C-159/78

defendant,

APPLICATION for a declaration that the Italian Republic has failed to fulfil its obligations under Articles 30, 34 and 52 of the EEC Treaty by imposing restrictions on representation for customs purposes and by regulating the profession of customs agent in a discriminating manner,

COMMISSION v ITALY

THE COURT

composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, Lord Mackenzie Stuart, G. Bosco, Judges,

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

JUDGMENT OF 25. IC. 1979 — CASE 159/78

Article 47 of the Code requires both After taking note of this answer the kinds of customs agents to be licensed by Commission on 25 January 1978 the Minister of Finance after passing an delivered the reasoned opinion provided examination. Save for exceptions which for in Article 169 of the Treaty claiming may be recognized for sufficient reasons that the Italian Republic by the heads of customs districts, a customs agent, whether a professional agent or an employee agent, must have his residence in a commune within the district for which he has been appointed. "by not allowing for customs purposes as regards certain transactions the per­ formance of certain duties, the observance of particular rules and the exercise of certain rights, the owner of Article 48 of the Code stipulates that the goods to be represented by any person to licence to act as customs agent shall be whom he has given authority to act in his granted, subject to the other conditions name and on his behalf and by laying imposed, only to Italian nationals or to down, in a discriminatory manner on the the nationals of foreign countries that basis of nationality, conditions for the grant equal treatment in the matter to Italian citizens. grant of a licence to act as a customs agent",

Statute No 1612 of 22 December 1960 legally recognizes the occupation of has failed to fulfil its obligations under customs agent, lays down rules for its Articles 30, 34 and 52 of the EEC exercise and its professional organi­ Treaty. The reasoned opinion further zation. invited the Italian Republic to take the measures necessary to conform with the opinion within a month.

The Commission claims that the Court should : These provisions prevent the owner of goods from freely choosing a represen­ tative to effect customs transactions in (1) Declare that the Italian Republic his name and on his behalf and require him to have recourse to a customs agent. — By not allowing the owner of That obligation to use an agent involves goods to be represented at the costs which make imports and exports Customs by any person to whom more expensive and constitutes directly he has given authority to act in or indirectly an actual or potential his name and on his behalf, but obstacle to intra-Community trade and only by a customs agent; by reason of this is a measure having an effect equivalent to a quantitative restriction contrary to Articles 30 and 34 — By laying down in a discrimi­ of the EEC Treaty. natory manner on the basis of nationality conditions for the grant of a licence to act as a The Commission further considers that

customs agent; by requiring the customs agent to reside in a commune within the district in which he is licensed to practise, the has failed to fulfil its obligations fourth paragraph of Article 47 of the under Articles 30, 34 and 52 of the Code makes him an agent or represen­ EEC Treaty. tative of the foreign exporter in the territory of the importing Member State (2) The costs are to be paid by the within the meaning of Article 2 (3) (g) of unsuccessful parry. Commission Directive No 70/50/EEC of 22 December 1969 (Official Journal, English Special Edition 1970 (I), p. 17) The Government of the Italian Republic which, according to that Directive, also contends that the Court should reject the constitutes a measure which has an effect Commission's application and order it to equivalent to a quantitative restriction. bear the costs.

that there are no restrictions on customs the name of the agent, but also on behalf representation in seven of the Member and in the name of the owner concerned, States is irrelevant and it further is not justified by the rule prohibiting contends that the work of customs measures having an effect equivalent to agents +s regulated in Statute No 1612 of quantitative restrictions. 22 December 1960 and in the Code in a manner appropriate to and consistent with the objectives of the customs union. Professional, qualified customs agents usually have their own effective organi­ zation and enjoy the confidence of the administration which ensures that In the view of the Italian Government Articles 40, 43 and 44 of the Code customs transactions run smoothly. cannot be regarded as measures constituting directly or indirectly an actual or potential obstacle to intra- Community trade. The fact that trade As regards the residence obligation between Italy on the one hand and the (fourth paragraph of Article 47 of the Member States and non-member Code) the Italian Government observes countries on the other is continually on that the Commission's reference to the increase confirms this opinion. Article 2 (3) (g) of Directive No 70/50 is based on an incorrect interpretation. That provision refers to measures requiring a foreign exporter to have a representative in the territory of the It is legally incorrect to say that the use Member State to which he is exporting of a customs agent involves additional and not to the case where the importer costs for there are similar costs when the has a representative in his own State. As work is done by "employees". Further regards freedom of establishment the such costs can be recovered in the price Italian Government relies on the of the imported product and therefore judgment of the Court of 3 December do not fall within Article 2 (3) (d) of 1974 in Case 33/74 (Van Binsbergen Directive No 70/50 which classifies as [1974] 2 ECR 1299) in support of measures having equivalent effect such as its contention that the residence "preclude any increase in the price of the requirement is, by reason of the pro­ imported product corresponding to the fessional nature of the work done by supplementary costs and charges inherent customs agents, compatible with Articles in importation". 59 and 60 of the EEC Treaty.

work of State departments and not costs which are an obstacle to free provisions which govern the repres­ movement of goods. entation of individuals. Moreover the Court has recognized that certain import formalities (Case 35/76 Simmenthal [1976] 2 ECR 1871) and export formalities (Case 53/76 Bouhelier [1977] In its rejoinder the Italian Government 1 ECR 197) are measures having an considers that the expression "the equivalent effect. Moreover the formalities to which imports are subject" Commission does not share the opinion has a much wider meaning than the that professional rules for agents Commission recognizes and it considers necessarily involve an increase in the that the references to the above- costs for those who do not have recourse mentioned Cases Nos 35/76, the to the services of an agent. It also Simmenthal case, and 53/76, the challenges the contention in relation to Bouhelier case, are irrelevant. the advantages for traders in having specialized agents. It further challenges the relevance of the statistics referred to by the Italian Government since a potential restriction is sufficient in itself As regards the arguments about the to make the rules in question contrary to increased costs and the specialization of the Treaty. agents the Italian Government takes the view that it is precisely because of the professional standards required of agents that strict checking can be avoided to the advantage of free movement of goods whereas such checking is necessary when Regarding the argument based on Article a nonqualified agent deals with customs 2 (3) (d) of Directive No 70/50 the formalities. Commission in reply argues that even if the additional costs resulting from the provisions in question can be passed on in the price of the imported product the national products benefit therefrom. Further the Italian Government considers that the Commission's arguments in relation to its requirement that customs representation by agents should be allowed regardless of the agent's qualifications are irrelevant and it repeats In answer to the argument of the Italian that administrative practice allows any Government that the owner of goods owner of goods to have recourse for may be represented by anyone he likes customs formalities to any person of his provided that the agent is entitled to act choice provided that such agent assumes on behalf of the owner, but in his own responsibility for his declarations vis­ a-vis the administration. name, the Commission, while recog­ nizing the right of national legislatures to adopt rules relating to agency (or rep­ resentation) maintains that the system of indirect representation [rappresentanza indiretta] laid down by the Italian The Italian Government challenges the legislation gives rise to difficulties and view of the Commission that the

experience in seven Member States licence to act as customs agent shall be shows that it is not necessary that the granted to nationals of a foreign State person making the declaration should only if that State grants equal treatment guarantee the correct payment of the in the matter to Italian citizens is duties and that therefore the rules should contrary to Article 52 of the EEC Treaty- be similar in all Member States. It argues abolishing all restrictions on freedom of that the Commission has forgotten that establishment by the end of the there are fewer customs officials in Italy transitional period. According to the than in the other Member States and that judgment of the court of 21 June 1974 the Italian officials are personally liable (Case 2/74, Reyners [1974] 1 ECR 631) for any failure to collect the duties. that provision is directly applicable Regarding professional qualifications the despite the possible absence, in a Italian Government observes, finally, that particular sphere, of the directives the Commission would like everybody to provided for in Articles 54 (2) and 57 (1) be able to carry out customs transactions of the Treaty. Even if in practice the in the name and on behalf of other Italian authorities apply Article 48 (a) in traders, but the Commission itself has accordance with the requirements of the laid down, for example in Articles 3 and Treaty, the wording of that article ought 10 of Regulation No 1226/71 of the nevertheless to be amended. Commission of 11 June 1971 (Official Journal, English Special Edition 1971 (II), p. 365) on simplification of the formalities to be carried out at offices of departure and destination in respect of The Italian Government states that the goods transported under the Community condition of reciprocity concerns only transit procedure, that "the customs nationals of non-member countries and authorities may withhold authorization that it intends to introduce legislation to from persons not providing the amend the article in question. It observes guarantee they consider necessary." nevertheless that there can be no doubt Similar rules are included in Council in the circumstances that the condition Directives Nos 74/561 and 74/562 of of reciprocity relates only to nationals of 12 November 1974 on admission to the non-member countries and considers that occupation of road haulage and if the position were different all Member passenger transport operators in national States would be under an "obligation", and international transport operations in spite of the direct application of (Official Journal No L 308 of 1974, Community rules, to amend numerous p. 18 and p. 23). national provisions which include a condition requiring persons to hold the nationality of that State.

— By laying down in a discriminatory manner on the basis of nationality conditions for the grant of a licence to act as a customs agent"

has failed to fulfil its obligations under Articles 30, 34 and 52 of the EEC Treaty.

2 It is clear both from the letter sent on 16 December 1976 by the Commission to the Italian Government and from the reasoned opinion delivered on 25 January 1978 that the complaints of the Commission concern Articles 40, 43, 44, 47 and 48 (a) of the Testo Unico delle disposizioni legislative in materia doganale [Consolidated text of the legislative provisions in customs matters, hereinafter referred to as "the Code"], approved by Decree No 43 of the President of the Republic of 23 January 1973 (Supplemento ordinario alla Gazzetta Ufficiale della Repubblica Italiana, No 80 of 28 March 1973).

According to the Commission Articles 40, 43, 44 and 47 of the Code concerning the representation of owners of goods for the purposes of customs declarations prevent the owner of imported or exported goods from freely choosing an agent to handle customs matters in his name and on his behalf and force him to seek the services of a customs agent. Those services involve costs which make imports and exports more expensive. The result is that those provisions constitute an obstacle, directly or indirectly, actually or potentially, to intra-Community trade and by reason of this a measure having effect equivalent to a quantitative restriction contrary to Articles 30 and 34 of the Treaty.

As regards Article 48 (a) of the Code which provides among other conditions that the licence to act as customs agent is to be granted only to Italian nationals or nationals of foreign countries that grant equal treatment in the

COMMISSION v ITALY

The first and second paragraphs of Article 40 provide:

"Where customs provisions require the owner of goods to make any declaration, to perform any act or to comply with any rules or obligations, or where they confer on him any rights, he may act through an agent.

Without prejudice to the provisions of Article 43, authority to represent a person in customs transactions may be granted only to a customs agent whose name appears on the professional register established under the Statute of 22 December 1960, No 1612."

Under the first paragraph of Article 43,

"Authority to represent the owner of goods in customs transactions may also be granted to a customs agent whose name does not appear on the pro­ fessional register if he is an employee of the owner".

Finally Article 48 (a), which is alleged to infringe Article 52 of the Treaty, provides.

"A licence to act as customs agent shall be granted to natural persons who satisfy the following conditions:

(a) They must be Italian nationals or nationals of a foreign country that grants equal treatment in the matter to Italian nationals."

B — The alleged infringment of the prohibition on measures having effect equivalent to quantitative restrictions (Articles 30 and 34 of the Treaty)

6 Although the reasoned opinion and the application do not say so expressly, their wording and the reference to Articles 30 and 34 of the Treaty show that the Commission's allegations concern the conditions for complying with customs formalities at the frontiers in intra-Community trade. Customs formalities at the external frontiers of the Community concerning goods coming from or intended for non-member countries are not at issue.

9 In this respect it is right to observe that in order to achieve that aim the Commission, on 19 January 1979, submitted to the Council a proposal for a regulation "defining the conditions under which a person may be permitted to make a customs declaration" (Official Journal No C 29, p. 3), which is to enter into force on 1 January 1980, and Article 3 of which is intended to make the Member States, as regards customs declarations, adopt the rules which the Commission complains the Italian Government did not include in its legislation.

10 The Commission puts forward three grounds of complaint:

(a) First it complains that the legislation in question unnecessarily requires traders to have recourse to licensed customs agents to carry out customs formalities whereas in its view it ought to be possible for such formalities to be carried out by anyone appointed by the owner acting in his name and on his behalf. This requirement unnecessarily adds to costs and is an obstacle to trade;

JUDGMENT OF 25. 10. 1979 — CASE 159/70

(b) Secondly it alleges even if the second paragraph of Article 56 of the Code has to be interpreted as allowing the owner of goods to appoint persons other than professional agents or employees to make the declaration for him, such persons could not act in the name and on behalf of the owner but only in their own name and on their own responsibility which means that that solution is hardly practical;

(c) Finally it takes the view that by requiring the customs agent to have a residence in a commune in the district in which he is authorized to act, the fourth paragraph of Article 47 gives him the status of agent or representative in the territory of the importing Member State whereas the requirement of such representative is expressly classified by Article 2 (3) (g) of Directive No 70/50/EEC of 22 December 1969 (Official Journal, English Special Edition 1970 (I), p. 17) as a measure having an effect equivalent to a quantitative restriction.

COMMISSION v ITALY

or has possession of them when they enter or leave the customs territory; this includes inter alia the carrier and those storing the goods. It was also stated that the last sentence of Article 56, to the effect that "This is without prejudice, in every case, to the right of the Customs to ascertain, for all the purposes of the present Code, the identity of the owner of the goods which are the subject of the customs transaction in question", does not mean that the authorities may refuse to accept the declaration of a person who is not the owner who presents or has possession of the goods but is intended to allow the authorities to make the owner jointly liable with the declarant for the duties and penalties as is specified in Article 38 of the Code.

13 The Italian Government also stated that the administrative practice is, nevertheless, to examine the declaration more thoroughly when it is made by the owner or by those who are treated as such than when it is made by a professional agent, whether self-employed or employed, by reason of the qualifications required of such agents.

15 In the second place the Commission claims, however, that the fact that when the declarants other than the owner himself are not customs agents they can make the declaration only in their own name and not as agents of the owner they are consequently jointly and severally liable with the owner of the goods for the duties and penalties whereas on the one hand the personal liability of independent carriers is only ancillary and limited to the payment of excess duties (Article 41 of the Code) and the owner of the goods is liable for the acts of an employee-agent representing him also amounts to a measure having effect equivalent to a quantitative restriction. In the view of the Commission third parties appointed by the owner of the goods to carry out customs formalities ought to be able to act in his name and on his behalf without incurring personal liability vis-à-vis the authorities providing they keep within the limits of their authority. Any additional obligation is an excessive hindrance to free movement of goods.

16 Disregarding the fact that this aspect of the Italian legislation was not considered in the reasoned opinion or in the application, at least not express terms, it is not possible to consider the distinction made by the national auth­ orities between the rules governing the liability of members of a regulated profession which is subject to the requirements of professional competence and the rules governing the liability of declarants who do not meet such conditions as going beyond what a government may consider as justified in the interests of ensuring compliance with the requirements of customs declarations. Moreover the Commission has not shown how this distinction is capable of constituting even potentially an obstacle to the free movement of goods.

C — The infringement ofArticle 52 of the Treaty

20 The Commission considers that Article 48 (a) of the Code infringes Article 52 of the Treaty which provides that freedom of establishment includes the right to take up and pursue activities as self-employed persons under the conditions laid down for its own nationals by the law of the country where such establishment is effected.

21 The Italian Government challenges that view and contends that the condition of reciprocity mentioned in Article 48 necessarily refers only to nationals of non-member countries and certainly not to those of other Member States. The legal principle that the particular rule, in the present case Article 52 of the Treaty, takes precedence over a general rule, in the present case

JUDGMENT OF 25. 10. 1979 — CASE 159/78

Article 48 of the Code, leaves no doubt in this respect. It is obvious that no condition of reciprocity can be contemplated as regards the provision of services in the relations between Member States and there is no doubt in this respect in the minds of the traders concerned.

Moreover the Commission has recognized that the way Italy applies Article 48 (a) of the Code complies with the Treaty. The Italian Government adds "it has moreover been stated in the answer to the reasoned opinion that nevertheless legislative measures will be adopted to clarify the matter accordingly".

On those grounds,

THE COURT,

hereby:

1. Declares that by maintaining unamended the wording of Article 48 (a) of the Testo Unico delle disposizioni legislative in materia doganale, approved by Decree No 43 of the President of the Republic of 23 January 1973, without making an exception, as regards the condition of reciprocity, in favour of nationals of other Member States, the Italian Republic has failed to fulfil its obligations under Article 52 of the EEC Treaty;

2. Dismisses the other claims;

3. Order the parties to bear their own costs.