed on an equal

in particular, their provisions on a manufacturer who carries out

to Article 16 of the EEC work for a Danish customer instead of corresponding the latter pay would, it is true, Treaty are not directly applicable. making have the effect of formally abolishing As regards exports to Member States of the difference in treatment but not of the Community and third countries with the situation from the point of altering which the Community has entered into view of competition in the case of a free trade agreement, it is necessary to exports since the charge would continue make a distinction, in application of to be imposed only once. Article 37 of the Act concerning the

Conditions The system in force at present in of Accession, according to Denmark does not involve, from the whether the levy concerns exports economic point of a real before or after the time-limit of 1 view, difference in treatment since the levies January 1974. In any case, Article 16 of are of the same nature and the same the EEC Treaty applies only to exports amount whatever the state of to other countries of the Community. production at which are collected. they It is therefore necessary to reply to the (c) The levy is, in principle, charged second question in the negative. on manufacturers of articles of precious

metal whether these are sold on the (d) Gold imported in the conditions domestic market or exported. This rule

manu­ referred to in the third question in the contains an exception as regards order for reference is also subject to the facturers who carry out work for others control by the Statens Kontrol med without applying their own mark; in dle Metaller and therefore to the levy. AE­ this case, the levy is charged on the

been manufactured from metal supplied destination imposes a similar charge on

by a foreign client. the same product; it is solely necessary to compare the charge or levy imposed The reply to the third question is in the negative. on exported products with that borne by therefore the same goods sold on the domestic market. (e) The levy in question is in the

nature of internal taxation and must be basis (b) Manufacturers producing articles examined on the of Article 95 of

the EEC Treaty. As it is of precious metal are subject in of general Denmark to supervision by the Statens application and makes no distinction Kontrol med AEdle Metaller whether according to the origin of the gold, it is the articles which they produce are not contrary to that provision. exported or sold on the domestic It is therefore necessary to reply to the market. Imports of finished products are fourth question in the negative. also subject to the control and the levy The Commission of the European is calculated on the basis of the value of Communities, having explained the the precious metal which they contain.

Danish system of control of articles of In the same way, the levy payable by precious metals as follows from Law No manufacturers is calculated on the basis 499 of 29 November 1972 and of the value of the consumption of

Ministerial Order No 626 of 22 precious levy is imposed metal. The December 1972, only once: it must be paid by the under­ observes that the

(a) The first question should be turers working for a foreign customer

answered in the negative. are not placed in a situation different from that of manufacturers working for The prohibition laid down in the EEC a customer on the domestic market who Treaty on charges having an effect

apply that customer's mark to the article equivalent to customs duties is intended produced. The basis of assessment to to guarantee that goods circulating between the Member States are not the levy is the same in both cases; there is merely a necessary technical given discriminatory treatment in one distinction with regard to the payment Member State as against products manu­

of the levy. factured and in circulation in that State; more concretely, as regards exports, Internal taxation could not have an

trade with the other Member States effect equivalent to a customs duty on must not be subject to heavier economic exports unless it imposed a higher tax

burdens than domestic trade in the same on imports than on domestic trade. The products. To determine whether a levy in question is however only charge or levy has an effect equivalent charged so as to cover the costs of the

(c) If the second question is answered upon undertakings manufacturing, in the negative longer any there is no in importing or dealing articles of need to reply to the third: it is irrelevant precious metal which is calculated on with regard to the calculation of the basis the of the value of the precious

levy payable by a manufacturer whether metals used and imposed under rules

the precious metal is imported by the providing that the levy is imposed only manufacturer or supplied by a foreign once on the same product cannot be customer. In the second case this is a regarded as having an effect a charge

typical example of inward processing equivalent to a customs duty on exports traffic which involves in certain cases within the of Article 16 of the meaning the application of special customs EEC Treaty as long as that levy applies Moreover, it is appro­

equally to domestic trade and exports. It arrangements.

priate to note that all precious metals is irrelevant with regard to the appraisal must be imported and that in the case of of a levy in the light of Article 16 of the inward traffic direct processing or Treaty that a customs duty on imports importation the manufacturer saves the is in addition imposed in another

There is apparent discrimination Kjerulff, represented by Peter Dyhr, the between for Government of the Kingdom of manufacturers working Denmark, represented by Mr Per customers established in Denmark and Head Legal Secre­ those who work for customers Lachmann, of the

latter in fact pay tariat for Matters relating to European established abroad: the

a levy based on the value of the quantity Integration at the Ministry for Foreign Affairs, and the Commission of the of gold imported whilst undertakings

which manufacture articles intended for European Communities, represented by domestic do do its Legal Adviser, Mr Bjarne Hoff- the market not so.

However is Nielsen, presented oral argument and the levy paid precisely on

the basis of the of gold answered a question put by the Court at quantity imported or consumed and to the hearing on 26 April 1978. according rules whose effect is that the levy is only The parties to the main action drew the

Decision

1 By order of 2 November 1977, which reached the Court on 18 November

1977, Københavns Byret referred to the Court under Article 177 of the EEC Treaty four questions for a preliminary ruling on the interpretation of the concepts of charge having an effect equivalent to a customs duty on exports within the meaning of Article 16 and of internal taxation within the

meaning of the first paragraph of Article 95 of the EEC Treaty in relation

Danish legislation to the on the control of articles of precious metal.

2 These questions were raised within the context of a dispute between the

exported in the form of articles not bearing a Danish mark must be included in the chargeable consumption on which the taxation of the undertakings is assessed.

4 By judgment of 4 March 1975 Københavns Byret found in favour of the

goldsmiths in these cases, acknowledging that there is no need, for the

purpose of establishing the basis of the assessment to the tax, to include the

consumption of precious metal used in the manufacture of goods exported

without the application of their mark.

7 As a result of that reference, Københavns Byret referred to the Court four questions for a preliminary ruling worded as follows:

1. Does a levy which is imposed upon undertakings manufacturing, importing or dealing in articles of precious metal in order to meet the costs of the supervision of such undertakings by the authorities and is basis undertakings'

which calculated on the of the consumption of

precious metals constitute a charge having an effect equivalent to a

customs duty on exports within the meaning of Article 16 of the EEC Treaty when it is imposed upon all undertakings which are subject to

such supervision in accordance with provisions whereby one and the

otherwise be included in the basis for the Danish levy, still irrespective of whether it is again subject to charge abroad?

3. In this connexion is it relevant that the precious metal which is made up in Denmark is supplied to the Danish manufacturer by the foreign customer in question to whom the finished product is re-exported?

4. If such a levy is not regarded as constituting a charge having an effect equivalent to a customs duty on exports is it to be regarded as internal

JUDGMENT OF 29. 6. 1978 — CASE 142/77

taxation (on the imported quantity of gold) contrary to the first paragraph of Article 95 of the EEC Treaty?

The first, second and third questions (interpretation of Article 16)

metal used by each undertaking and bearing the mark of that undertaking forms the basis of assessment to that charge.

11 Articles not marked by the manufacturer are exempted from the charge

where they are transferred to the owner of a mark since in that case the

consumption of metal in question is, on account of the application of the

mark, included in the chargeable consumption of the undertaking owning the mark.

12 The quantities of metal exported, which are exempted by the law from the duty of marking, must be included in the chargeable consumption of the

for that reason all quantities of metal imported, dealt in on the actual

STATENS KONTROL MED AEDLE METALLER v LARSEN

territory of Denmark or exported are included in the chargeable

consumption of those undertakings according to the same criteria and

without any distinction as to origin or destination.

15 It is therefore a system of internal taxation in the sense in which that

18 The subject-matter of the dispute must therefore be examined exclusively from the point of view of the system of the Treaty as regards the

application, in intra-Community trade, of the provisions on internal taxation to which the fourth question refers.

19 Within this context, it is however appropriate to take into account both the third question on contract work carried out for a foreign customer and an

aspect of the first and second questions on the possible effects of double taxation when precious metals are exported to other States.

The fourth question (scope of Article 95)

The fourth question calls for examination of the problem whether the rule

22 The application of the same systems of taxation to exports is referred to in

Articles 96 to 98 from the point of view of the repayment of excessive

taxation which may distort conditions of trade within the common market.

23 It follows from a comparison of those provisions that the aim of the Treaty in this field is to guarantee generally the neutrality of systems of internal taxation with regard to intra-Community trade whenever an economic

transaction going beyond the frontiers of a Member State at the same time

constitutes the chargeable event giving rise to a fiscal charge within the

discriminatory manner a system of internal taxation to products intended for export to other Member States.

26 Although it is true that as a general rule the States have no interest in

curbing their exports by measures of that kind, it is however impossible to rule out the possibility of such discrimination in cases such as the export of

rare products which are particularly valuable or especially sought after.

27 It is therefore appropriate to hold, as the Court of Justice has already indicated in its judgment of 23 January 1975 (P.J. Van der Hulst's Zonen v

Produktschap voor Siergewassen, Case 51/74 [1975] ECR 79, paragraph 34 of the decision), that Article 95, considered in conjunction with the other

STATENS KONTROL MED AEDLE METALLER v LARSEN

29 In view of the information supplied by the national court, it is impossible to consider as discriminatory a system of levies so arranged that all under­

takings precious metal are obliged to their share of tax so that using pay purely national transactions and transactions relating to the import or

export of those metals are made subject to tax on the same account

so More particularly, if the application of a mark constitutes the condition for the placing of precious metal into circulation on the national territory with

duty to pay tax is linked to the application of the mark by the result that the

32 It follows from the first two questions which have been submitted that the

national court asks whether an exemption for quantities of precious metal

exported without the application of a mark would be justified if the

products in question were intended to undergo a fresh control, with the

levying of charges in respect thereof, in the country of destination.

33 It is necessary to observe in this connexion that the EEC Treaty contains no

JUDGMENT OF 29. 6. 1978 — CASE 142­/77

36 For the same reason, the fact that a system of taxation is arranged so that

the same quantity of metal territory marketed be on the national can

included only once for the purpose of establishing the basis of assessment to the levy intended to finance the control of precious metal is not such as to make the application of the same tax to exported products appear discrimi­

natory when the procedures for the control and for the taxation of imports in other States are not within the influence of the exporting State.

37 It is therefore necessary to reply as stated above to the questions submitted

decision on costs is a matter for that court.

On those grounds,

THE COURT

in answer to the questions referred to it by Københavns Byret by order of 2 November 1977, hereby rules:

1. A levy which is imposed on undertakings manufacturing, importing or dealing in articles of precious metal to meet the costs of the supervision of such undertakings by the authorities and which is basis undertakings'

calculated on the of the consumption of precious

supervision of the production and marketing of articles of precious

metal, must be applied without discrimination, whatever the origin or destination of the products.

3. A system of taxation so arranged that the consumption of precious

metal exported and for that reason exempted from the application of a mark is included in the chargeable consumption of the under­

takings on the same conditions as the quantities of metal marketed

on the national territory and subject as such to the duty of marking must not be regarded as discriminatory.

exported in the basis of assessment to the levy payable for the control of the quality of the metal carried out by that State.

Kutscher Sørensen Bosco Donner Mertens de Wilmars

Pescatore Mackenzie Stuart O'Keeffe Touffait

Delivered in open court in Luxembourg on 29 June 1978.

A. Van Houtte H. Kutscher

Registrar President