C-15/81

In Case 1 5 / 8 1

R E F E R E N C E t o t h e C o u r t u n d e r Article 177 of t h e E E C T r e a t y by the Gerechtshof [Regional C o u r t of A p p e a l ] , ' s - H e r t o g e n b o s c h , for a pre- liminary ruling in t h e action pending before that court between

G A S T O N S C H U L D O U A N E E X P E D I T E U R BV

and

INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN [ I n s p e c t o r of C u s t o m s and Excise], ROOSENDAAL,

on the interpretation of Articles 13 and 95 of :he E E C T r e a t y and the validit) of Article 2. point 2, of the Sixth Council Directive or 17 M a y 1977 on t h e h a r m o n i z a t i o n of t h e laws of t h e M e m b e r States relating to turnover taxes — C o m m o n system of value-added t a x : uniform basis of assessment (Official J o u r n a l L 145, p . 1),

Facts and Issues

The facts of the case, the course of the (a) The supply of goods and services procedure and the observations provided within the country bv submitted under Anicie 20 of the traders in the course of their Protocol on the Statute of the Court of business; Justice of the EEC may be summarized as follows: (b) The importation of goods."

According to Article 2 the trader is auth- orized to deduct from the tax for which I — Facts and written procedure he is liable on the supply of goods and provision of services the tax levied on the goods and services supplied to him and the tax on the importation of goods which are intended for him. According 1. In the Netherlands the law on to Anicie 7 of the law "trader" means turnover tax of 1968 as amended in 1978 anyone engaged in an independent provides for turnover tax to be applied activity. according to the system of value-added tax. According to Articles 9 and 20 respectively the tax is fixed at the rate of 18% both for the supply of goods and According to Article 1 of that law services within the country and for turnover tax means "a tax on: impons.

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It appears from the particulars given by 2. The economic activities referred to the national court that turnover tax is in paragraph (1) shall comprise all not levied in the Netherlands on goods if activities of producers, traders and the delivery is made within the country persons supplying services including bv a private person who is not a trader mining and agricultural activities and whereas if the goods are imported from activities of the professions. The a non-member country or from Member exploitation of tangible or intangible States the tax is in principle always levied property for the purpose of whatever the status of the supplier and obtaining income therefrom on a whether or not the goods are delivered. continuing basis shall also be considered an economic activity."

The company Gaston Schul lodged an Article 4 thereof provides as follows: appeal against that decision before the Gerechtshof [Regional Court of Appeal], 's-Hertogenbosch. Its main contention is ' Ί . 'Taxable person' shall mean any that the taxation is contrary to Article 13 person who independently carries and. as the case may be. Article 12 of the out in anv place any economic EEC Treaty. Although it is true that the activity specified in paragraph (2). tax in question is pan of a general whatever the purpose or results ot svstem of internal dues in force in the that activity. Netherlands applying systematically to

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" 1 . Must the charging by a Member 4. Does an affirmative answer to State of turnover tax on the import- Question 3 mean that a Member ation of goods from another State is prohibited from subjecting to Member State which are supplied by value-added tax the importation of a private person be regarded as a goods from another Member State charge having an effect equivalent to supplied by a private person if the customs duties within the meaning of supply of those goods within the Article 13 (2) of the Treaty Member State by a private person is [establishing the European Economic not subject to that tax?" Community] if, on the supply by a private person of goods which are already in that Member State, no charge to turnover tax is made? 4. The judgment making the reference was received at the Court Registry on 13 January 1981. 2. If Question 1 is answered in the negative, then, within the meaning of Article 95 of the Treaty, must the charging by a Member State of In accordance with Article 20 of the turnover tax on the importation of Protocol on the Statute of the Court of goods from another Member State Justice of the EEC written observations which are supplied by a private were lodged by the limited liability person be regarded as internal company Gaston Schul, represented for taxation in excess of that imposed on that purpose by Barents, Gasille and similar domestic products if no Mout of the Bar of The Hague, by the turnover tax is charged on the supply Netherlands Government, represented by of goods which are already in that F. Italianer, acting for the Ministry for Member State if they are supplied by Foreign Affairs, by the Council of the a private person? European Communities, represented by Raffaello Fornasier, acting as Agent, and the Commission of the European Communities, represented by D. 3. Should one of the two foregoing Gilmour, acting as Agent, assisted by questions be answered in the affirm- T. van Rijn.

Accordingly, the first question calls for the following answer: 1. The company Gaston Schul makes the preliminary point that the delivery of the boat in question to the previous owner had been subject in France to "Turnover tax which a Member State turnover tax and the previous owner did levies on the importation of goods from not obtain in relation to the export to the another Member State which are Netherlands a refund of the tax he had supplied by a private person must be paid. considered as a charge having effect equivalent to customs duties on imports within the meaning of Article 13 (2) of the Treaty if turnover tax is not levied (a) As to the first question, Schul points on the supply by a private person of out that according to the case-law of the goods which are already in that Member Court the prohibition in Anicie 13 (2) of State."

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The Netherlands legislation provides a different basis of assessment for the Consequently the third question calls for levying of the turnover tax in that the following answer: domestic products are liable to the tax only when the supply is effected for a consideration to the taxable person "Article 2, point 2, of the Sixth Directive whereas imported products are liable on the harmonization of the laws of the simply by reason of their importation. Member States relating to turnover taxes That difference has a real effect upon is incompatible with the Treatv and domestic and imported products for even therefore invalid in so far as that if the rate is the same the charge is provision requires Member States to different in view of the fact that the basis subject the importation of goods from of assessment for the imported product other Member States to value-added tax: includes the turnover tax paid in another Member State. Either without making any exception for goods supplied by private persons which, if supplied within the Member State As a result, the second question, concerned, would not be subject to that submitted in the event of the first tax; question's being answered in the negative, calls for the following answer: or without taking other measures to avoid double taxation on the movement "Turnover tax which a Member State between Member States of goods levies on the importation of goods from belonging to private persons." another Member State supplied by a private person must be considered as internal taxation in excess of that (d) As to the fourth question it is imposed on similar domestic products contended that in so far as Article 2, and falling within Article 95 of the point 2, of the Sixth Directive is invalid Treaty if no turnover tax is levied on the it cannot affect the obligations on supply by a private person of goods Member States under Articles 15 and 95 already in that Member State." of the Treaty.

"The answer to the third question Member State by a private person does implies that in the present state of not constitute a charge having equivalent Community law a Member State is not effect within the meaning of Article 13 permitted to charge value-added tax on (2) of the Treaty. the importation of goods from another Member State supplied by a private person if the supply of those goods by a private person within the Member State is not subject to that tax." That provision is aimed, as the Court held in the judgment of 19 June 1973 in Case 77/72 Capolongo [1973] ECR 611, at any tax demanded at the time of or by reason of importation and which, being 2. The Netherlands Government imposed specifically on an imponed observes that Article 1 of the product, results in the same restrictive Netherlands law on turnover tax consequences on the free movement of complies with Article 2 of the Sixth goods as a customs duty by altering the Directive. That directive aims at the cost price of that product. On the other partial harmonization of national laws hand, it follows from that judgment that on turnover taxes in accordance with the pecuniary charges such as turnover tax, objectives of the EEC Treaty. which fall within a general system of internal taxation applying systematically to domestic and imponed products according to the same criteria, are not to be considered as charges having That harmonization is necessary because equivalent effect. the laws of the Member States on turnover taxes are based on the principle that consumer taxes, such as turnover tax, must be levied in the country where the goods and services in question are The taxation of goods supplied by used (principle of the country of undertakings within the country is a tax destination). Implementation of that liability which is imposed on those goods principle implies that there are tax before they reach the consumer and frontiers, as the consumption of goods in which subsequently affects the completed a Member State is liable to the turnover use or consumption. It is therefore tax in force in that Member State. The unnecessary also to subject to turnover tax thus affects not only the supply of tax any supplies by private persons at a goods which traders make within the subsequent stage in view of the fact that country but also the importation of the completed use is taxed, as the under- goods, irrespective of the person who taking paid turnover tax on the price of carries out the importation and of the the goods in their new state when it nature of the transaction at the basis of supplied them to the first private person. that importation. Further, if there were no such taxation on importation there would be inequality in relation to the position in which the same private person would be if he had acquired the same goods in the Member (a) As to the first question the State. It is precisely in order to avoid Netherlands Government considers that such an advantage that the importation the lewing of turnover tax on the im- of goods is always in principle subject to portation of goods from another the national tax.

(b) The second question also calls for a the Member States retain a wide negative answer. On the importation of discretion as regards determining the goods the consumption of which has rates of the tax and the definition of the already started outside the territory of concepts used for the purpose of the Netherlands the taxation relates to applying the tax. It is aimed above all at the agreed sale price or the market price the economic activities of traders but which may be regarded as representing extends also to all transactions, even the value of the goods having regard to those of a non-commercial kind. what scope for consumption is left in them. Thus, applying the tax to the sale or market price and taking as a basis what use is left in the goods, a situation That harmonization is based on the one is reached which is equivalent from the hand on the maintenance of tax tax point of view, to that of goods which frontiers, that is to say, the compan- are already in the country at the same mentalization of the tax systems of the marketing stage or which have been Member States, and on the other hand resold after a corresponding partial on a gradual standardization of those consumption. It follows that the levying systems. In the meantime the differences of turnover tax on the importation of between the national systems are products by private persons cannot be equalized at the frontier by a system of regarded as internal taxation in excess of taxation on importation and remission that imposed on similar domestic on exportation. The compensatory products within the meaning of Article system is, however, imperfect in so far as 95 of the Treaty. the differences between the laws which have not yet been harmonized may give rise to taxation for which there is no remission. (c) Having regard to the negative answer to be given to the first two questions the third and fourth questions are redundant. As regards more particularly Anicie 2 of the Sixth Directive Member States. are required, in respect of transactions effected within the country, to levy value-added tax only on transactions 3. The observations of the Council, effected by a taxable person within the which gives its opinion only on the third meaning of Article 4 of the directive. question in relation to the validity of the That article leaves a wide discretion to Sixth Directive, may be summarized as the Member States, especially as regards follows: occasional transactions. On the other hand as regards imports Member States are bound to levy value-added tax on all imports of goods and have no discretion (a) The object of the Sixth Directive is in the matter. to establish a common system of value- added tax. It does not however establish a comprehensive system containing all the detailed provisions enabling it to be To avoid double taxation of goods, applied in a uniform manner in all the namely in the country of expon and in Member States but harmonizes the the country of import, Anicie 15, point national tax systems only partially so that 1, of the directive requires the exponing

(c) Consequently the Council proposes that the C o u n should answer the third question to the effect that the obligation (b) The Council maintains that the placed on Member States by Anicie 2 of system thus described is compatible with the Sixth Directive to levy value-added the provisions of the EEC Treaty. To that tax on the importation of goods, even end it analyses Articles 95, 12 and 13 of when bought from private persons, does the Treaty. not infringe Anicie 95 of the Treaty Nor, because of its object, can it be considered as involving the imposition of a charge having an effect equivalem to a customs duty within the meaning of Articles 12 and 13 of the Treaty. In any Article 95 of the Treaty is not affected event it should be accepted as a by Article 2 of the directive since that transitional provision, inasmuch as it is a provision does not impose a general necessary means of progressiv riv prohibition on the levying of taxes on achieving the harmonization of taxes and importation but only the levying of taxes avoiding the abuses which mipru which are in excess of. those imposed on otherwise arise from the panial naturt- ol similar domestic products. that harmonization.

The requirement that Member States 4. The Commission recognizes that trtr levy tax on importation with no Netherlands system of value-added tax corresponding remission on exportation constitutes an obstacle to the tree does not fall within the scope of Artiles movement of goods since the sale o: 12 or 13 for the threefold reason that second-hand goods between private such taxation is marginal, because it can persons in the Netherlands is noi vumnt occur only in rare cases of disparity to value-added tax whereas pooo» between the national systems, that it is bought in similar circumstance», in transitional, because it coincides with a another Member State and imponed mio stage of partial harmonization of the the Netherlands are subject to ihe ta\ li national systems, and thai it is nevertheless maintains that neither tne

(a) As regards the question of the It follows that although there is compatibility of the Netherlands system undoubtedly a right of deduction on the with the Sixth Directive it is necessary to export of new goods, so that the start with the mechanics of the tax. It is question of double taxation does not levied at each production and distri- arise, the directive is not clear with bution stage up to the ultimate consumer regard to second-hand goods imported so that each taxable person in the by a private person after being acquired marketing chain is bound to collect and from another private person. In that pay it to the Treasury after deducting the respect the Commission first, of all amount paid to the taxable person discusses the scope of Article 32, which immediately prior to him in the chain. concerns the sale of second-hand goods, The tax is levied according to the same and according to which Member States criteria and methods within each fiscal are authorized to retain their system in jurisdiction, the Member States force until the Community system nevertheless remaining free to determine applies. The Commission takes the view their own rates of levy. No value-added that that provision applies only to taxable tax is required in the event of sale by persons and concludes that the sale in a private persons in so far as the sale takes Member State of second-hand goods place within the fiscal jurisdiction of a between private persons does not fall Member State, since private persons are within the system of the Sixth Directive not taxable persons within the meaning and is not liable to tax. of the directive.

concluded within the country and Article 12 (5) of the directive are "the imports. supply of like goods" whereas in the foregoing argument those words are interpreted as meaning an equivalent transaction, that is to say, the delivery of second-hand goods on behalf of a That argument cannot be refuted by the private person to another. In addition it objection that the system so described must be objected that the price gives rise to double taxation regarding demanded for second-hand goods second-hand goods which have already reflects the value-added tax originally been subject to the tax once at the imposed and that it is therefore necessay ultimate consumer stage, for double to compensate for the tax which is taxation is not made unlawful by the reflected in the price of second-hand Sixth Directive which has not succeeded goods on the domestic market. in neutralizing value-added tax in intra- Community trade in respect of all classes of transactions.

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stage and the chargeable event giving rise since the same tax as that on importation to the duty must also be identical in the indirectly affects products consumed case of both products". Nevertheless it is within the country. doubtful whether that consideration is applicable in the present case since the judgment in Denkavit was concerned The questions relating to the validity of with a system of parafiscal charges the Sixth Directive are therefore relating to the protection of public redundant. health, which is not comparable with the taxation in question.

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complications of a legislative and The Netherlands Government adds that practical nature which would perhaps be Article 95 does not affect taxation pre- out of reasonable proportion to the scribed by Community rules applying in financial and economic interests the same form to all Member State? and involved. not thereby favouring the national production of one Member State to the detriment of that of others. The general principles of Community law and in particular the principle of equality of The Italian Government states that treatment do not impose a general whereas the taxation of imponed goods is necessary in any event to achieve prohibition on double taxation. neutrality in competition in intra- Community trade, any refund to the ultimate consumer of the tax paid pre- viously would give the latter an The Italian Government states that an unjustified benefit which would unjustifiably privileged position would encourage him to export. arise if private persons supplying second- hand goods abroad were entitled to a refund of value-added tax whereas the private consumer reselling the goods within the country would not be so 2. The compatibility with the spirit of entitled. Article 95 and with the general principles of Community law

Decision

1 By judgment of 19 December 1980, received at the Court on 30 January 1981, the Gerechtshof [Regional Court of Appeal], 's-Hertogenbosch, referred four questions to the Court for a preliminary ruling under Aniele 177 of the EEC Treaty on the interpretation of Articles 13 and 95 of the EEC Treaty and the validity of Aniele 2, point 2, of the Sixth Council Directive No 77/388 of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — common svstem of value- added tax: uniform basis of assessment (Official Journal L 145, p. 1).

: The limited liability company Gaston Schul Douane Expediteur BV, customs forwarding agents, imported a second-hand pleasure and sports boat into the Netherlands on the instructions and on behalf of a private person residing in the Netherlands who had bought it in France from another private person. The Netherlands revenue authority levied on that importation value-added tax at the rate of 18% on the sale price which was the normal rate applied within the country on the sale of goods for valuable consideration. The levying of that tax is the subject of the main action.

3 The Netherlands authority relied on the Netherlands law of 1968 on turnover tax and in particular Anicie 1 thereof. According to that provision turnover tax is chargeable on the one hand on goods delivered and services provided within the country by traders in the course of their business and on the other hand on the imponation of goods. The provision gives effect to Anicie 2 of the Second Council Directive No 67/228 of 11 April 1967 on the

3. Should one of the two foregoing questions be answered in the affirm- ative, must it be assumed that point 2 of Anicie 2 of the Sixth [Council] Directive on the harmonization of the laws of the Member Statei relating to turnover taxes is incompatible with the Treaty and theretore invalid in so far as that provision requires Member States to subiect the imponaiion of goods from other Member States to value-added tax without making any exception for goods supplied by private persons

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which, when supplied within the Member State concerned, would not be subject to that tax?

4. Does an affirmative answer to Question 3 mean that a Member State is prohibited from subjecting to value-added tax the importation of goods from another Member State supplied by a private person if the supply of those goods within the Member State by a private person is not subject to that tax?"

t The questions put by the national court are essentially aimed at ascertaining whether it is compatible with the provisions of the Treaty, and in particular with Articles 12 and 13 on the one hand and 95 on the other, for a Member State to levy, pursuant to Community directives, turnover tax in the form of value-added tax on the importation of products from another Member State supplied by a non-taxable person (hereinafter referred to as a "private person").

7 The plaintiff in the main action alleges that the tax is incompatible with the Treaty because similar supplies within the territory of a Member State by a private person are not subject to value-added tax. It maintains further that the levying of value-added tax on the importation of products from another Member State supplied by a private person gives rise to an overlapping of taxes since, unlike supplies made by taxable persons, there is no remission in respect of value-added tax levied in the Member State of exportation. Consequently, the value-added tax levied on the importation of such products must be considered as a charge having an effect equivalent to a customs duty or as discriminatory internal taxation.

1 That is the background to Anicie 2 of the Sixth Directive which provides that the following are to be subject to value-added tax: on the one hand "the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such" (point 1) and on the other "the imponation of goods" (point 2). Anicie 4 of the directive defines "taxable person" as meaning any person who independently carries out in any place any economic activity such as that of producer, trader, and person supplying services including mining and agricultural activités and activities of the professions. Anicie 3 defines "supply of goods" as "the transfer of the right to dispose of tangible propeny as owner" whereas "importation of goods" is defined in Anieles 7 as "the entry of goods into the territory of the country".

The Sixth Directive also harmonizes the concepts of chargeable event and chargeability of tax (Anicie 10) and the taxable amount (Article 11).

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Exemptions are provided both for transactions within the country and imports (Articles 13 and 14). Expons and like transactions are exempted from tax (Anicie 15).

i3 It is right to stress that the directives bring about only a partial har- monization of the system of value-added tax. At the present stage of Community law Member States are free inter alia to fix the rate of value- added tax, provided always that the rate applicable on the importation of goods must be that applied to the supply of like goods within the territory of the country (Article 12 of the Sixth Directive).

i7 The first question which the Gerechtshof submits is essentially whether it is compatible with Articles 12 and 13 of the Treaty to levy value-added tax v, the importation of products from another Member State supplied by : private person if no such tax is levied on the supply of similar goods by ., private person within the territory of the importing Member State.

is According to established case-law of the Court the prohibition, in relations between Member States, of charges having an effect equivalent to customs duties, covers any tax which is payable on or by reason of importation and which, as it applies specifically to an imponed product to the exclusion of a similar domestic product, ultimately produces, by adversely affecting the cost price of the former product, the same effect upon the free movement of goods as a customs duty.

i9 The essential characteristic of a charge having an effect equivalent to a customs duty, and the one which distinguishes it from internal taxation, is therefore that it affects only imponed products as such whereas internal taxation affects both imponed products and domestic products.

2: The C o u n has nevenheless recognized that a pecuniary charge payable on a product imponed from another Member State and not on an identical or similar domestic product does not constitute a charge having equivalent effect but internal taxation within the meaning of Anicie 95 of the Treaty if it is pan of a general system of internal dues applicable systematically to categories of products according to objective criteria applied without regard to the origin of the products.

S e c o n d q u e s t i o n : t h e i n t e r p r e t a t i o n of A r t i c l e 95 of t h e T r e a t y

23 In its second question the Gerechtshof asks in substance whether the levying of value-added tax on the importation of products from another Member State supplied by a private person is compatible with Article 95 of the Treaty where no such tax is payable on the supply of similar products by a private person within the territory of the Member State of importation.

24 The plaintiff in the main action considers that such difference in treatment is contrary to Article 95 since on the one hand it is detrimental to the supply of products between private persons resident in different Member States as compared to supply by private persons resident in the Member State of importation and on the other hand it gives rise to an overlapping of taxes as regards products delivered by private persons across the frontier for which, unlike products supplied by taxable persons, there is no remission of tax on exponation.

25 The Member States which have taken p a n in these proceedings, the Council and Commission contend that the elimination of the overlapping of taxes

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within the Community, however desirable it may be, can be achieved only by means of the gradual harmonization of the national taxation systems under Article 99 or 100 of the Treaty and not by applying Article 95. In support of that argument it was alleged that the overlapping of taxes is a corollary of the fact that the Treaty, by reserving power in relation to internal taxation to the Member States, has allowed tax frontiers to remain.

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regard to the tax burdens borne by the two categories. The domestic products have already been subjected to value-added tax within the territory of the Member State when delivered new. Since that tax is reflected in the market price of second-hand goods the effect of value-added tax charged on importation is merely to compensate for the residue of that tax and thus to establish, from the point of view of perfect neutrality with regard to intra- Community trade, equality of treatment between the domestic and foreign products.

3: On the other hand the plaintiff in the main action claims that there is a breach of the principle of equal treatment since the products imponed by private persons are already burdened with value-added tax imposed in the Member State of exportation, there being no remission of tax on exponation.

31 It may be observed that at the present stage of Community law the Member States are free, by vinue of Anicie 95, to charge the same amount on the importation of products as the value-added tax which they charge on similar domestic products. Nevenheless, this compensation is justified only in so far as the imponed products are not already burdened with value-added tax in the Member State of exponation since otherwise the tax on imponation would in fact be an additional charge burdening imponed products more heavily than similar domestic products.

3: That view derives in the first place from the terms of Anicie 95 of the Treaty which prohibits not only the direct but also the indirect imposition of internal taxation on products from other Member States in excess of that on similar domestic products. That prohibition would not be complied with if imponed products could be subject to the value-added tax applicable to similar domestic products without account being taken of the proportion of value- added tax with which those products are still burdened at the time of their imponation.

34 Consequently, it is necessary also to take into account the value-added tax levied in the Member State of exponation for the purpose of determining the compatibility with the requiremencs of Article 95 of a charge to value-added tax on products from another Member State supplied by private persons where the supply of similar products within the territory of the Member State of importation is not so liable. Accordingly, in so far as such an imported product supplied by a private person may not lawfully benefit from a remission of tax on exportation and so remains burdened upon importation with part of the value-added tax paid in the Member State of exportation the amount of value-added tax payable on importation must be reduced by the residual part of the value-added tax of the Member State of exportation which is still contained in the value of the product when it is imported. The amount of this reduction may not, however, be greater than the amount of value-added tax actually paid in the Member State of exportation.

35 The Member States which have taken pan in these proceedings have objected to this interpretation on the ground that the value-added tax paid in the Member State of exponation is difficult to check since both the rate of the tax and its basis of assessment may have varied in the course of time.

36 In that regard it should be pointed out that it is for the person who seeks exemption from or a reduction in the value-added tax normally levied on imponation to establish that he satisfies the conditions for such exemption or reduction. Accordingly it is open to the Member State of imponation to require such an importer to provide the necessary documentary proof that the value-added tax was levied in the Member State of exponation and still burdens the product on importation.

4: The second question must accordingly be answered to the effect that value- added tax which a Member State levies on the importation of products from another Member State supplied by a private person, where no such tax is levied on the supply of similar products by a private person within the territory of the Member State of importation, constitutes internal taxation in excess of that imposed on similar domestic products within the meaning of Article 95 of the Treaty, to the extent to which the residual part of the value- added tax paid in the Member State of exportation which is still contained in the value of the product on importation is not taken into account. The burden of proving facts which justify the taking into account of the tax falls on the imponer.

T h i r d q u e s t i o n : t h e v a l i d i t y of A r t i c l e 2, p o i n t 2 , of t h e Sixth Directive

JI The third question concerns the validity of Article 2, point 2, of the Sixth Directive in so far as it imposes value-added tax on products imported from another Member State and supplied by a private person.

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42 The requirements of Article 95 of the Treaty are of a mandatory- nature and do not allow derogation by any measure adopted by an institution of the Community. Nevertheless it follows from the foregoing considerations that that article does not prohibit in a general way the imposition of value-added tax on the importation of products even though the supply of similar domestic products in the territory of the Member State of importation is not so subject but it simply requires that the pan of the %-alue-added tax paid in the Member State of exportation and still burdening the product on import should be taken into account.

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46 According to established case-law of the Court that provision contains a prohibition of discrimination which constitutes a clear and wholly unconditional obligation and its implementation and effects are not subject to the adoption of any measure by the institutions of the Community or the Member States. The prohibition thus produces direct effects and creates for individuals personal rights which the national courts are bound to protect.

47 Consequently in so far as that provision, as interpreted by the Court, restricts the conditions under which value-added tax may be imposed on the import- ation of products from another Member State supplied by a private person, the Member States are bound to comply therewith and not to apply any provision to the contrary which may be contained in their national law.

48 The fourth question must therefore be answered to the effect that Article 95 of the Treaty prohibits Member States from imposing value-added tax on the importation of products from other Member States supplied by a private person where no such tax is levied on the supply of similar products by a private person within the territory of the Member State of importation, to the extent to which the residual part of the value-added tax paid in the Member State of exportation and still contained in the value of the product when it is imported is not taken into account.

Costs

The costs incurred by the Netherlands, French and Italian Governments and by the Council and Commission, which have submitted observations to the Court, are not recoverable. Since the 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.

3. Article 2, point 2, of the Sixth Council Directive No 77/388 of 17 May 1977 is compatible with the Treaty and therefore valid since it must be interpreted as not constituting an obstacle to the obligation under Article 95 of the Treaty to take into account, for the purpose of applying value-added tax on the importation of products from another Member State supplied by a private person where no such tax is levied on the supply of similar products by a private person within the territory of the Member State of importation, the residual part of the value-added tax paid in the Member State of exportation and still contained in the value of the product when it is imported.

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4. Article 95 of the Treaty prohibits Member Sutes from imposing value-added tax on the importation of products from other Member States supplied by a private person where no such tax is levied on the supply of similar products by a private person within the territory of the Member State of importation, to the extent to which the residual part of the value-added tax paid in the Member State of exportation and still contained in the value of the product when it is imported is not taken into account.

Menens de Wilmars Bosco Touffait

Due Pescatore Mackenzie Stuart O'Keeffe

Koopmans Everling Chloros Grévisse