C-347/90

My Lords, VAT payable by the client and the contribu- tions are used to provide insurance solely on the basis of the principle of solidarity and for all contributing lawyers, but not with regard 1. In this case, the Pretura di Milano (Milan to the individual contributors since their Magistrate's Court) asks for a preliminary contributions do not count for pension pur- ruling under Article 177 of the EEC Treaty poses and cannot be reclaimed in the event on the compatibility with Community law that entitlement to a pension is not of contributions charged by lawyers to their acquired?' clients which finance certain social benefits for members of the legal profession. It has been argued before the referring court that those contributions are incompatible with the Sixth VAT Directive, Directive 77/388 on the harmonization of the laws of the Mem- ber States relating to turnover taxes — Com- 3. That question has arisen in the course of mon system of value added tax: uniform proceedings instituted by Mr Aldo Bozzi, a basis of assessment (OJ 1977 L 145, p. 1). member of the Milan Bar, against the Cassa Nazionale di Previdenza e Assistenza a favore degli Avvocati e dei Procuratori legali ('the Fund') for the recovery of LIT 2. The question which has been referred is in 2 280 390 which Mr Bozzi paid to the Fund the following terms: by way of contributo integrativo, or 'supple- mentary contribution', under Article 11 of Law N o 576 of 20 September 1980. Mr Bozzi maintains that that provision is incom- 'Is Article 33 of the Sixth Council Directive patible with Article 33 of the Sixth VAT (No 77/388/EEC of 17 May 1977) to be Directive, which provides as follows: interpreted as precluding the application in a Member State of a requirement that lawyers pay to the Lawyers' National Provident Fund supplementary contributions based on the consideration payable by clients for their services, having regard to the fact that the consideration is already subject to VAT, the 'Without prejudice to other Community supplementary contribution is to be included provisions, the provisions of this Directive separately on every invoice together with the shall not prevent a Member State from main- taining or introducing taxes on insurance contracts, taxes on betting and gambling, * Original language: English. excise duties, stamp duties and, more gener-

6. The rules relating to the supplementary contribution are laid down in Article 11 of 4. I note that Article 33 has recently been Law N o 576 of 1980. By virtue of that pro- amended: see Directive 91/680, OJ vision, anyone whose name appears on the 1991 L 376, p. 1. The amendments are not, roll of lawyers, including qualified lawyers however, material to the question raised in who are not affiliated to the Fund and train- these proceedings. ees who are affiliated to it, must pay to the Fund a certain proportion, currently two per cent, of all fees which contribute to his annual turnover for the purposes of VAT. The amount concerned may be, and usually The Fund is, passed on to the client, but remains pay- able by the lawyer to the Fund whether or not the client has paid it to the lawyer. The supplementary contribution is not subject to 5. The Fund was established by Law income tax or VAT and is not taken into N o 6 of 8 January 1952 to provide social account for the purposes of calculating a benefits for lawyers. All lawyers practising in lawyer's professional income. Italy and whose professional income reaches a certain level are required to affiliate to it. Law N o 576 of 20 September 1980 is con- cerned with the benefits payable b y the Fund, which include old-age and invalidity pensions, and with the contributions which have to be paid to it by its members. The Fund is financed by two types of contribu- tion. The first type is the 'individual contri- 7. According to Article 17 of Law N o 576 of bution', the amount of which depends on the 1980, anyone whose name appears on the lawyer's professional fees chargeable to roll of lawyers, including trainees who are income tax. The basic rate is ten per cent up affiliated to the Fund, must inform the Fund to a certain ceiling. Thereafter three per cent each year of his turnover for VAT purposes. is payable of professional income which The Fund is also authorized to obtain infor- exceeds that ceiling. There is a minimum mation about lawyers' income and turnover contribution which is payable by all lawyers from the tax and VAT authorities. Under affiliated to the Fund. The second type of Article 21 of the Law, lawyers who with- contribution is the 'supplementary contribu- draw from the Fund before their entitlement tion', which is levied at the rate of two per to a pension accrues are entitled to a refund cent on the fees paid by clients. It is the of their individual contributions, but not of

8. The meaning of the expression 'turnover taxes' in Article 33 of the Sixth Directive has been considered by the Court on a number ... the principle of the common system of of occasions. In view of the purpose of the value-added tax consists, by virtue of Article directive, it would have been possible to 2 of the First Directive, in the application to interpret that expression widely as excluding goods and services up to the retail stage of a all forms of turnover tax other than the har- general tax on consumption which is exactly monized system of VAT laid down by Com- proportional to the price of the goods and munity legislation. None the less, the services, irrespective of the number of trans- Court's case-law, which was recently sub- actions which take place in the production jected to a detailed analysis by Advocate and distribution process before the stage at General Tesauro in Case C-200/90 Dansk which the tax is charged. However, value- Denkavit and Another v Skatteministeriet, added tax is chargeable on each transaction has consistently interpreted the expression only after deduction of the amount of value- more narrowly. It would in my view be added tax borne directly by the costs of the unwise, having regard to the special need for various price components. The procedure for certainty in the tax field, for the Court now deduction is so arranged by Article 17(2) of to depart from the general trend of its previ- the Sixth Directive that taxable persons are ous decisions. authorized to deduct from the value-added tax for which they are liable the value-added tax which the goods have already borne.'

12. The Court's judgment in Wisselink makes it clear that, in order to determine whether a charge such as the supplementary contribution constitutes a turnover tax within the meaning of Article 33 of the Sixth Directive, it is necessary to consider whether it is charged on the provision of services in a 11. However, the purpose for which the tax way comparable to VAT and whether it in question is levied is not, according to the therefore jeopardizes the functioning of the case-law, decisive. Thus, the fact that the common system of VAT. supplementary contribution may, as the Fund suggests, have more in common with a social security contribution than a tax does not necessarily take it outside the scope of Article 33. As Advocate General Mancini explained in somewhat similar circumstances 13. As both Mr Bozzi and the Commission in Case 295/84 Rousseau Wilmot v Organic point out, the supplementary contribution [1985] ECR 3759, at p. 3761, 'it is clear that and VAT undoubtedly have some common the social or fiscal purpose which the levies features. Thus, the contribution is generally in question are intended to achieve does not assessed on the same basis as VAT, it is constitute a sure and satisfactory criterion exactly proportional to the cost of the ser- for determining whether or not such levies vice provided by the lawyer, it has a direct are covered by the Community rule'. That impact on the cost of the service and is in view was borne out by the judgment of the practice nearly always passed on to the cli- Court, which stated, at paragraph 16, that ent. Where this is the case, it will be shown Article 33 of the Sixth Directive did not separately on the lawyer's invoice in the 'prohibit the Member States from maintain- same way as VAT. ing or introducing duties or charges which are not fiscal but have been introduced spe- cifically in order to finance social funds and which are based on the activity of undertak- ings or certain categories of undertakings and calculated on the basis of the total 14. In my view, however, the supplementary annual turnover without directly affecting contribution possesses a number of features the price of goods or services' (emphasis which show that it is not charged on com- added). It is therefore apparent that such a mercial transactions in a way comparable to levy was only regarded as outside the scope VAT. First of all, contrary to the view put of the prohibition laid down in Article forward by the Commission, the supplemen- 33 because it possessed both the characteris- tary contribution does not appear to be gen- tics mentioned. Consequently, the purpose eral in scope. It is true that the Court's case- to which the supplementary contribution is law does not make it entirely clear what is put cannot in itself be decisive. meant by the word 'general' in this context.

15. In my view, the Court's case-law makes it clear that those features have the effect of removing the supplementary contribution from the scope of the prohibition laid down The Court concluded that a tax such as the in Article 33. BVB did not constitute a turnover tax within the meaning of Article 33 of the Sixth Direc- tive.

16. That this is the effect of the case-law may be illustrated by comparing the sup- plementary contribution with the special consumption tax on passenger cars known as the BVB, which was the subject of the 17. The supplementary contribution differs Court's ruling in Wisselink. There the Court in two respects from the BVB as described said, at paragraph 20 of the judgment: by the Court in the passage I have just cited.

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OPINION OF MR JACOBS — CASE C-347/90

Conclusion

2 1 . I a m accordingly of the opinion that the q u e s t i o n referred b y the P r e t u r a di M i l a n o s h o u l d be a n s w e r e d as follows:

Article 33 of t h e Sixth V A T Directive does n o t preclude the imposition b y a M e m - b e r State of a r e q u i r e m e n t that lawyers p a y t o a p r o v i d e n t fund a s u p p l e m e n t a r y c o n t r i b u t i o n such as the contributo integrativo.

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