C-165/88

1. These questions for a preliminary ruling are the result of the incomplete state of the 2. Let me examine briefly the facts of the harmonization of tax legislation within the case pending before the national court, the Community. Although the First, Second and Gerechtshof (Regional Court of Appeal), Sixth Directives 1 introduced the bases and Amsterdam, between the plaintiffs, ORO general principles for a harmonized system Amsterdam Beheer BV and Concerto BV, of value-added tax, the express provision of and the Inspecteur der Omzetbelastingen temporary derogations and the existence of (Inspector of Turnover Taxes), the sectors which have not been fully defendant. harmonized mean that the Court is required to resolve discrepancies arising out of the conflict between the requirement that the general principles must be observed and the lack of any common rules to govern After duly paying to the Netherlands tax significant parts of the system. authorities the difference between the amount of VAT resulting from the sale of new and second-hand goods and the amount of turnover tax paid as input tax, the plaintiffs claimed the repayment of a The case with which I am dealing today is a certain amount in respect of the VAT still typical example. Whereas it is a fundamental contained in the price of second-hand goods principle of the common system of purchased with a view to their resale. The value-added tax — consistently referred to Netherlands tax authorities refused that in the judgments of the Court — that there request. should be no tax cumulation, the absence of common rules on the taxation of second-hand goods means that this principle is not observed in a case such as that pending before the national court. Conse­ The national court, finding that there was quently, it is necessary to assess whether or no provision of national law which permitted the total or partial deduction of * Original language Italian the VAT which was still contained in the 1 — First and Second Council Directives of 11 April 1967 on price of second-hand goods and that the the harmonization of legislation of Member States concerning turnover taxes (OJ, English Special Edition resulting legal situation raised a problem of 1967, pp. 14 and 16) the interpretation of Community law, and in Sixth Council Directive of 17 May 1977 on the harmon- ization of the laws of the Member States relating to particular Article 32 of the Sixth Directive, turnover taxes — Common system of value-added tax referred to the Court the following uniform basis of assessment (77/388/EEC, OJ L 145, 136 1977, p. 1) questions for a preliminary ruling:

5. The first question submitted by the national court requires an examination of (2) If the first question is answered in the Article 32 of the Sixth Directive in order to negative, how is account to be taken, in ascertain whether, in view of the Council's the determination of the turnover tax failure to act by not adopting before 31 payable on the supply of second-hand December 1977 a Community taxation goods, of the fact that the goods were system to be applied to second-hand goods, bought from individuals?' the Member States may retain the special system which they applied before the entry into force of the Sixth Directive.

3. The arguments of the parties are set out in the Report for the Hearing and did not substantially change at the hearing. There is 6. In this regard the Government of the therefore no need for me to recall them. Netherlands claimed that Article 32 should be interpreted as prohibiting the modifi-

2 — Article 32 provides as follows: 'The Council, acting unanimously on a proposal from the Commission, shall adopt before 31 December 1977 a Community taxation system to be applied to used goods, 4. I would state at the outset that it is clear works of art, antiques and collectors' items. both from the written observations and the Until this Community system becomes applicable, Member States applying a special system to these items at the time argument at the hearing that in this case the this directive comes into force may retain that system'.

ORO AMSTERDAM BEHEER AND CONCERTO v INSPECTEUR DER OMZETBELASTING

7. It seems to me clear that the Netherlands Government's interpretation of the second paragraph of Article 32 cannot be accepted. I do not see how it can be thought that a 9. It is clear that this first conclusion does provision authorizing the Member States to not resolve the problem submitted by the continue to apply a special system can national court. It is apparent both from the change so radically as to prohibit them from terms of the first question and from the amending such a system. Apart from any observations submitted to the Court by the doubt as to the interpretation of the text, I plaintiffs and the Commission that the true need only state that the Court itself, in its question is not whether a Member State has judgment of 10 July 1985 in Case 16/84 the power to amend its taxation system but Commission v The Netherlands [1985] ECR rather whether it is obliged, in the light of 2355, replying on an incidental point to the the Council's failure to act, to adopt Commission, which was then arguing — national measures to avoid double taxation. curiously enough — that Article 32 'prohibits any amendment of existing national systems', stated that 'that cannot apply to adjustments whose sole objective is to ensure that a national system entirely 10. In this regard I have to state that at first conforms to that article'. sight it does seem strange that, in spite of the express provision in the first paragraph of Article 32, the Council has not yet, 13 years after the prescribed date, adopted a Community taxation system in a sector as important as that of second-hand goods. 8. Consequently, I do not feel able to accept the view put forward by the Netherlands Government. The standstill provided for in the second paragraph of Article 32 must in my view be interpreted in 11. However, I do not consider that this such a way that Member States wishing to situation can impose an obligation on the introduce into their legislation a taxation Member States to adopt national measures system for second-hand goods to avoid to make up for the Council's failure to act.

To claim that such a failure to comply with a time-limit which is clearly procedural must impose an obligation on all the Member 14. I do not think that this conclusion may States to introduce into their own national be challenged, as the Commission seeks to law rules having the same effects as those do, on the basis of the judgments of the which the Council should have adopted but Court of 28 March 1984 in Joined Cases 47 has not adopted is in practice tantamount to and 48/83 Pluimveeslachterij Midden- denying that the Council has a discretionary Nederland and Van Miert [1984] ECR 1721 power in the field of tax harmonization. and of 5 May 1981 in Case 804/79 Commission v United Kingdom [1981] ECR 1045. According to the Commission it is clear from those judgments that in principle, where the Council has failed to act, there I therefore do not consider that the failure can be no objection to a Member State's to comply with the prescribed time-limit retaining or introducing, pursuant to the imposes an obligation on Member States to duty to cooperate imposed by Article 5 of 'anticipate' a Community decision which the the Treaty, national measures designed to Council for reasons of its own has been attain the objectives to be achieved by unable to adopt. Community rules.

ORO AMSTERDAM BEHEER AND CONCERTO v INSPECTEUR DER OMZETBELASTING

There is an enormous 175 if it were accepted that the Council's difference between recognizing that there is inaction gave rise to an obligation to act on a power and alleging the existence of an the part of the Member States. obligation, which not even the Court's reference to the fulfilment of an obligation to cooperate under Article 5 of the EEC Treaty can bridge. The argument based on Article 5, which reappears in the aforesaid 16. For the sake of completeness I would judgment in Case 804/79 Commission v mention, even though the Commission has United Kingdom, performs a function that is not used such an argument, that an obli wholly different from the one which the gation on the part of the Member States in Commission seeks to attribute to it. In other the event of the Council's failure to act words, the Court did not state that, because cannot be inferred either from the fact that there is an obligation to cooperate under the Commission has repeatedly submitted Article 5, the Member States are bound to proposals for directives in order to remedy the failure on the part of the implement the first paragraph of Article 32. Community legislature. Instead it had In its judgment of 16 December 1981 in recourse to the argument based on Article 5 Case 269/80 Regina v Tynien [1981] ECR with a view to limiting the power of 3079, the Court clearly stated that: Member States to legislate in a sector governed by a common organization of the

Community. To accept the reasoning of the Lastly, it is clear from the remainder of the British Government would amount to judgment (paragraph 25) that it is always a recognizing the lawfulness of national matter of a 'power' ('provisions adopted or measures adopted in a sphere within which maintained by Member States in the circum the powers of the Community apply solely 1 stances described above are permissible ) and by reason of the existence of a Community not of an obligation imposed on Member proposal which is identical in principle.

OPINION OF MR TESAURO —CASE C-165/88

Community and the Member States and 17. Since the first question has been would thus adversely affect the essential answered in the negative, it is unnecessary balances establishing the Treaty.' to reply to the second question.

18. In conclusion, I propose that the Court should rule, in reply to the question submitted by the national court, that in the present state of Community law the fact that a Member State imposes turnover tax on the sale of second-hand goods without providing for any reduction and without taking account of the fact that these goods were purchased from private persons is not incompatible with the Sixth Council Directive on the harmonization of the laws of the Member States relating to turnover taxes, and in particular with Article 32 thereof.