C-391/85

COMMISSION / BELGIUM

OPINION OF MR ADVOCATE GENERAL MISCHO delivered on 22 October 1987 *

down in Article 27 (5) of the directive are Mr President, not fulfilled, the Kingdom of Belgium has Members of the Court, failed to fulfil its obligations under the EEC Treaty*.

1. In the new action which the Commission has brought against the Kingdom of Belgium concerning the taxation of motor 4. By Royal Decree No 17 of 20 December cars it claims that the Court should declare 1984 laying down a minimum basis for that, 'by retaining in practice, under its Law charging VAT on second-hand saloon cars of 31 July 1984, the list price as the basis for and estate cars, which repeals Royal Decree the taxation of new saloon cars and estate No 17 of 20 July 1970, Belgium terminated cars, Belgium has failed to take the the practice whereby the list price was used measures necessary to comply with the as the minimum taxable amount for new judgment delivered by the Court of Justice cars for VAT purposes. on 10 April 1984, 1 in which the Court de­ clared that practice to be contrary to Directive 77 / 388 / EEC' .

8. It is true that the Court did not, in the Commission may contest only by instituting operative part of its judgment or in the entirely new proceedings, not linked with grounds thereof, make any reference to the the question whether the preceding list price except with regard to Articles 11 judgment has been complied with. and 27 of the directive, which deal solely with VAT. 13. It must be admitted that such an approach would be logical and consistent. Does that mean that it is the only possible 9. Moreover, Belgium has demon­ approach? The Commission thinks not, strated — in my view convincingly and since in its application it seeks a declaration without being contradicted in this respect by that the judgment of the Court has been the Commission — that the registration tax incorrectly implemented, and not that there has characteristics which distinguish it from has been a fresh infringement, independent VAT. The arguments which it has put of the old one. forward are contained in the Report for the Hearing. The most decisive argument 14. It should also be noted that the fresh concerns the fact that registration tax is not proceedings instigated by the Commission deductible. seem almost like two combined actions against Belgium for failure to fulfil its obli­ gations, one for infringement of Article 171 10. It might therefore be concluded, on the of the EEC Treaty and the other for failure basis of the actual terms of the judgment of to comply with Article 33 of the Sixth 10 April 1984, that Belgium has in fact Directive. adopted the measures needed to comply with that judgment and that the 15. Indeed, even in its letter of formal Commission's application is unfounded. notice the Commission claimed that the registration tax infringed Article 33 of the Sixth Directive. It repeated that argument in the reasoned opinion, in the application and 11. To reach that conclusion would be to in the reply. adopt a strict interpretation of Article 171 which could be described in the following terms: Article 171 requires a Member State 16. It is therefore undeniable that as to adopt the precise measures arising out of regards the latter complaint Belgium had the the operative part of the judgment by which same opportunity of defending itself as it the Court held that the Member State had would have had if entirely separate failed to fulfil its obligations. Those proceedings had been instituted against it measures may be negative (repeal of a for failure to fulfil its obligations. At the provision, as was the case here) or positive hearing, however, the Commission insisted (adoption of a new provision). that its action related solely to the infringement of Article 171.

me, however, that the fact that the article the Court has not been properly complied was cited in the letter of formal notice and with. was set out in the conclusion of both the reasoned opinion and the application is sufficient for this action to be considered an 21. The second approach is as follows: action for the infringement of Article 171. I therefore propose that the Court should 22. Article 171 requires a Member State to reject that submission. adopt the necessary measures to comply with a judgment by which the Court held that it was in breach of one of its obli­ gations. If in complying with a judgment a Member State infringes a rule of 18. In support of the Commission's point of Community law, it is not respecting Article view two lines of reasoning may be put 171 of the Treaty and is liable to be found forward, which may overlap. The first is to have thereby failed to fulfil its obli­ based on the implied scope of the judgment gations. of 10 April 1984 and the second on the connection between the measures adopted by Belgium and compliance with that judgment. 23. In this case Belgium, obliged as a result of the judgment of the Court to abolish the minimum basis for charging VAT, adopted a set of measures which were expressly stated, in the recitals to the Royal Decree of 20 December 1984 amending the general 19. The first approach emphasizes the fact rules on taxes equivalent to stamp duties that the subject-matter of the Commission's (Moniteur belge of 3 January 1985, p. 17), application which gave rise to the judgment of 10 April 1984 was necessarily limited to to be an 'inseparable whole'. The intro­ the method of charging VAT, since at that duction of a registration tax based on the time in Belgium there was no other tax on list price of new cars constitutes a major new cars. There was therefore no reason for part of that whole. It was even stated, in the the Court to consider the compatibility with preamble to the aforesaid Royal Decree, the Sixth Directive of other taxes based on that the registration tax was intended to the list price. The Court was, however, fully 'compensate for the abolition of the aware of the fact that, under the system minimum taxable amount for VAT established by the Sixth Directive, there purposes'. could be no tax on turnover other than VAT (see Article 33 of the Directive). Therefore the judgment of 10 April 1984 24. If it should therefore be found that the implied that the supply (the chargeable registration tax is contrary to a provision of event for VAT purposes) of a new car could Community law, namely Article 33 of the not give rise to any taxation based on the Sixth Directive, Belgium would not have list price. properly complied with the judgment in question and would therefore have failed to fulfil its obligations under Article 171 of the Treaty.

26. It seems to me that the arguments put Ίn leaving the Member States free to forward in support of the second interpre­ maintain or introduce certain indirect taxes tation prove, in this case at least, that the such as excise duties on the condition that connection between the conduct on the part they are not taxes which can be 'charac­ of the Member State complained of and the terized as turnover taxes', Article 33 of the compliance with the judgment of the Court Sixth Directive seeks to prevent the func­ is sufficiently close for the application tioning of the common system of brought by the Commission against Belgium value-added tax from being compromised for failure to fulfil its obligations under by fiscal measures of a Member State levied Article 171 to be regarded as admissible. on the movement of goods and services and charged on commercial transactions in a way comparable to value-added tax. The purpose of that provision cannot therefore 27. It must therefore then be considered be to prohibit the Member States from maintaining or introducing duties or charges whether the registration tax must be which are not fiscal but have been regarded as a turnover tax within the introduced specifically in order to finance meaning of Article 33 of the Sixth Directive. social funds and which are based on the activity of undertakings or certain categories of undertakings and calculated on the basis of the total annual turnover without directly 28. That article provides that 'without affecting the price of goods or services.' prejudice to other Community provisions, the provisions of this directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, 32. I propose to examine the various criteria stamp duties and, more generally, any taxes, set out in that paragraph one by one. duties or charges which cannot be charac­ terized as turnover taxes'.

35. It is levied on the first use of a vehicle equivalent to that which was used as the and is then charged on any change of assessment basis for VAT (new Article 7 (2) ownership. In other words, it is levied on of the code on taxes equivalent to stamp successive disposals of the same goods, duties, introduced by the Law of 31 July although its minimum basis of assessment, 1984). expressed by a decreasing percentage of the list price, is reduced as the car becomes older (Article 10 of the general regulation on taxes equivalent to stamp duties, as 39. As the Belgian Government stresses in amended by the regulation of 20 December paragraph 53 of its defence, the purchaser 1984). of the car is merely granted a 'tax credit' for the VAT paid by him. In my view, it may therefore be said that registration tax is charged on commercial transactions in the same way as VAT. 36. (c) Is the tax charged on commercial transactions in a way comparable to the VAT, and does it directly affect the price of the goods concerned? 40. If one turns away from the theoretical aspects and observes the way in which the system operates in practice, one finds that either the two taxes are paid simultaneously when the car is paid for (see for example 37. From the way in which the basis of the bill of sale submitted to the Court by the assessment is formally defined ('In the case Commission) or the purchase price and of new saloon cars and new estate cars, the VAT are paid and registration tax is paid tax shall be charged on the list price in force separately. In both cases the actual taxable on the date of registration of the amount for the purposes of registration tax vehicle' — Article 5 (1) introduced by the is the difference between the list price and Law of 31 July 1984) it must be concluded the price actually paid, that is to say the that it is certainly charged on a commercial discount granted by the seller. transaction, since the list price includes the price which was actually paid. In principle, the tax is charged not only on the rebate granted by the seller but also on the price 41. This is why the Belgian Government actually paid by the purchaser, which also states in paragraph 26 of its rejoinder that constitutes the assessment basis for VAT. the taxable amount for the purposes of Furthermore, in the table headed 'Example registration tax 'is not the consideration for illustrating the effect of registration tax in a transaction, expenditure on consumption practice', which was supplied to the Court or a fraction of turnover'. But can it still be by the Belgian Government in reply to the said that, as things truly stand, registration questions asked by the Court, there is a tax is not charged on commercial trans­ column entitled 'Base d'importation de actions in a way comparable to VAT and principe = prix de catalogue' ('Basic does not directly affect the price of the taxable amount = list price'). goods in question, in accordance with the criterion laid down by the Court?

47. The Belgian Government, however, maintains that the chargeable event for this 43. In Rousseau Wilmot, the tax was based tax is not the purchase of the car but solely on the total annual turnover of the its registration. The tax is merely a standard companies concerned, and the Grad Case charge levied when a car is authorized to be (judgment of 6 October 1970 in Case 9/70 used on the public highway. Grad v Finanzamt Traunstein [1970] ECR 825) concerned a fixed sum of one pfennig per tonne per kilometer. 48. If that were so, however, the tax would have to be charged whenever a car was authorized to be used on the public highway. But that is not the case. Regis­ tration tax is not in fact charged at all when 44. By contrast, the registration tax 'affects VAT has been charged on the basis of the the price of the goods concerned', since it list price or where an exemption from VAT increases the price which must be paid for has been granted (see Article 7 of the code on taxes equivalent to stamp duties, as the car by the consumer if he wishes to use amended by the Royal Decree of 17 it for the purpose for which it is intended. October 1980 and by the Law of 31 July The case of a person wishing to purchase a 1984). car without also applying for a registration plate is in practice so unusual that it may be disregarded. 49. In my view, the fact that registration tax is so wholly interchangeable with VAT conclusively proves that it is a turnover tax prohibited by Article 33 of the directive.

Conclusion

53. For all the reasons set out above, I propose that the Court should declare that the Kingdom of Belgium, by retaining in practice in its Law of 31 July 1984 the list price as the basis for the taxation of new saloon cars and new estate cars, has not adopted the measures necessary to comply with the judgment of the Court of Justice of 10 April 1984, and should order the defendant to pay the costs.