C-127/86
ECLI:EU:C:1988:64
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OPINION OF MR MISCHO — CASE 127/86
OPINION OF MR ADVOCATE GENERAL MISCHO delivered on 9 February 1988 *
Mr President, dealing with VAT, permit a Member State Members of the Court, to require payment of the VAT due upon importation where a resident uses, for the performance of his duties under his contract 1. Mr Ledoux, the defendant in the main of employment and for leisure purposes, a proceedings, was charged with having vehicle placed at his disposal by his unlawfully imported into Belgium, the employer, who is established in another country in which he resides, a motor vehicle Member State in which VAT has been paid, registered in France and belonging to the the vehicle remaining the property of the French company which employs him, on the said employer and the importation into the basis that on 22 February 1983 he used the user's country of residence being merely vehicle away from the route he took when temporary. travelling to work, that is to say, he used it for private purposes. It can be seen from the file that the said vehicle was placed at the disposal of the accused under the terms of 4. The particular Community rules his contract of employment and he was applicable at the material time were those in entitled to use it both for his work and for the Sixth Council Directive of 17 May 1977 leisure purposes. (Directive 77/388 on the harmonization of the laws of the Member States relating to 2. It appears that at the material time there turnover taxes — Common system of was a practice in Belgium, which has been value-added tax: uniform basis of subsequently officially authorized by a assessment) (Official Journal L 145, p. 1). circular of the Belgian Customs and Excise Department of 1 May 1984, permitting frontier workers normally resident in 5. Since then, Council Directive 83/182 of Belgium to use a vehicle placed at their 28 March 1983 on tax exemptions within disposal by an employer established in the Community for certain means of another Member State on the Belgian part transport temporarily imported into one of the journey from their homes to their Member State from another (Official foreign workplace. However, that practice Journal L 105, p. 59) was adopted and did not cover the secondary use of such a came into effect on 1 January 1984. vehicle for private purposes. Obviously, I can refer to that text only incidentally and can use it only as a source 3. The question which the cour d'appel of interest in the reasoning which must be (Court of Appeal), Liège, before which the constructed on the basis of the law dispute in the main proceedings was applicable at the material time. Furthermore, brought after the tribunal correctionnel Directive 83/182 does not provide for tax (Criminal Court), Neufchâteau, had exemption in regard to temporary import acquitted Mr Ledoux, has referred to the ations of the kind at issue here. However, Court seeks essentially to know whether the on 4 February 1987, the Commission Community rules, in particular those submitted a proposal to the Council for an
* Translated from the French.
CRIMINAL PROCEEDINGS AGAINST LEDOUX
amendment to Directive 83/182, inserting in Member States into which the goods are it a provision covering that situation imported'. (Official Journal C 40 of 18 February 1987, p. 7).
9. However, those who drafted the Sixth Directive manifestly regarded the mere physical fact of importation as too rigid 6. Article 2 of the Sixth Directive provides because in Article 14, they provided for as follows: exemptions from VAT on importation. In particular, Article 14 (1) provides that:
'The following shall be subject to 'Without prejudice to other Community value-added tax: provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of (1) ...; such exemption and of preventing any possible evasion, avoidance or abuse:
(2) the importation of goods'.
(c) importation of goods declared to be 7. Article 10 (3) provides that as regards under temporary importation imported goods, 'the chargeable event shall arrangements, which thereby qualify for occur and the tax shall become chargeable exemption from customs duties, or at the time when goods enter the territory which would so qualify if they were of the country ..." (subparagraph 1), except imported from a third country; where goods are placed under arrangements for temporary admission (subparagraph 4). ...'.
8. Unlike what occurs in regard to the 10. Article 14 (2) adds that until the entry 'supply of goods' within the country, which into force of Community tax rules clarifying requires 'the transfer of the right to dispose the scope of the said exemptions and the of tangible property as owner' (Article detailed rules for their implementation, 5 (1)), it is therefore in principle the mere physical fact of importation, that is to say the entry of the goods into the country, 'Member States may: which gives rise to VAT liability. Whether the person importing the goods is the owner or the user thereof is irrelevant. Under Article 21 (2) the person liable to pay tax — maintain their national provisions in on importation is 'the person or persons force on matters related to the above designated or accepted as being liable by the provisions,
OPINION OF MR MISCHO — CASE 127/86
— adapt their national provisions to considered the problem of exemptions in a minimize distortion of competition and wider context. in particular the non-imposition or double imposition of value-added tax within the Community,
15. After noting that according to Article 14, the national provisions in question were to be maintained in force 'on matters related — use whatever administrative procedures to' the exemptions provided for by the they consider most appropriate to Community rules and were to be adapted to achieve exemption.' minimize cases of double imposition of value-added tax within the Community, the Court added that those requirements had in turn to be viewed in the light of one of 11. The Court was called upon to interpret the objectives of the harmonization of those provisions on three occasions, in its value-added tax which is, as stated in one of 2 judgments in Carciati 1, Abbink and the recitals in the preamble to the Sixth Profant. 3 Directive, to make further progress in the effective removal of restrictions on the movement of persons and goods and the integration of national economies. 12. Cardati was concerned with a situation very different from that of Mr Ledoux inasmuch as the vehicle was not re-exported every day to the Member State in which was 16. The Court concluded that those situated the undertaking which owned it but considerations showed that 'the authorities seems to have been used semi-permanently of the Member States do not enjoy a in the country of residence of the user. complete discretion in implementing the exemptions under Article 14 of the Sixth Council Directive, for they have to observe the fundamental objectives of the harmon 13. In Abbink, too, a return journey was ization of value-added tax such as, in not made every day. Furthermore, in both particular, to facilitate the free movement of of those cases the Court considered the persons and goods and to prevent cases of problem in the light only of the principles of double taxation. It follows that in applying the Treaty concerning the free movement of their national provisions on exemptions goods, as was required by the terms of the from value-added tax to motor vehicles used questions referred to it. by students from another Member State the tax authorities of a Member State are required to apply the concept of temporary importation in such a way as to avoid dero gating, by taxing their vehicles twice, from 14. In its judgment in Profant, the most the freedom of nationals of Member States recent case on the subject, the Court to pursue their studies in the Member State of their choice' (paragraphs 24 to 26). The 1 — Judgment of 9 October 1980 in Case 823/79 Carciati [1980] ECR 2773. Court concluded that in such a case, the 2 — Judgment of 11 December 1984 in Case 134/83 Abbink rules of Community law preclude the [1984] ECR 4097. levying by a Member State of value-added 3 — Judgment of 3 October 1985 in Case 249/84 Ministère public vProfant [1985] ECR 3237. tax on importation.
CRIMINAL PROCEEDINGS AGAINST LEDOUX
17. I consider that the reasoning used in taxation subsists in principle even in cases Profant may be transposed to the problem (such as this one) where in practice, in before the Court in this case. It is true that accordance with the judgments in Schul I4 Mr Profant, unlike Mr Ledoux, did not and Schul II, 5no VAT may be collected in have his principal residence in the country the importing country because the rate of of importation. It is also true that the Court VAT applicable there is lower than that expressly added that the result would have applicable in the exporting country. been otherwise if the person in question, who had got married in the interim, and his wife 'settled in the host Member State in such a way as to manifest their intention of 21. On the other hand, there is no double not returning to the Member State of origin' taxation and an exemption in the country of (paragraph 27). In such a situation, the temporary importation would not be importation would no longer be temporary justified if VAT had not been paid in the but would become definitive. exporting country or if it had been reim bursed.
18. However, it can be argued that in this 22. It is therefore quite correct for both case the fact that the car is imported into Directive 83/182, cited above, (last recital in Mr Ledoux's country of residence does not the preamble and Article 4 (1) (c)) and prevent the importation from being Directive 85/362 on the temporary temporary since the car continues to be the importation of goods other than means of property of the employer established in transport (Seventeenth Council Directive of the neighbouring country, is regularly 16 July 1985, Official Journal L 192, p. 20, re-exported to that country and will return Article 10 (c)) to make the exemption there definitively not later than upon the subject to an express condition that the termination of Mr Ledoux's contract of goods have been liable to VAT in the employment. exporting Member State and have not benefited, by virtue of their exportation, from any exemption from VAT.
19. Since the importation of the goods, regardless of who imports them, constitutes 23. On the other hand, it must be estab the chargeable event in regard to VAT, its lished that the vehicle was actually placed at temporary nature should, of itself, be the disposal of the worker by his employer, sufficient to justify the exemption. that is to say, that this is not a case of fraud such as false registration of a vehicle in a neighbouring country whereas it in fact belongs to the user. However, proof of the ownership of the vehicle by the employer may be established by fairly simply adminis 20. If a market 'resembling a real internal trative techniques. market' (fourth recital in the preamble to the Sixth Directive) is to be achieved, 4 — Judgment of 5 May 1982 in Case 15/81 Schul y Inspecteur des droits d'importation et des accises [1982] ECR 1409. double taxation is in fact quite inconceivable 5 — Judgment of 21 May 1985 ¡n Case 47/84 Secrétaire d'État in such a situation. Nevertheless, double aux Finances vSchul[1985] ECR 1491.
OPINION OF MR MISCHO — CASE 127/86
24. Furthermore, I regard it as revealing within the Community (Official Journal, that for temporary imports of goods other English Special Edition 1968 (II), p. 475), than means of transport, Article 10 (d) of which state expressly that: Council Directive 85/362, cited above, requires that the goods in question should 'belong to a person established outside the territory of the Member State of '. .. freedom of movement constitutes a importation'. fundamental right of workers and their families (which) must be enjoyed without discrimination by permanent, seasonal and frontier workers and by those who pursue 25. It should also be noted for Directive their activities for the purpose of providing 83/182 did not deal with all imaginable and services'. possible cases of temporary importation of motor vehicles and certainly does not constitute the final stage of development in that matter. To prove my point, I would The fifth recital in the preamble adds that: refer to Article 9 (1) of that directive which permits the Member States to maintain and / or introduce more liberal arrangements than those provided for in the directive '. . . the right of freedom of movement, in and to the Commission's proposal for order that it may be exercised, by objective supplementary provisions to which I standards, in freedom and dignity, requires referred at the beginning. that equality of treatment shall be ensured in fact and in law in respect of all matters relating to the actual pursuit of activities as employed persons. .. and also that obstacles 26. There is thus no imperative reason to the mobility of workers shall be elim- inherent in the requirements of the common inated.' system of VAT to make the grant of exemptions for the temporary importation of motor vehicles subject in this sort of situation to a condition that the user has his 29. Furthermore, under Article 5 of the normal residence in a Member State other Treaty, the Member States have a general than that into which the vehicle is being obligation to take all appropriate measures imported. to ensure fulfilment of the obligations arising out of the Treaty or resulting from action taken by the institutions of the 27. In the second place, it should be borne Community, to faciliate the achievement of in mind that the exemptions provided for in the Community's tasks and to abstain from Article 14 of the Sixth Directive should be any measure which could jeopardize the granted by the Member States 'without attainment of the objectives of the Treaty. prejudice to other Community provisions' while continuing to respect the fundamental aim of promoting free movement of persons. 30. A Member State infringes that general obligation to cooperate if, by adopting a national measure, it contributes to the main 28. Let me draw attention to the third and tenance or introduction of an obstacle to fourth recitals in the preamble to Regulation free movement of workers who, although No 1612/68 of the Council of 15 October residing on its territory, exercise their acti 1968 on freedom of movement for workers vities in another Member State.
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31. That is what a Member State does if, by 34. It is interesting to note in this context charging VAT twice, it obliges a frontier that all those who benefit under Article 4 of worker in practice to give up certain Directive 83/182 from an exemption for the advantages granted to him by his employer use in the course of their work of a vehicle solely on the ground that the worker has his of which they are the proprietor do not lose residence on that State's territory. The that exemption if, at the end of their day's worker is thus placed at a disadvantage in work, they use the vehicle for private regard to working conditions compared to purposes (for example, to go to a restaurant his colleagues residing in the country in or to the beach). I therefore consider that which their employer is established and there is no real reason to deny a worker in having the benefit of the same advantage in the position of Mr Ledoux the right to use kind. The attraction of employment in a the vehicle placed at his disposal by his Member State other than that in which he employer under the terms of his contract of has his residence is thereby diminished, employment for private purposes. which directly affects the exercise of his right to freedom of movement within the Community.
35. As the Court has already seen, the Belgian authorities were perfectly well aware of the problem of the use by a 32. The same reasoning holds good when frontier worker of a vehicle placed at his the employer also permits the vehicle to be disposal by his employer to travel from his used for private purposes. It may be home to his place of work because they first considered in that case that that is part of tolerated, then officially permitted that use the remuneration, in the broadest sense, on a trial basis with effect from 1 May paid to the worker. Furthermore, such an 1984. Furthermore, the circular of 1 May advantage in kind may well, in certain cases, 1984 issued by the Belgian customs auth be compensated for by a salary slightly orities has the merit of dealing also with the lower than would be paid to workers who case in which several workers are driven did not enjoy it. back to the country in which they live in a staff transport vehicle which remains overnight in that country.
33. The Commission correctly emphasizes on page 10 of its written observations that 'part of the remuneration paid to a worker residing in another Member State would in 36. For the reasons set out above, I fact be rendered useless by the legislation of consider that those rules should have been the country of residence, whereas in regard introduced on a definitive basis and not to the country of employment there is merely on a trial basis (with the possibility complete equality of remuneration between of withdrawing them without notice, see residents and non-residents, as is required page 7 of the circular of 1 May 1984) and by Article 48 of the Treaty and provided for that it should not have been possible to in detail by Article 7 of Regulation No withdraw the benefit of those exemptions if 1612/68 on free movement of workers the vehicle was used secondarily for private within the Community'. purposes.
OPINION OF MR MISCHO — CASE 127/86
37. For all of those reasons, I propose that the Court should reply as follows to the question referred to it by the cour d'appel, Liège:
'The rules of Community law, in particular those dealing with value-added tax, prevent a Member State from collecting value-added tax on the temporary importation of a motor vehicle belonging to an employer established in another Member State in which value-added tax has been paid when the vehicle is used by an employee residing in the first Member State under the terms of his contract of employment and for leisure purposes.'