C-327/90

COMMISSION v GREECE

OPINION OF ADVOCATE GENERAL TESAURO delivered on 28 January 1992 *

Mr President, vehicles are bought direct from the manufac- Members of the Court, turer and 23.2% in other cases, and a further 7% to take account of the costs of insurance and transport of the vehicle (in the case of vehicles from overseas, 2 5 % is added).

1. In these proceedings the Commission seeks a declaration from the Court that, by applying differentiated tax rules to motor vehicles, and in particular by using different rules to calculate the basis of assessment for Law N o 1573/1985 makes the Greek auto- the special consumption tax, so that mobile industry subject to a system of cus- imported vehicles are more heavily taxed toms supervision, providing inter alia that than those assembled in Greece, the Hellenic the tax on motor vehicles made in Greece is Republic has failed to fulfil its obligations to be collected by the customs authority under Article 95 of the EEC Treaty. upon clearance through customs.

provided for by Community legislation for It emphasizes that in Greece, because of the raw materials from non-member countries. limited development of the automobile industry, manufacturers are in the habit of selling motor vehicles direct to the final con- sumer, without using intermediaries; accord- ingly, in Greece the manufacturer's selling 3. The Commission, in its criticism of the price, which is used as the basis for calcula- legislation described above, states in particu- tion of the tax, is equivalent to the retail sell- lar that such a differentiated system for cal- ing price and includes marketing expenses. culation of the taxable basis favours motor vehicles assembled in Greece, at the expense of those imported from other Member States, thus infringing the prohibition of dis- In the case of imported motor vehicles, the criminatory taxation laid down by Article supplement of 2 1 % or 23.2% represents the 95 of the EEC Treaty. difference between the wholesale selling price and the normal distribution price and is intended to cover the expenses of marketing, such as those of promotion, advertising or after-sales service, borne by the importing The discrimination of which the Commis- concessionaire and also the commission sion complains is, in its view, mainly attrib- taken by the sole importer. utable to the fact that imported motor vehi- cles are subject to a flat-rate increase of the basis of assessment of the tax, whilst those assembled in Greece are taxed on the basis of actual data, in other words on the basis of Furthermore, the Greek Government main- the ex-factory price. tains that that differentiated method for cal- culation of the tax basis is intended to pre- vent fraud in the form of under-declaration of the invoice price, such fraud occurring frequently because of the very high rates of consumption tax (up to 400%). Lorries, The Commission also emphasizes that that which are subject to a lower tax and are distinction is not based on objective grounds therefore less exposed to fraud of that kind, and cannot be justified by the need to offset are taxed, without distinction as to origin, on non-deductible charges included in the over- the basis of the transaction price. all cost of motor vehicles assembled in Greece; the Greek law in fact grants an exemption for imports of components intended for the production of motor vehi- cles. Finally, at the hearing the defendant stated that in any event the risks of discrimination adversely affecting imported motor vehicles are eliminated by Article 4(3) of Law N o 1573/1985,. pursuant to which the tax basis 4. The Greek Government contends, on the for motor vehicles produced in Greece may other hand, that its taxation system does not not be lower than the minimum value deter- favour Greek products to the detriment of mined for imported vehicles of the same or those imported from other Member States. similar cylinder capacity.

In particular, as the Court has made clear, the first paragraph of Article 95 is infringed where the two taxes are calculated in a differ- ent manner on the basis of different criteria, which lead, if only in certain cases, to higher taxation being imposed on the imported Furthermore, as the Court has pointed out product. 5 on several occasions, in order to apply the prohibition of discrimination contained in Article 95 of the Treaty, it is necessary to take account not only of the rate of taxation but also of the various provisions concerning the basis of assessment and the detailed rules for levying taxes. The decisive comparative In Cases C-151/89 6 and C-152/89 7 just criterion for the application of Article 95 is referred to, concerning Luxembourg and the actual impact of each tax on the domestic Belgian legislation which took the hot wort product, on the one hand, and on the as the basis for duty to be levied on beer imported product, on the other; indeed, even produced locally but, for beer imported from where the rate of the tax is the same, its other Member States, took the volume of the impact may vary according to the provisions finished product, plus a flat-rate adjustment regarding basis of assessment and collection of 5%, the Court, having found that the leg- applied to domestic and imported products respectively. 2 3 — Judgment in Case 45/75 REWE v Hauptzoüamt Landau [1976] ECR 181, paragraph 16. 4 — Judgment in Case 20/76 Schüttle v Finanzamt Freudenstadt [1977] ECR 247, paragraph 22. 1 — See in particular the judgments in Case 168/78 Commission v France [1980] ECR 347, paragraph 4, Case 169/78 Commis- 5 — Judgments in Case C-152/89 Commission v Luxembourg sion v Italy [1980] ECR 385, paragraph 4, and Case [1991] ECR 1-3141, Case C-153/89 Commission v Belgium 171/78 Commission v Denmark [1980] ECR 447, paragraph [1991] ECR 1-3171, and Case 45/75, cited above, paragraph 4. 15. 2 — Judgments in Case C-47/88 Commission v Denmark [1990] 6 — Cited above, paragraphs 24 and 25. ECR 1-4509, paragraph 18, Case 55/79 Commission v Ire- 7 — Cited above, paragraphs 15 and 16. See also, with reference land [1980] ECR 481, paragraph 8, and Case 74/76 lannelli to Article 96 of the Treaty, the judgment in Case 45/64 Com- & Volpi v Meroni [1977] ECR 557, paragraph 21. mission v Italy [1965] ECR 857.

Legislation of the kind just described, which applies to imported products a system for calculation of the basis of assessment which As regards the further flat-rate addition of is largely based on flat-rate factors, whereas 2 1 % or 23.2% which the Commission con- the corresponding domestic product is taxed siders arbitrary and excessive, 8 pointing out on the basis of actual data, gives rise, by its that the Greek legislation does not allow the very nature in my view, to a serious risk of persons concerned to adduce any counter- discrimination since flat-rate calculations are evidence, I would observe that it appears in general based on average values and when from the very balance sheets appended to the they are used it is difficult to ensure, as Greek Government's pleadings that — required by the case-law of the Court, that regardless of the extent to which they are imported products will not under any cir- typical — that addition was calculated on the cumstances be taxed more heavily than sim- basis of an average. From that standpoint as ilar domestic products. well, the prescribed system of calculation of the basis of assessment is not therefore ca- pable of ensuring that the imported product is not in any circumstances made to bear a greater tax burden than the corresponding If the Greek legislation is analysed in greater domestic product. detail, various factors render inevitable the conclusion that the special consumption tax ultimately has a greater impact on imported cars.

It must also be observed, firstly, that the defendant's statement — contested by the In the first place, the second subparagraph of Commission — that in Greece the ex-factory Article 4(2) of Law N o 1573/1985 provides that, for cars produced in Greece, all charges of a fiscal nature included in the cost of man- 8 — The Commission points out that until 1986 the addition in ufacture are to be deducted from the question was only 10%.

Let me say in the first place that, since the The same applies to the further addition of Greek Government claimed to be surprised 7%, which is likewise calculated on the basis at the fact that the Commission, when exam- of an average and is intended to cover trans- ining the legislation in question, did not dis- port and insurance costs. Its effect is to cover that that provision existed, I, for my penalize those cars for which the transport part, am just as surprised, if not more so, and insurance costs are lower; suffice it to that a Member State, which is criticized for say in that regard that transport costs vary introducing discriminatory legislation and not so much according to the value of the considers that it has adopted an appropriate product as according to its weight, its dimen- measure which obviates any risk of discrim- sions and the distance over which it is car- ination, did not draw attention to that fact in ried. the pre-litigation stage or in the exchange of pleadings but waited until the hearing before putting forward an argument which it never- theless claims to regard as decisive.

ject to a high basis of assessment but to those secondly, Article 95 of the Treaty is applica- which enjoy more favourable treatment, that ble even if, in order to eliminate the obstacle is to say, specifically, the more economical created by the internal tax, that tax would cars — which probably have no accessories. have to be abolished. , 0 That provision, therefore, whilst reducing the risks of discrimination against imported products, does not eliminate them. Furthermore, as rightly observed by the Commission, it is not entirely clear why it should not be possible to avoid the risk of under-declared invoice prices by using non- 8. As regards the defendant's further conten- discriminatory systems for calculation of the tion that the detailed rules for calculation of basis of assessment, based for example on the basis of assessment which I have catalogue prices, as is the practice in other described are needed in order to obviate the countries which have similar special con- risk of fraud by traders, which is particularly sumption taxes. serious because of the high rates of con- sumption tax, I would point out in the first place that, as laid down in the case-law of the Court, disparate treatment as between the Finally, the fact that the tax in question is imported product, which is taxed at a flat particularly high is an aggravating factor and rate, and products produced locally, on exacerbates the effects of the discrimination which the tax is levied according to a sliding since even a minimal difference in the calcu- scale, cannot be justified on the ground that lation of the basis of assessment may have the investigations which would be necessary significant repercussions on the tax payable in the former case cannot be carried out; 9 on the product.