C-38/82
ECLI:EU:C:1983:108
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JUDGMENT OF 26. 4. 1983 — CASE 38/82
2. Article 95 of the Treaty must be do not prescribe for its grant a interpreted as meaning that, in order condition which only domestic to qualify for a tax advantage production is capable of fulfilling, available to domestic products which spirits imported from other Member is permissible under Community law States must satisfy all the conditions because it is not discriminatory of the provisions establishing the tax inasmuch as the national provisions advantage in question.
In Case 38 / 82
REFERENCE to the Court under Article 177 of the EEC Treaty by the Vllth Senate of the Bundesfinanzhof [ Federal Finance Court ] for a preliminary ruling in the action pending before that court between
HAUPTZOLLAMT FLENSBURG
and
FIRMA HANSEN GMBH & Co ., Flensburg ,
on the interpretation of Article 95 of the EEC Treaty ,
THE COURT
composed of: J. Mertens de Wilmars , President , P . Pescatore , A. O'Keeffe and U . Everling ( Presidents of Chambers ), Lord Mackenzie Stuart , G. Bosco , T . Koopmans , O . Due and K. Bahlmann , Judges ,
Advocate General : G. Reischl Registrar : P . Heim
gives the following
HAUPTZOLLAMT FLENSBURG v HANSEN
JUDGMENT
Facts and Issues
The facts of the case, the course of particular the prohibition of discrimi the procedure and the observations nation laid down in Article 95, apply submitted pursuant to Article 20 of the to goods coming from the French Protocol on the Statute of the Court of overseas departments. Justice of the EEC may be summarized as follows: 2. Where national tax legislation favours certain classes of producers or the production of certain types of spirits by means of tax exemptions or I — Facts and written procedure the grant of reduced rates of taxation, even if such advantages Hansen GmbH & Co. (hereinafter benefit only a small proportion of referred to as "Hansen"), which has its domestic production or are granted registered office in Flensburg, manu for special social reasons, those factures spirits intended for human advantages must be extended to consumption. It is the proprietor of a imported Community spirits which warehouse from which it withdrew in fulfil the same conditions, taking 1974 light rum coming from the French into account the criteria which overseas departments and from underlie the first and second Suriname. In connection with that paragraphs of Article 95 of the EEC withdrawal the Hauptzollamt [Principal Treaty. Customs Office] Flensburg charged the monopoly equalization duty 3. The EEC Treaty does not include (Monopolausgleich) at the usual rate, any provision prohibiting discrimi amounting at the material time to DM nation in the application of internal 1 500 per hectolitre of wine-spirit. taxation to products imported from Hansen challenged that assessment on non-member countries, subject the ground that under Article 95 of the however to any treaty provisions Treaty the monopoly equalization duty which may be in force between the must not exceed the lowest tax imposed Community and the country of on German production of spirits distilled origin of a given product." from fruit, which at the time amounted to DM 1 210.60 per hectolitre of wine- Following that judgment of the Court spirit. the Finanzgericht Hamburg held that light rum imported from the French The Finanzgericht [Finance Court] overseas departments and from Suriname Hamburg before which proceedings were should be assessed at a rate of DM brought referred five questions to the 1 210.60 per hectolitre of wine-spirit. Court of Justice to which the following answers were given : The Hauptzollamt Flensburg submitted an appeal on a point of law against that " 1 . Article 227 (2) of the EEC Treaty, judgment to the Bundesfinanzhof interpreted in the light of Article 227 [Federal Finance Court], arguing on the (1), must be taken to mean that the one hand that the first paragraph of tax provisions of the Treaty, in Article 95 does not require the
JUDGMENT OF 26. 4. 1983 — CASE 38/82
application to imports of the most According to the Bundesfinanzhof the favourable national rate of tax since that case-law of the Court of Justice shows rate constitutes a tax advantage for the that, in that version, the provision is not benefit of specified categories of compatible with Article 95 since the pre domestic producers which may not be scribed conditions cannot be fulfilled by extended without discrimination to the producers of other Member States imported spirits; accordingly imported whose legal systems do not contain spirits must comply with the substantive equivalent provisions. conditions in order to qualify for the tax advantage in question. Furthermore the The Bundesfinanzhof however recalls only comparison which can possibly be that, according to the established made is with blended domestically- case-law of the Court of Justice, produced rum and not with spirits Member States may grant reductions in distilled from fruit. taxation provided that they are for The German Law on the Monopoly legitimate economic or social purposes in Spirits (Gesetz über das Brannt and that such advantages are extended to weinmonopol), in the version prior to imported products which fulfil the same 1978, laid down that spirits distilled from conditions; it is thus necessary to fruit on German territory were liable apply to imported products "such to the spirits surcharge (Brannt conditions ... as constitute, in their weinaufschlag), which,- at the normal totality, a true equivalent to the rules rate, corresponded to the rate of the applying to domestic products so that the monopoly equalization duty imposed on imported products may effectively imported products. benefit from the same-advantages". However under paragraph 79 (2), No 1, of the Law on the Monopoly in Spirits, The Bundesfinanzhof continues that, in in the version in force at the material this case, the application of those time, that surcharge was reduced in the principles as a whole to the extension of case of spirits produced in a cooperative the tax advantage in question causes fruit farm distillery (Obstgemeinschafts difficulties in establishing what specific brennerei). requirements must be prescribed.
According to paragraph 37 of the Law In view of the fact that the Court has not on the Monopoly in Spirits such yet given "any clear answer to that distilleries constitute bonded distilleries question" since even the judgment given, run by a cooperative,, the spirits being in Case 153/80 (judgment of 7 May distilled exclusively from fruit produced 1981, Hansen, [1981] ECR 1165) does by the members of the cooperative not provide a reply the Bundesfinanzhof themselves. "finds it necessary to make a fresh Finally, the reduction in the surcharge is reference to the Court of Justice", accorded only if the production of the submitting to it two questions : said distilleries does not exceed 300 litres of wine-spirit distilled from products of " 1 . Has the importer of spirits distilled any one member of the cooperative in from fruit or similar spirits from the course of one financial year. other Member States an unrestricted Accordingly that tax advantage applies legal right under the first paragraph only to spirits distilled from fruit on the of Article 95 of the EEC Treaty to a national territory and is in part domestic tax advantage in respect of conditional on following the technical spirits the grant of which depends on procedures peculiar to German law with the spirits' being produced in a regard to the taxation of spirits. distillery operated in common by
HAUPTZOLLAMT FLENSBURG v HANSEN
several persons to process agri excluded because the latter is cultural raw materials produced by produced by the use of an imported themselves and annually producing product (rum)?" no more than 300 litres of wine spirit from the raw materials of any one member? Or does the right to that advantage depend upon the requirement that the imported spirits should originate in a distillery satisfying in whole or in part the In the grounds for its order the Bun conditions laid down in the desfinanzhof recalls with regard to the provisions governing the grant of the first question that the national provisions advantage? If partial fulfilment is in question "served to protect the sufficient, with which of those traditional use to which fruit is put by conditions may compliance be made small-scale farmers in Germany". The a requirement for extending the tax differentiation was thus made on advantage to similar spirits imported economic and social grounds, and from other Member States if the first especially to maintain the use of fruit by paragraph of Article 95 of the EEC small-scale farmers, as is traditional in Treaty is not to be infringed? May Germany. This is the framework within the extension of the advantage be which, the Bundesfinanzhof continues, it made subject to the requirement that is necessary to raise the question of the production of the distillery in establishing whether the first paragraph which the imported spirits originate of Article 95 of the Treaty is satisfied if should be no greater than the similar imported spirits qualify for the maximum production of the domes tax benefit in question only in so far as tic cooperative distillery during a they originate in distilleries which on the comparable period? whole satisfy the conditions mentioned in the Law on the Monopoly in Spirits. That is why the court making the reference requests the Court of Justice to provide a specific reply to the first question and points out that large-scale German producers would suffer discrimi 2. In a case where light rum imported nation if all importations of similar spirits from other Member States is similar qualified for the advantage reserved to both to domestic spirits distilled small-scale German producers and that from fruit and to domestic blended the German legislature is obliged, in rum or domestic spirits distilled from order to mitigate the consequences, to grain and the national law provides, abolish that tax advantage which it is by way of legitimate differentiation, entitled to grant under Community law. for different duties for the three kinds of products, does Article 95 of the EEC Treaty require that the most favourable of the three relevant duties on spirits should be applied to the imported rum? Or is the With regard to the second question the determinant criterion with which of Bundesfinanzhof is of the opinion that it the three kinds of products the concerns the problem of coordinating the imported rum has most charac conditions regarding similarity laid down teristics in common? Is comparison by Article 95 of the Treaty and the with the duty on blended rum conditions for justified differentiation in
JUDGMENT OF 26. 4. 1983 — CASE 38/82
taxation. In so far as the Court has ruled order of the court making the reference that although two products were similar and on the substantive legal situation different tax systems might nevertheless created by the Law on the Monopoly in be justified (cf. in this connection in Spirits. particular the judgment of 14 January 1981 Chemial Case 140/79 [1981] ECR The judgment delivered by the Court on 1) the greatest similarity should be taken 10 October 1978 (Case 148/77 Hansen, as the basis for according the tax cited above) and the judgment delivered advantage in question in respect of on 7 May 1981 (Case 153/80, Hansen, imported products. also cited above), show that the tax advantages granted in favour of The order making the reference was cooperative fruit farm distilleries must be received at the Court Registry on extended to similar imported spirits, 27 January 1982. unlike the advantages for which small- scale units qualify. In the plaintiff's view these judgments show that whilst In accordance with Article 20 of the differentiation is permitted its limit is Protocol on the Statute of the Court of attained, at least when it defines the Justice of the EEC written observations circumstances so restrictively in terms of were lodged by Hansen, represented by specific national characteristics that Mr Ehle, Rechtsanwalt, Cologne, by the factors in other Member States — parti Government of the Federal Republic of cularly overseas States — are thereby Germany, represented by Mr Sedemund, excluded. Rechtsanwalt, Cologne, and by the Commission of the European Com munities, represented by its Legal The Court has also established in its Adviser, Mr Zimmermann, acting as judgment in Case 148/77 that a Agent, assisted by Mr Krause-Ablass, quantitative relationship between the Rechtsanwalt, Düsseldorf. domestic products which qualify for the tax advantage and the imported products to which the tax advantage must be Upon hearing the report of the Judge- extended is of little importance. Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any After recalling these principles which, preparatory inquiry. according to it, follow from the case-law of the Court Hansen advances its principal argument to the effect that the tax difference established by the Law on II — Observations submitted the Monopoly in Spirits is not lawful. In under Article 20 of the fact the Bundesfinanzhof has not shown Protocol on the Statute of the real objectives pursued by the the Court of Justice of the German Law; it does not have as its EEC objectives any social aim — whilst such reasons do in fact exist with regard to the producers in the French overseas departments — but such objectives A — The first question comprise reasons relating to the competitive capacity of distilleries, an According to the plaintiff and respondent objective which is valid with regard to to the appeal the reply to the first Article 37 of the Treaty but which has, question must be based not only on the however, discriminatory effects in the tax wording but also on the grounds of the field which are contrary to Article 95 of
HAUPTZOLLAMT FLENSBURG v HANSEN
the Treaty. That is confirmed by the fact Finally that criterion — which must be that the German legislature abolished the modified in terms of the conditions in tax advantage in question in 1978. the exporting country — causes a considerable problem of fact for the national courts. Consequently the plaintiff in the main action considers only in the alternative the specific problems raised by the court With regard to the question raised by the making the reference in its first question. Bundesfinanzhof of possible discrimi nation against German large-scale producers the plaintiff recalls first of all Hansen recalls that the Bundesfinanzhof that the tax advantage in question is not has considerably restricted the criteria to directed to the small-scale producers but be extended in its order for reference in to the cooperative fruit farm distillery relation to the conditions which it listed which, as has been explained above, in its interlocutory judgment of 9 July cannot be treated as equivalent to such 1981 in the main procedure and producers. Furthermore Article 95 of the considers that of the three criteria listed Treaty does not prohibit Member States by the Bundesfinanzhof in its order from imposing upon imported products making the reference only the lower taxes than those applied to similar quantitative criteria may be extended to domestic products and all discrimination imported products. The requirement that contrary to Article 95 of the Treaty must the distillery should be run in the form be abolished by the legislature without of a cooperative cannot in fact be the need to take into consideration the extended to imported products because, quantity of spirits qualifying for the on the view taken by German law, the national tax advantages. distilling right belongs to the cooperative and not to its members. Accordingly it is likewise impossible to treat the In those circumstances the plaintiff in the cooperative as equivalent from the point main action suggests that the Court of view of tax law to the small-scale should reply as follows to the first distillers. question submitted by the Bundes finanzhof:
Even the quantitative criterion can be extended to imported products only "The importer of spirits distilled from where it constitutes an objective fruit or of similar spirits (rum) from criterion, the production capacity, and other Member States enjoys an unre not a subjective criterion, the actual stricted right under the first paragraph of production. Article 95 of the EEC Treaty to enjoy the tax advantage which is granted to cooperative fruit farm distilleries under Furthermore it should be borne in mind paragraph 79 (2) of the German Law on that, even though little use was made of the Monopoly in Spirits." that privilege, it was nevertheless established for all spirits distilled from fruit in the Federal Republic of The Federal German Government recalls Germany. first of all that, according to it, the objective of the Law of the Monopoly in Spirits is to promote the use of fruit by According to the plaintiff in the main small-scale undertakings and that the tax action the application of Article 95 is not advantage in question applies on average dependent on the number of persons to only 0.013% of the agricultural exercising a national tax privilege. production of spirits in the Federal
JUDGMENT OF 26. 4. 1983 — CASE 38/82
Republic of Germany. That tax advan considers that such a criterion may easily tage moreover constitutes a reasonable be extended to the other Member States, supplement to the individual privilege particularly since such forms of granted to small-scale distillers. cooperative or collective organization of small-scale agricultural producers are In view of these facts it is impossible to widespread throughout the European require the Federal Republic of Germany Community. to grant the tax advantage in question in respect of imported spirits the more so The same applies to the criterion that the since under Article 3 of the Grundgesetz raw materials must be produced by the [Basic Law] it would then be necessary members of the cooperative themselves to withdraw that advantage, since since that criterion complements the imported spirits may not be favoured in foregoing criterion and limits the persons relation to domestic spirits, and thus to qualifying for the tax advantage in refrain from benefiting the small-scale question to smallscale agricultural producers even though that would be producers and since the objective perfectly legal from the point of view of possibility of extending that additional
Community law. It is thus a necessary criterion appears clear. consequence that imported products cannot, according to the Federal Since the third condition prescribed by Government, enjoy an unlimited right to the German Law on the Monopoly in benefit from the tax advantage in Spirits constitutes a quantitative criterion question since it would be mistaken to it should be possible to extend it without consider that a tax advantage is difficulty to imported products. incompatible with Article 95 of the EEC Treaty when that advantage affects only Finally according to the Federal an infinitesimal percentage of domestic Government there remains one last production and does not produce any condition for obtaining the tax effect on the taxation of more than 99 % advantage in question which consists in of such production. the requirement that the spirits must be produced from fruit.
In this connection The case-law of the Court of Justice also the Federal Government observes that shows that, it is not only quantitative the Court of Justice has already on criteria which may be extended to a number of occasions expressly imported products but other criteria as recognized as lawful a tax differentiation well, provided nevertheless that their on the basis of the nature of the raw extension does not lead to an objective materials used. Light rum produced from impossibility of extending the tax molasses and not from fruit could thus advantage in question. qualify for the tax advantage in question only if the production of genuine fruit The German Government next considers spirits were objectively impossible in the each condition laid down by paragraph other Member States for reasons of law 79 (2), No 1, of the German Law on the or of fact. Monopoly in Spirits.
It considers in this connection that by its nature that task is Accordingly the Government of the for the national court and does not come Federal Republic of Germany proposes within the jurisdiction of the Court of that the answer to the first question Justice but nevertheless submits the submitted to the Court of Justice should following observations. be as follows:
"With regard first of all to the first "Article 95 of the Treaty must be criterion relating to the cooperative form understood as meaning that the tax of the organization of these distilleries it advantages which the legal system of a
HAUPTZOLLAMT FLENSBURG v HANSEN
Member State grants in respect of certain conditions to be provided in accordance alcoholic products may not be extended with appropriate procedures with which to similar products from other Member importers are able in practice to comply. States unless they fulfil the objective conditions which national law lays down as a qualification for the tax advantages Consequently the Commission proposes in question. That does not apply to that the reply to the first preliminary conditions which it is objectively question submitted should be as follows: impossible to fulfil in another Member State by reason of its geographical "A national tax advantage granted in situation or of the laws, regulations or respect of spirits distilled from fruit on administrative provisions applicable to condition that the spirits are produced in the manufacture of spirits in force in that a distillery which is operated in common State. by several persons to process agricultural raw materials produced by themselves and which does not manufacture more than 300 litres of wine-spirit per year Tax advantages for which only small- from the raw materials of any one scale distillers organized as cooperatives member of that group must, in qualify and which are conditional upon accordance with the first paragraph of compliance with quantitative criteria and Article 95 of the EEC Treaty, be granted on the nature of the raw materials used also in respect of similar spirits imported are in principle lawful in the present state from other Member States provided that of Community law in so far as the such spirits originate in a distillery which relevant conditions which must be fulfils the above-mentioned conditions. It fulfilled as a qualification for the tax must be made possible for proof of advantage may also be fulfilled in the fulfilment of these conditions to be other Member States." provided in accordance with appropriate procedures with which importers are able in practice to comply."
The Commission puts forward a point of view broadly similar to that expressed by the Federal German Government and B — The second question emphasizes that the Court, in its judgment of 30 October 1980 (Schneider, Case 26/80 [1980] ECR 3469), has The plaintiff in the main action considers recognized the lawful nature of granting first of all that the wording of that tax advantages to small-scale under question does not cover a factor of takings and that it is thus logical to grant decisive importance for the specific the same advantages to a group of small- subject-matter of the main action as only scale undertakings, the more so when domestic fruit spirits qualify for the tax they constitute agricultural distilleries. advantage provided for in paragraph 79 Apart from what the German Govern (2), No 1, of the German Law on the ment has termed the fourth condition, Monopoly in Spirits. The question raised concerning the requirement of the use of by the Bundesfinanzhof may at the most fruit for distilling, the Commission also be relevant in another context — and in considers that the three other conditions other cases — that is, with regard to the indicated by the Bundesfinanzhof must marginal rate of monopoly equalization be extended to imported products. It duty (Monopolausgleichsspitze). In the nevertheless adds that it must be made plaintiff's opinion, within the framework possible for proof of fulfilment of these of the procedure for obtaining a pre-
JUDGMENT OF 26. 4. 1983 — CASE 38/82
liminary ruling under Article 177 of the of the EEC Treaty the imported product EEC Treaty questions which are not must instead be classified in the most decisive for the procedure in the main favourable national tax category for action may not be submitted to the which it fulfils the objective conditions." Court of Justice.
The Commission suggests that the reply Nevertheless in order to reply to the to the second preliminary question second question the plaintiff in the main should be as follows : action emphasizes first of all that the concept of similarity within the meaning of the first paragraph of Article 95 of the "Where spirits imported from other EEC Treaty can only be a uniform one Member States are similar to a number since it concerns Community consumers; of domestic products and where national thus the most favourable rate must be law, in drawing a lawful distinction, applied when similarity exists with a provides a tax benefit only for one of the number of domestic spirits. kinds of similar domestic products the grant of the same tax advantage in respect of the imported spirits is subject Consequently the reply to the second to the sole condition that the imported question should be as follows: spirits should fulfil the conditions for the grant of the tax advantage which are lawfully required within the framework "Where imported spirits are similar to of the provisions of Article 95 of the several domestic products to which EEC Treaty; it is unnecessary to inquire differentiated taxation is applied the in addition with which of the similar most favourable rate of taxation must be extended." domestic products the imported spirits have most characteristics in common."
With regard exclusively to the reply to be given to the second question the Government of the Federal Republic of Germany and the Commission share the III — Oral procedure point of view of the plaintiff in the main action. At the sitting on 25 January 1983 replies The Federal Government suggests to the were given to the question put by the Court that the reply to the second Court and oral argument was presented question should be as follows : by the following: Mr Ehle, Rechtsanwalt, Cologne, for the plaintiff in the main action; Mr Sedemund, "If the tax provisions of national law Rechtsanwalt, Cologne, for the German provide different rates of taxation for a Government; and Mr Zimmermann, number of similar products the rate acting as Agent, assisted by Mr Krause- applied to a similar product imported Ablass, Rechtsanwalt, Düsseldorf, for from another Member State does not the Commission of the European depend on ascertaining to which of the Communities. similar domestic products the imported product displays the greatest similarity or with which it has most characteristics in The Advocate General delivered his common. In accordance with Article 95 opinion at the sitting on 8 March 1983.
HAUPTZOLLAMT FLENSBURG v HANSEN
Decision
1 By order dated 17 December 1981 which was received at the Court on 27 January 1982 the Bundesfinanzhof [Federal Finance Court] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two preliminary questions on the interpretation of Article 95 of the Treaty in order to permit it to determine whether the Gesetz über das Branntweinmonopol [the Law on the Monopoly in Spirits] in the version existing prior to 1978, was compatible with Community law.
2 That order was made in the course of an action before the Bundesfinanzhof between the Hauptzollamt [Principal Customs Office] Flensburg and Hansen GmbH & Co. (hereinafter referred to as "Hansen"). The action has already led to the reference to the Court of a first series of preliminary questions submitted by the Finanzgericht [Finance Court] Hamburg on the interpre tation of Articles 227 and 95 of the Treaty, to which the Court replied in a judgment dated 10 October 1978 (Hansen & Balle v Hauptzollamt Flensburg, Case 148/77 [1978] ECR 1787).
3 It should be recalled that the main action concerns the rate of the Monopolausgleich [monopoly equalization duty] charged on light rum coming from the French overseas departments and from Suriname. In 1974 Hansen withdrew from its warehouse a quantity of light rum in order to market it in the Federal Republic of Germany. The revenue authorities imposed tax on the rum at the ordinary rate whereas Hansen claimed that under Article 95 of the EEC Treaty the monopoly equalization duty in respect of imported spirits must not exceed the lowest rate of tax imposed on German production of spirits distilled from fruit, and proceedings were sub sequently brought before the Finanzgericht Hamburg.
4 In reply to the questions submitted by that court the Court of Justice ruled in particular that:
Where national tax legislation favours certain classes of producers or the production of certain types of spirits by means of tax exemptions or the grant of reduced rates of taxation, even if such advantages benefit only a small proportion of domestic production or are granted for special social reasons, those advantages must be extended to imported Community spirits which
JUDGMENT OF 26. 4. 1983 — CASE 38/82
fulfil the same conditions, taking into account the criteria which underlie the first and second paragraphs of Article 95 of the EEC Treaty.
5 Following that judgment of the Court the Finanzgericht Hamburg decided that the spirits in question were liable to tax at the reduced rate.
6 The Hauptzollamt Flensburg appealed against the judgment, arguing that the reduced rate of tax constituted a tax advantage for which only specified cate gories of domestic producers who fulfilled certain conditions qualified and that consequently only imported spirits fulfilling the same conditions might qualify for that rate.
7 According to the Bundesfinanzhof the conditions prescribed by the German Law on the Monopoly in Spirits were, apart from technical procedures peculiar to German law with regard to the taxation of spirits, as follows: the spirits in question must be distilled from fruit in a distillery managed in the form of a cooperative fruit farm from raw materials produced by the members of the cooperative themselves and the production of such a distillery must not exceed 300 litres of wine spirit distilled from the products of a single member of the cooperative in the course of one financial year.
8 The Bundesfinanzhof considers that certain domestic products may be promoted by the grant of a reduced rate of taxation in their favour provided that legitimate economic or social purposes are served thereby and that the reduced rate is extended to imported products fulfilling the same conditions. With regard to those conditions the Court stated in its judgment of 30 October 1980 (Schneider-Import, Case 26/80 [1980] ECR 3469) that in order to decide whether imported products may benefit from advantages granted for the domestic product it is necessary to apply to imported products conditions constituting a' genuine equivalent to the arrangements applicable to the domestic product, but it did not give an unequivocal reply regarding the question which specific requirements must be laid down in order that imported products may qualify for the tax advantage in question.
HAUPTZOLLAMT FLENSBURG v HANSEN
9 For that reason the Bundesfinanzhof submitted the following questions to the Court of Justice:
" 1 . Has the importer of spirits distilled from fruit or similar spirits from other Member States an unrestricted legal right under the first paragraph of Article 95 of the EEC Treaty to a domestic tax advantage in respect of spirits the grant of which depends on the spirits' being produced in a distillery operated in common by several persons to process agricultural raw materials produced by themselves and annually producing no more than 300 litres of wine spirit from the raw materials of any one member? Or does the right to that advantage depend upon the fact that the imported spirits originate in a distillery satisfying in whole or in part the conditions laid down in the provisions governing the grant of the advantage? If partial fulfilment is sufficient, with which of those conditions may compliance be made a requirement for extending the advantage to similar spirits imported from other Member States if the first paragraph of Article 95 of the EEC Treaty is not to be infringed? May the extension of the advantage be made subject to the production of the distillery in which the imported spirits originate being no greater than the maximum production of the domestic cooperative distillery during a comparable period?
2. In a case where light rum imported from other Member States is similar both to domestic spirits distilled from fruit and to domestic blended rum or domestic spirits distilled from grain and the national law provides, by way of legitimate differentiation, for different duties for the three kinds of products, does Article 95 of the EEC Treaty require that the most favourable of the three relevant duties on spirits should be applied to the imported rum? Or is the determinant criterion with which of the three kinds of products the imported rum has most characteristics in common? Is comparison with the duty on blended rum excluded because the latter is produced by the use of an imported product (rum)?"
10 These questions are in fact intended to establish whether Article 95 of the Treaty must be interpreted as meaning that spirits distilled from fruit or
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similar spirits imported from other Member States must automatically qualify for the most favourable tax treatment accorded to certain spirits of domestic origin or whether such spirits must satisfy one or more, or all, of the pre scribed conditions in order to qualify for that advantage.
11 With regard to the imported rum it should be mentioned that that kind of spirits has been charged the ordinary rate of tax and that the only problem raised by the national court is the question whether such rum must qualify for the favourable arrangements made only for a limited proportion of domestic production, namely spirits distilled from fruit.
12 It should be recalled that in the present state of Community law Member States are not prohibited from granting tax advantages in the form of exemption from or reduction in duty in respect of certain kinds of spirits or certain categories of producers. However, Article 95 requires that such pref erential arrangements be extended without discrimination to imported products meeting the same conditions as the domestic products in respect of which the preferential treatment is granted and must not constitute indirect protection for domestic products.
13 As far as the quantitative conditions are concerned, in this case the limitation to 300 litres, the problem has been resolved by the judgment of 7 May 1981 (Rumhaus Hansen, Case 153/80 [1981] ECR 1165) in which the Court stated that: "If the tax advantage for domestic products is granted in terms of the quantities produced in each production undertaking the same advantage must be granted in favour of products from production units situated in other Member States which fulfil the same quantitative criteria."
14 Consequently, imported spirits cannot qualify for the reduced rate of taxation described above unless they fulfil the conditions concerning the limitation or production fixed in this connection by national legislation.
15 With regard to the condition that the spirits should be distilled by cooperatives consisting, as the Bundesfinanzhof has stated, of a group of small-scale farmers the requirement that the condition should be met by products imported from other Member States is not contrary to Article 95.
HAUPTZOLLAMT FLENSBURG v HANSEN
Such a requirement does not in fact constitute a specifically national condition but may be met by undertakings in all Member States provided that it is understood as referring to groups of the same economic and social groups as those envisaged by the national law.
16 For the same reasons it appears that the requirement that each member of the cooperative should be entitled to produce spirits only from his own raw materials also constitutes a condition which may be required in order that spirits imported from other Member States may qualify for the tax advantage in question.
17 With regard to the requirement that the spirits taxed at the lower rate must be produced from the raw materials specified by the national provisions, that is to say, fruit, berries, wine, wine lees, must, roots or their residues, it should be observed that such raw materials are also produced in other Member States. Consequently the national provisions do not prescribe a condition which only domestic products are capable of fulfilling and the legislation in question is not discriminatory.
18 The reply to the questions submitted by the Bundesfinanzhof should therefore be that Article 95 of the Treaty must be interpreted as meaning that, in the case of a national tax advantage which, since it is not discrimi natory, is permissible under Community law, spirits imported from other Member States must, in order to qualify for that advantage, satisfy all the conditions of the provision by which it is established.
Costs
19 The costs incurred by the Government of the Federal Republic of Germany and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these 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.
OPINION OF MR REISCHL — CASE 38/82
On those grounds,
THE COURT ,
in answer to the questions referred to it by the Bundesfinanzhof by order of 17 December 1981, hereby rules:
Article 95 of the Treaty must be interpreted as measning that, in the case of a national tax advantage which, since it is not discriminatory, is permissible under Community law, spirits imported from other Member States must, in order to qualify for that advantage, satisfy all the conditions of the provision by which it is established.
Mertens de Wilmars Pescatore O'Keeffe Everling
Mackenzie Stuart Bosco Koopmans Due Bahlmann
Delivered in open court in Luxembourg on 26 April 1983.
P. Heim J. Mertens de Wilmars Registrar President
OPINION OF MR ADVOCATE GENERAL REISCHL DELIVERED ON 8 MARCH 1983 1
Mr President, the Court of Justice is sought as to the Members of the Court, conditions on which, in view of Article 95 of the EEC Treaty, a national tax benefit must be provided for similar or In the reference for a preliminary ruling competing imported products. Since the which is to be considered today Court is already acquainted with the additional clarification of the case-law of facts of the main action from the first
1 — Translated from the German.