C-90/79

T H E COURT

composed of: J. Mertens de Wilmars, President, P. Pescatore, Lord Mackenzie Stuart and T. Koopmans (Presidents of Chambers), A. O'Keeffe, A. Touffait and O. Due, Judges,

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

gives the following

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JUDGEMENT

Article 22 of Law No 75-1278 also Paragraph I (b) of Article 22 of the institutes a levy of 0.20% on the pub- French Loi de Finances [Finance Law] lication of certain written works which is for 1976, No 75-1278 of 30 December payable by publishers according to the 1975 (Journal Officiel de la République sales, other than export sales, of works Française of 31 December 1975, p. published by them. 13564), institutes a "levy on the use of reprography", the yield from which, less an amount representing 5% of the levy which goes to the customs authorities, is The Commission took the view that the allocated to the Centre National des levy imposed on imports of the Lettres [National Centre for Literature] equipment in question constituted a which subsidizes literature in France, charge which has an effect equivalent to particularly in the scientific field. a customs duty prohibited by Article 9 et According to details furnished by the seq. of the EEC Treaty in so far as it French authorities, the revenue is used in applies to imports from other Member particular to finance the purchase of States and which is incompatible with journals and new books and the Article 113 of the Treaty and with the translation of foreign works. Common Customs Tariff in so far as it applies to imports from non-member countries and by a letter of 1 August By paragraph II (b) of the same 1977 notified the Government of the provision, the levy is payable on sales French Republic of its viewpoint and and appropriations for their own use, gave it an opportunity to submit its otherwise than for export, of repro- observations. graphic machines by undertaking which have manufactured them, or have had them manufactured in France as well as After pointing out that the dual purpose on imports of such machines by under- of the levy in issue is to assist intellectual takings which import them. creativity in written form and to strengthen the entire protective scope of copyright law, which is seriously By the same paragraph, the levy, the rate threatened by the extension of repro- of which is 3 % , is assessed, paid and graphy which is replacing the traditional

The Commission maintained its point of Upon hearing the report of the Judge- view and sent to the French Republic a Rapporteur and the views of the reasoned opinion dated 28 July 1978 in Advocate General the Court decided to which it stated that "by charging levies open the oral procedure without any on reprographic equipment the French preparatory inquiry being necessary. Government has failed to fulfil its However, the Court requested the obligations under Article 12 of the EEC parties to furnish, by agreement if Treaty, under Regulation No 950/68 of possible, statistical details on French 28 June 1968 on the Common Customs manufacture and importation of the Tariff and under Article 113 of the EEC reprographic equipment in question. Treaty" and invited it to take the necessary measures to comply with that opinion within a period of two months. It contended in substance that as there was no significant manufacture of repro- graphic equipment in France the levy was II — C o n c l u s i o n s of the p a r t i e s borne "almost entirely by imported products" and that secondly, owing to its specific character, the levy could not be regarded as forming part of a general The applicant claims that the Court system of internal taxation. should:

1. Dismiss the application; Nevertheless, even a duty falling within a general system of internal taxation 2. Order the Commission to pay the applying systematically to domestic and costs. imported products according to the same criteria may constitute a charge having an effect equivalent to a customs duty on imports if it appears to be intended III — A r g u m e n t s of the p a r t i e s exclusively to support activities which specifically benefit domestic products alone so that as regards those products A — Application the charge is offset. Such a duty has only the appearance of being a system of The Commission observes that under the internal taxation (judgment of the Court case-law of the Court of Justice any of Justice of 19 June 1973, Case 77/72 pecuniary charge, however small and Capolongo [1973] ECR 611 ; judgment of whatever may be its designation, mode 18 June 1973, Case 94/74 IGAV [1975] of application, objective, or the use to ECR 699; judgment of 25 May 1977, which the sums raised by it are put, Case 77/76 Cucchi [1977] ECR 987). borne by imported goods when or by reason of the fact that they cross a frontier, and which is not a customs duty It is the Commission's view that, in the in the strict sense, constitutes a charge case of reprographic equipment which having equivalent effect within the has not been manufactured in France, it meaning of Articles 9, 12 and 13 of the is the importation of such equipment Treaty, even if it is not imposed for the which, under Article 22 of the Finance benefit of the State, is not discriminatory Law, makes the levy chargeable whereas or protective in effect, and if the product there is nothing to suggest that the levy on which the charge is imposed is not in is payment for a service rendered. The competition with any domestic product. first two conditions required by the case-law cited above are accordingly fulfilled. The position is different only if the charge: As to whether the levy does not — firstly, appears to be payment for a constitute internal taxation within the service actually rendered to importers meaning of Article 95 of the EEC and whose amount is proportionate Treaty, the Commission admits that from to the value of the service in question a theoretical and strictly legal point of as well as to its cost (judgment of view the levy has all the appearance of 11 October 1973, Case 39/73 REWE [1973] ECR 1039); an internal tax which applies systematically and in the same manner to domestic and imported products alike. In — secondly, relates to a general system reality the situation is however different. of internal dues applied systemati- The Commission says that the cally in accordance with the same production of reprographic equipment in criteria to imported products and France is negligible. According to official similar or comparable domestic pro- statistics on imports and official ducts (judgment of 14 December 1972, industrial statistics on production in

That requirement is not however fulfilled The Commission concluded that by in this case because the levy in issue was introducing the levy in issue the French introduced outside the general taxation Republic has infringed Articles 12 and system for the purpose of financing a 113 of the Treaty and the provisions of specific project of cultural policy. In the Common Customs Tariff. practice the charging of that levy results in malung imports alone bear the cost of financing a measure which must necessarily benefit essentially national businesses. It thus appears that whilst the B — Defence levy in question appears to be internal taxation from a technical point of view, it in fact has the same effect as a charge on imports. It is that effect which is the test for determining whether a domestic The French Republic considers it appro- charge comes under Article 12 or Article priate to recall at the outset the features 95 of the Treaty. of the system under criticism and to

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(b) As regards the legal assessment of In the light of the expansion of repro- the tax on reprography in the light of graphy, which represents a danger to the Community law, the French Government writing and publishing professions, it first of all criticizes the Commission's seemed justified that the reprographic approach in listing a number of industry should contribute to the complaints which do not add up to a financing of cultural action in this sector. coherent argument free of obscurity and In accordance with the Berne contradiction. It particularly challenges Convention on Copyright, the Law of the statement that the factor which 11 March 1957 on copyright exempts determines whether a charge should be from the payment of royalties only described as one having equivalent effect copies made for private use. However, in is the fact that "importation gives rise to many areas reprography is replacing the the collection of the levy" and that there traditional dissemination of books and is accordingly a causal link between the periodicals thus seriously prejudicing the crossing of the frontier and the rights of authors and publishers. collection of the charge. That alleged

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(3) A charge coming under Article 95 (1) Under the scheme of the Treaty the may nevertheless come within the same tax may not simultaneously belong category of charges having equivalent to the category of charges having an effect if, although applying to domestic effect equivalent to a customs duty and and imported products according to the to the category of internal taxation same criteria, it "has the sole purpose of within the meaning of Article 95 since financing activities for the specific those in the first category are purely and advantage of the taxed domestic simply prohibited whilst in the case of product" judgment of 25 May 1977 in the second Article 95 merely prohibits Case 77/76 Cucchi, cited above).

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JUDGMENT OF 3. 2. 1981 — CASE 90/79

the case-law of the Court expressly specific advantage of the taxed domestic admits of such a possibility from the products so as to affect, wholly or in moment the tax in question comes under part, the fiscal charge imposed upon a general system of internal dues them (judgment of the Court of 18 June (judgment of 4 April 1968 in Case 7/67 1975 in Case 94/74 'IGAV[1975] ECR Wöhrmann [1968] ECR 177 and Case 711 and of 22 March 1977 in Case 13/67 Becher [1968] ECR 187; judgment 78/76 Steinike & Weinlig [1977] ECR of 1 July 1969 in Case 24/68 595). However, the circumstances in Commission v Italy [1969] ECR 193; which that case-law may be applied do judgment of 1 July 1969 in Joined Cases not exist as far as the levy in question is 2 and 3/69 Diamantarbeiders [1969] concerned and the French Government ECR 211). Contrary to what the points out that the Commission does not Commission contends, taxes of this kind contend that this case-law should apply. are not rare and do not only come under There is in fact no relationship between the heading of traditional taxes; the the domestic products subject to the levy defendant cites various examples taken and the allocation of the tax to the from the practice of Member States. Centre National des Lettres. The charge bourne by those domestic products is not offset in any way whatsoever, either The defendant further stresses that wholly or in part. On the contrary, the where fiscal levies on consumption are existence of the levy tends in practice to concerned it is justifiable for the basis of inhibit the development of the French assessment of those levies to extend to all industry owing to the strength of foreign products consumed on the territory in undertakings in the market. question.

However, in Community law, the only relevant question is whether the levy in C — Reply issue is part of the system of copyright rules because the question whether that levy is or is not part of a system of internal taxation depends on the answer 1. The Commission makes two pre- to that question alone. However, that is liminary remarks. It says that the French clearly not the case. Government does not contest the accuracy of the statistical data submitted by the Commission as regards the respective shares of domestic and 2. The Commission then goes on to imported products and that it has consider the pleas advanced by the admitted that the levy in question does French Government in its defence and not form part of the scheme of French contends first of all that it is impossible legislation on copyright. to resolve the dispute between the two parties to the action without raising the question whether there is or is not in fact any domestic production. A unilaterally The object of the levy is not to imposed tax which is basically aimed at remunerate authors for the reproduction imports alone and is borne by foreign of protected works but to finance goods by reason of their crossing a specific functions conferred on the frontier constitutes a charge having an Centre National des Lettres. The effect equivalent to a customs duty. Commission does not dispute that the increasing use of reprographic machines presents serious problems from the point of view of copyright but the matter is so The Commission considers it necessary complex that studies made for several to analyse the concept of internal years at world level have not agreed in taxation within the meaning of Article 95 their conclusions. of the EEC Treaty in order to refute the French Government's argument that it is immaterial whether or not there is any domestic production. It was on the basis of those considerations and in the context of copyright alone that in its Communi- cation to the Council of 22 November (a) Although there is no exhaustive 1977, to which reference is made definition of that concept it has been elswhere, the Commission suggested clarified by the Court by means of the that, as part of a comprhensive solution expression “general system of domestic to the general problem of copyright, “a charges” (judgment of the Court of 25 sum ought to be included in the selling January 1977 in Case 46/76 Bauhuis

[1977] ECR 5) or general internal system (c) Those observations likewise apply if of fiscal charges (judgment of 22 March domestic production is so insignificant 1977 in Case 74/76 Iannelli [1977] ECR that in real economic terms it should be 557) so that the tax applies "without regarded as negligible. If that were not distinction to all categories of products, so a Member State could, by introducing whether domestic or imported", like the "internal taxes" in the sectors in which turnover tax which was the subject- there is no significant domestic matter of the judgment of the Court of production, cause the principle of the Justice of 4 April 1968 in Case 31/67 free movement of goods to be Stier [1968] ECR 235. Although Article undermined. The problem of applying 95 allows a general internal system to be the criterion "negligible" or extended to products imported from "insignificant" to domestic production is other Member States, it does so in order therefore fundamental in evaluating the to provide a balance between imported tax in issue. and domestic products. In its judgment of 4 April 1968 (Stier) the Court was careful to state that "in fact such a tax, when charged on importation, even on products not competing with domestic products, is intended to place in a (d) The French Government's comparable fiscal situation all categories argument as to the allegedly arbitrary of products, whatever their origin". nature of the concept of negligible production is especially surprising in view of the fact that it was used by its representative to justify the introduction of the tax (sitting of the Senate of 22 November 1975). It is apparent from the debates on the tax that it was calculated mainly on the basis of imports and was (b) In its Bauhuis judgment the Court in fact aimed at them only. That fact admittedly held that there is "internal reveals the true intention of the French taxation" when domestic and imported legislature. products are taxed systematically according to the same criteria but where domestic production is non-existent that condition is not automatically fulfilled by the mere fact that a national fiscal rule provides for equal treatment of imports It is further apparent from those debates and domestic products. that instead of considering the internal tax and particularly the rate thereof and then extending it to imports, the French Government proceeded in precisely the reverse order. Having studied on the one hand the volume of imports of repro- graphic equipment and on the other The use of such a fiscal arrangement is hand the revenue which it required, it in reality a circumvention of the first established the rate of tax needed to prohibition on charges having equivalent bring in the pre-determined amount of effect which the Court has specifically revenue and only then applied that tax, condemned (judgment of 1 July 1969 in at the same rate, to French products in Joined Cases 2 and 3/69 Diamant- the knowledge that they were almost arbeiders, cited above). non-existent.

The Commission is aware that such In this respect it cannot but conclude, differences are likely to affect intra- especially in the light of the statements Community trade and it has submitted made during the parliamentary debates, proposals to the Council for directives that it is prima facie a special tax on founded on Article 99 of the EEC Treaty imports and that there is no factor to with a view to harmonizing that kind of prove that the levy is an internal tax. tax but it observes that it is not possible This case is moreover clearly to harmonize provisions which are distinguishable from that of the classical contrary to the Treaty. They should be parafiscal charges with which the Court abolished. had to deal in Case 105/76 Interzuccheri [1977] ECR 1029 (judgment of 25 May 1977). In the present case examination of the use to which the revenue is put is relevant not to whether an internal tax D — Rejoinder recognized as such is, by way of exception, to be regarded as a charge having equivalent effect but, on the contrary, to whether there are grounds for accepting that a charge, borne mainly 1. The facts by imports and which for that reason should prima facie be regarded as a charge having an effect equivalent to a customs duty, may be regarded as an (a) The French Government first internal tax owing to the particular criticizes the Commission's statement legislative system which introduced it. that the French Government has not

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(b) The French Government believes (d) The French Government lays stress that those statistics are perfectly on the fact that the system instituted in consistent and accurate. The difference France is similar to the one which the in the figures obtained from them and Commission itself favoured when it the lower ones submitted by the proposed the idea of a tax on repro- Federation des Industries Électriques et graphy in its Communication to the Électroniques on which the Commission Council of 22 November 1977. The relies stems from the fact that French conditions under which the tax on repro- subsidiaries of foreign manufacturers of graphy is charged on equipment are reprographic equipment were omitted entirely the same as those for value- from that Fédération's list although, as added tax and the tax is consequently checks which have been carried out have included in the final price which the user shown, as French undertakings they paid pays. the tax to the tax authorities.

(e) As regards the arguments of the (c) As regards the deliberate intention Commission based on the conditions of the French legislature to tax imported governing the use to which the tax is put, equipment only, the statements made by the French Government observes that the the Ministre de l'Économie et des Commission's opinion that "in Finances [Minister for Economie Affairs Community law, the only relevant

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As to the concept of a parafiscal charge, The French Government whishes to it refers to the judgment of 22 March supplement its defence on two specific 1977 in Case 78/76 Steinike & Weinlig points: the criterion of "negligible" or which clearly distinguished between "insignificant" domestic production, and charges having an effect equivalent to a the concept of a parafiscal charge. customs duty and internal taxation.

As to the criterion of "negligible" or In view of the definition of a charge "insignificant" domestic production, it having equivalent effect given by the submits that neither the letter nor the Court in that judgment the French spirit of the Treaty of Rome makes any Government points out that the tax on appeal to that concept and it questions reprography is not borne solely by the references by the Commission to imported products but is charged on competition law. both domestic and imported products on identical terms. The tax on no account benefits taxed domestic products but is rather the financial instrument of a The Treaty does not seek to impose a comprehensive policy on the division of labour. On the contrary, dissemination of books.

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2 Article 22 of the French Finance Law for 1976, No 75-1278 of 30 December 1975 (Journal Officiel de la République Française of 31 December 1975, p. 13564), introduced a tax called a levy on the use of reprography which is charged at the rate of 3 % on sales and appropriations for their own use,

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otherwise than for export, of reprographic machines by undertakings which have manufactured them or have had them manufactured in France and on imports of such machines. A Decree of 12 July 1976 (Journal Officiel de la République Française of 17 July 1976, p. 4279) listed the types of machines subject to the levy. The list includes certain offset printing machines, hectographs and stencil duplicating machines, special photographic equipment for the copying of documents, microfiche scanners linked to copying equipment, optical photocopying equipment, thermo-copying equipment and certain contact-photocopying equipment.

3 Article 22 of Law No 75-1278 further provides for the introduction of a levy on the publication of books which is charged at the rate of 0.20% and is payable by publishers on their sales, other than export sales, of any kind of works published by them.

4 Under the same provision the sums raised by both those levies are allocated entirely to the Centre National des Lettres and remitted to a special account called the "Fonds National du Livre" [National Book Fund]. Those levies are added to the other resources of the Fund — particularly subsidies — which are available to the Centre National des Lettres which uses them amongst other things to subsidize the publication of quality works and the purchase of both French and foreign books by libraries and the translation of foreign works into French. Finally, it is apparent from paragraph II of Article 22 of the said Law that those levies are assessed, paid and collected in the same manner as value-added tax.

8 The Government of the French Republic submits on the contrary that the levy in issue does not constitute a charge having an effect equivalent to a customs duty referred to in Articles 9, 12 and 13 but is an internal tax as referred to in Article 95 of the Treaty and that it satisfies the requirements of the last-mentioned provision regarding the prohibition of discrimination against products imported from other Member States.

9 Investigations undertaken jointly by the parties at the request of the Court and on the results of which both parties are agreed show that domestic production of all the different kinds of reprographic machine is only a small percentage, amounting in value to about 1% in 1977, 1978 and 1979, of the value of the total number of products, both domestic and imported, put on to the French market.

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10 As regards the facts which form the basis for the Commission's case, it should be observed that the percentage mentioned above relates to the entire French production of reprographic machines. The Decree of 12 July 1976 however lists eight different kinds of machines so that, the parties not having been able to provide accurate details on this point, it is not inconceivable that the percentage in question might be higher in the case of certain categories of machines.

1 1 The fact that French production is extremely limited compared to imports, which actually appears to be the case even if the reservation expressed above is taken into account, does not by itself justify the conclusions which the Commission draws from it regarding a failure by the French Republic to fulfil its obligations.

1 6 The Court is of the opinion that the particular features of the levy in issue lead to its being accepted as forming part of such a general system of internal dues. That follows first from its inclusion in taxation arrangements which have their origin in the breach made in legal systems for the protection of copyright by the increase in the use of reprography and which are designed to subject, if only indirectly, the users of those processes to a charge which compensates for that which they would normally have to bear.

17 That conclusion follows in the second place from the fact that the levy in issue forms a single entity with the levy imposed on book publishers by the same internal legislation and from the fact, too, that it is borne by a range of very different machines which are moreover classified under various customs headings but which have in common the fact that they are all intended to be used for reprographic purposes in addition to more specific uses.

18 It follows from those considerations that the alleged failure to fulfil obligations has not been proved and that the action should be dismissed.

Costs

19 Under Article 69 (2) of the Rules of Procedure the unsuccessful party must be ordered to pay the costs if the other party has asked for them. Since the applicant has failed in its submissions, it must be ordered to pay the costs.

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Koopmans O'Keeffe Touffait Due

Delivered in open court in Luxembourg on 3 February 1981.

A. Van Houtte J. Mertens de Wilmars Registrar President

OPINION OF MR ADVOCATE GENERAL WARNER DELIVERED O N 4 DECEMBER 1980

My Lords, a "levy on the use of reprography" ("redevance sur l'emploi de la repro- This is an action brought by the graphie"), the French Republic has failed Commission against the French Republic to fulfil its obligations under: under Article 169 of the EEC Treaty. The Commission contends that, in intro- (i) Article 12 of the Treaty, which ducing by its "Loi de Finances" for 1976 requires Member States to refrain