C-30/89

1. The proceedings to be discussed today are concerned with three questions 4. As the Court is aware, the Commission concerning the Community's own resources. takes the view that such transport oper­ The first question is whether, in so far as ations, where the places of departure and they are effected in international waters, arrival are in French territory and there is transpon operations between mainland no place of call in the territory of other France and the départements of Corsica is Member States, are to be regarded as subject to value-added tax pursuant to supplies of services within the territory Directive 77/3 8 8/EEC. · (within the meaning of Article 2 of Directive 77/388) and thus fully liable to tax with a corresponding effect upon the making available of the Communities' own resources pursuant to Article 2 of Regu­ 2. The second question is whether France, lation (EEC) No 2892/77. 2 Since the since it did not take such action (or rather French Republic takes a different view because it maintained the pre-existing rules (which, moreover, as we have seen, is on exemption from tax for transport oper­ shared by the Kingdom of Spain), ations between mainland France and proceedings were commenced under Article Corsica), has to pay compensatory amounts 169 of the EEC Treaty in which the as part of making available the own Commission claims a declaration that by resources of the Communities for the years failing to comply with the obligation to 1980 to 1985 (more particularly because the calculate unpaid own resources for the years exemption operated could at most be based 1980 to 1985 and for previous years, by on Article 28 of Directive 77/388 in failing to comply with the obligation to send conjunction with point 17 of Annex F a copy of the calculation to the thereto). Commission, by failing to comply with the obligation to make available to the Commission a sum equivalent to the own resources in question by exempting from 3. The third question is whether interest is value-added tax, in breach of the Sixth chargeable on such payments, which have so Directive on value-added tax, the inter­ far not been made, from 31 October 1986 national part of transport operations between mainland France and the dépar- * Original language: German. 1 — OJ 1977, L 145, p. 1. 2 — OJ 1977, L 336, p. 8.

5. (1) It must be admitted immediately that, according to the wording of Directive 77/388, it is not obvious that the Commission's view is correct. On the contrary, it tends to support the view of 8. Similarly, the judgment in Case 283/84 France and Spain, for Article 2 states (inter (which concerned sea transpon between the alia) that the supply of services effected for Italian peninsula and Sardinia, which is consideration within the territory of the subject to value-added tax for the whole country by a taxable person acting as such distance) the Court simply stated — in shall be subject to value-added tax whilst response to the question raised in the Article 3 defines the 'territory of the proceedings whether a Member State can country' as the area of application of the impose such taxation or whether it is Treaty establishing the European Economic excluded under the Value-Added Tax Community as stipulated in respect of each Directive — that the directive, in particular Member State in Article 227 (which Article 9(2)(b) thereof, in no way restricts certainly does not include international the freedom of the Member States to extend waters). the scope of their tax legislation beyond their normal territorial limits (which again means that they have such a possibility but no obligation to that effect).

6. (2) It must further be recognized that the two judgments mainly referred to in the proceedings (namely the judgments in Cases 5 168/84" and 283/84 ) do not directly either support the Commission's view or make the 9. I would add in parenthesis that the fact that elsewhere in the German version of the 1977,, L 336 3 — OJ 1977 336,, p. 1 judgment it is stated: 'Im Falle derartiger 4 — Judgment of 4 July 1985 in Case 168168//84 Gunter Berkholz v Beförderungen, die als reine Inlands­ Finanzamt Hambur -Mitte-Allitadt [i985 -Mitte-Allitadt[ ] i985] ECR 2251 2251.. beförderungen anzusehen sind. . . ' (in the 5 — Judgment o( 23 January 1986 in Case 283 /84 Tram 283/ Tirreno Expreisv Ufficio Provinciale [ 1986 1986]] ECR 231 case of such transport operations, which are

to be regarded as purely internal. .. ) is, on be covered by the laws of more than one the other hand, obviously of no significance, Member State. for that wider definition is no doubt due to a translation error as a comparison with the Italian text (Italian was the language of the case) and the French text of the judgment shows 'nel caso dei trasporti suddetti, che 12. The Court also emphasized that no possono essere considerati come trasporti conflict of jurisdiction arises where the ship puramente interni. . . ' ; 'dans l'hypothèse de effecting the transport plies between two tels transporte qui peuvent être considérés points within a single Member State and comme des transports purement inter­ where the route chosen, even if part of it is nes ... ' ). outside the national territory, does not pass through any area falling under the national sovereignty of another State. In the case of such transport operations, which may be regarded as purely internal, the territorial scope of value-added tax must therefore be 10. (3) However, it will be observed — and determined on the basis of the basic rules this is the reason why those judgments laid down in Articles 2 and 3 of the should not be completely disregarded in the directive and not on the basis of Article 9. present case — that in Case 168/84 it was That shows that for the answer to the stated that Article 9 was designed to secure present case, in which Article 9(2)(b) (to the a rational delimitation of the respective wording of which Spain's representative spheres of application of national attached special importance) does not at all value-added tax legislation (which justifies apply, it is more appropriate to refer to the the conclusion that too much importance general rules of the Treaty on the territorial should not be placed on the wording scope of Community law. adopted in it so far as it is concerned simply with the definition in the scope of the directive) and there it was also a case of services which took place outside the terri­ torial jurisdiction of the Member States 'on 13. Moreover, on the basis of those board sea-going ships over which they have judgments, since they stress that the jurisdiction' (which would suggest a modifi­ Member States are at liberty to tax oper­ cation of the territorial principle on which ations in international waters, it can easily France and Spain put so much weight). be shown that the French Government's argument derived from international law on the limits of national sovereignty certainly does not carry much weight.

17. Secondly, I refer to the judgment in ,0 Case 9/88 (which concerned the question 15. Let me cite first the judgment in Case whether a Portuguese worker employed on 7 167/73, according to which a provision of a Netherlands ship was covered by the the French code du travail maritime Community principle of equal treatment in requiring the crew of a ship to consist of a the exercise of his activity). I consider it certain proportion of French members was very significant that in that case the Court, held to be incompatible with Article 48 of having regard to the case-law according to the Treaty and Regulation (EEC) No which employment outside the territory of 8 1612/68 enacted thereunder. Since it was the Community may be regarded as stressed that sea transport was subject to the employment within the territory of a general rules of the Treaty and therefore Member State if there is a sufficiently close any discrimination in relation to access to connection with that territory, held that a work and conditions of employment was Portuguese worker employed on a prohibited, it would be difficult to accept Netherlands ship was to be regarded as that that rule applies only while the ships employed within the territory of that concerned are within the territorial waters Member State if there were sufficient links of the Member States. with it (determined by the registration of the ship, the shipowner's place of estab­ lishment in the Netherlands, the worker's recruitment in the Netherlands, the application of Netherlands law to the contract of employment and the application of Netherlands social security law as well as 16. The principle that the temporary Netherlands income tax law to the worker). exercise of activities (here transport through international waters) does not suffice to exclude the application of Community law (here the Value-Added Tax Directive) if the activity has a sufficiently close link with the territory of the Community (here the ports of departure and arrival lie within the same Member State) is confirmed by the 18. (5) Thus, while the considerations judgment in Case 237/83. 9 In that suggested by the judgments cited above (as judgment Community social law was regards the modification of the territorial principle and the correct interpretation of 7 _ Judgment of 4 April 1974 in Case 167/73 Commiato v the spacial scope of the rules of the Treaty) French Republic [\ 97 [\97 *] ECR 97*] 359 militate against the view put forward by 8 _ OJ, English Special Edition 1968 (II), p. 475. 9 — Judgment o( 12 Julv 1984 in Case 237/83 SARL ľrodeU v 10 — Judgment of 27 September 1989 in Case 9/88 Mano Lopes Canse primaire d'assurance maladie de Fans [ 1984 1984]] da Veigav Staatssecretaris van liisime [ 1989 1989]] ECR 2989 ECR 3153

20. (b) However, the reference to the aim of harmonization pursued by Directive 77/388, which includes, as the title of the directive shows, a uniform basis of assessment, seems to me to be important. 22. (c) In addition, there is the guidance to be obtained from the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties. 21. If that is borne in mind — and in that regard, as the Commission rightly stated, it should not be overlooked that we are concerned with complete harmonization and that all exemptions (as stated in the n judgment in Case 235 / 85 ) 'must be expressly provided for and precisely defined' 23. As is known, the Commission referred (paragraph 19) — the conclusion is ines­ in that respect to Section V 'Taxation' in capable that it is incompatible with those Annex I, which provided that Article 15 of aims (as already stated in the Opinion in Directive 77/388 was to be supplemented so Case 283/84) for the taxation of transport that the Portuguese Republic might treat sea operations between two places in a Member and air transport between the islands State to differ depending on whether they making up the autonomous regions of the take place by land or by sea and, in the Azores and Madeira and between those latter case, again depending on whether the regions and the mainland in the same way as international transport. Secondly, it referred to the fact that, according to 11 — Judgment of 26 March 1987 in Case 235/85 Commission v Kingdom of lhe Netherlands [1987] ECR 1471. Article 374 of the Act, the supplementary

26. Moreover, as far as Article 374 of the Act of Accession is concerned, it is not at all apparent why a payment obligation 24. Accordingly, it must indeed be assumed regarding value-added tax for transport that in adopting those provisions all the services to the places mentioned had to be States concerned accepted that such imposed on Portugal only. In view of the transpon operations were, for the purposes large distances in question, between the of the Value-Added Tax Directive, national mainland and the islands belonging to it, transport operations subject to value-added and the economic strength of the Member tax. Had it been clear that the directive was State concerned, an exemption would have to be interpreted in the way advocated by been more in line with expectations. France and Spain (namely to the effect that the Member States are at liberty to tax or exempt such transport operations), the addition to the Act of Accession would not 27. In this regard, therefore, it cannot just have been necessary or (this relates to the be a question of a particular problem being observation made by the Spanish resolved; it is more likely that a principle Government at the hearing that the addition valid in general for Member States is being to Article 15 of the Value-Added Tax made clear. Directive was necessary because journeys in territorial waters were also to be covered) it could have been limited to treating transport in coastal waters as international transport. 28. (6) I would therefore take the view that, after carefully weighing all the relevant aspects, it must be recognized that the Commission has put forward the better arguments for its view. The Value-Added Tax Directive therefore requires taxation of the entire stretch between mainland France 25. In my opinion, that analysis cannot be and Corsica and an exemption is contradicted by the argument that the conceivable only under Article 28(3)(b) in purpose of such special provisions in the conjunction with Annex F to the acts of accession is to resolve specific Value-Added Tax Directive (on which problems connected with the accession of a France wished to rely only in so far as Member State and that therefore more transport within coastal waters was far-reaching consequences should not be concerned). drawn from them. When, as happens in Section V of Annex I to the Act of Accession in relation to Article 15 of the Value-Added Tax Directive, an addition and amendment of an existing system is 29. Consequently, it is also clear (on this adopted, the incidental effect of this is to conclusion there was basically no dispute) reveal how the system is to be understood that the own resources due as value-added on a particular point; in a way it provides tax must be calculated accordingly, pursuant

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