C-71/91

PONENTE CARNI AND CISPADANA COSTRUZIONI

OPINION OF ADVOCATE GENERAL JACOBS delivered on 30 September 1992 *

My Lords, mission's reasoned opinion, the Italian Gov- ernment stated that no such steps were nec- essary, in view of the fact that the charges in question had been modified by an amend- 1. Joined Cases C-71/91 and C-178/91 are ment to the relevant legislation in 1988. The references for preliminary rulings made, Italian Government contended, furthermore, respectively, by the Tribunale di Genova and that the charges in question did not fall the Tribunale di Milano. The references have within the scope of the prohibition con- been made in order that the national courts tained in Article 10(c), or, alternatively, that can decide whether certain Italian legislative the charges came within the derogation from provisions, imposing charges in respect of that prohibition contained in Article 12(1)(e) company registrations, are compatible with of the directive. The Commission remained Community law, and in particular with Arti- unsatisfied by the Italian Government's cles 10 and 12(1) of Council Directive explanation of why its provisions required 69/335/EEC of 17 July 1969 concerning no further amendment, and accordingly indirect taxes on the raising of capital (OJ, brought the present action by means of an English Special Edition 1969 (II), p. 412, application lodged at the Court on 5 July hereafter 'the directive'). 1991.

(3) Is Article 12(2) of the directive compati- 4. The questions referred in the two refer- ble with certain provisions of national ences for a preliminary ruling are as follows: law (Articles 36(8) and (8 bis) of Law N o 154 of 27 April 1989) which impose on public limited companies [società per azioni] falling under Article 3 of the directive annual charges which are not quantified on the basis of the cost of the In Case C-71/91: service and which are higher than the charges applied within the territory of the State to private limited capital companies [società di capitali a responsabilità limita- ta] in respect of like transactions? (1) Are 'duties paid by way of fees or dues' within the meaning of Article 12(1)(c) [sic] of Council Directive 69/355/EEC [sic] of 17 July 1969 to be construed as meaning solely charges made for optional (4) Should the annual State fee for entering a services performed individually by public company in the companies' register, authorities in the specific interests of the imposed by Article 36(8) of Law person requesting them, or do they cover N o 154 of 27 April 1989, be viewed as a the broader concept of charges generally tax prohibited under Article 10 of the imposed for services performed in the directive? public interest?

(2) Do the administrative acts performed by the State in order to 'maintain the appro- priate machinery for making public all It is clear that the reference, in questions (1) documents relating to the conduct of and (2), to Article 12(1)(c) of the directive companies' acquire by virtue of Commu- should be a reference to Article 12(1)(e), and nity law the nature of a service performed that the reference to Directive 69/355/EEC individually and giving rise to a claim for is intended to be a reference to Directive payment of a pecuniary charge in accord- 69/335/EEC.

6. In what follows I shall first consider what (2) Must the pecuniary charge allowed by ruling should be made in Case C-176/91, Article 12(1)(e) of Directive 69/335/EEC that is to say in the direct action brought by of 17 July 1969 — in respect of 'duties the Commission. It will then be apparent paid by way of fees or dues' — be pro- what answers are to be given to the ques- portional to the actual cost of the service tions referred for a preliminary ruling in provided (as held on several occasions by Cases C-71/91 and C-178/91. the Court of Justice, albeit in cases con- cerning another matter, namely customs, in relation to costs for a service which was not optional but mandatory: see for example the judgment of 12 July 1977 in Case C-176/91 Case 89/76 Commission v Netherlands [1977] ECR 1355,para. 16; and subse- quent judgments, most recently that of 21 March 1991 in Case C-209/89 Com- mission v Italy) or may the actual cost of 7. Before describing the contested provi- the service be completely disregarded? sions in greater detail, it may be helpful briefly to set out the relevant provisions of Community law.

(3) Must Article 10 and Article 12(1)(e) of Directive 69/335/EEC be interpreted as precluding the introduction and/or main- 8. The directive has the aim of promoting tenance of national legislation — of the the free movement of capital by harmonizing type introduced by the Italian legislature the taxation payable on the contribution in the form of Article 3(19) of Decree of capital to companies and firms, and by

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OPINION OF MR JACOBS — JOINED CASES C-71/91 AND C-178/91

'(a) the formation of a capital company;

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PONENTE CARNI AND CISPADANA COSTRUZIONI

(b) the conversion into a capital company of '1. In each Member State a file shall be a company, firm, association or legal per- opened in a central register, commercial reg- son which is not a capital company; ister or companies register, for each of the companies registered therein.

(c) an increase in the capital of a capital com- pany by contribution of assets of any 2. All documents and particulars which must kind; be disclosed in pursuance of Article 2 shall be kept in the file or entered in the register; the subject-matter of the entries in the regis- ter must in every case appear in the file.

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OPINION OF MR JACOBS — JOINED CASES C-71/91 AND C-178/91

meaning of Article 12(1)(e). In order to eval- a condition required by Italian law of any uate those arguments, it is first necessary to company wishing to continue trading by examine the contested provisions in greater remaining on the register, just as the pay- detail. It is to be noted that the account of ment of the charge on first registration is a the relevant provisions of Italian law con- condition of the company commencing busi- tained in the Commission's application is not ness. contested by the Italian Government.

The amount of the duty was originally fixed at LIT 20 000, but was augmented by subse- quent decrees. Decree Law N o 853 of 19 December 1984, in particular, made a sub- 14. There can therefore be no doubt that the stantial increase in the levels of the duty, payment of the annual registration charge is imposing a charge of LIT 5 000 000 on the

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registration of the formation of a public lim- of an SpA, having initially been set at a mod- ited company or 'società per azione' (SpA), est level, now correspond to more than LIT 1 000 000 for a private limited company 48 times the average of the sum due for com- or 'società a responsabilità limitata' (Sri), and parable operations in the other Member LIT 100 000 for other kinds of company, States (namely E C U 162). According to the including the limited partnership or 'società Commission's information, the sums paid in in accomandita per azioni' (Sapa). Article the other Member States range from 3(19) of Decree Law N o 853 provided fur- E C U 725 (Denmark) and E C U 170 (France), thermore that the charge for company regis- the two highest, to E C U 16.7 in Portugal tration is due, not only in respect of the first (the lowest) as compared with registration of the company, but also on ECU 7 853.4 (for an SpA) and 30 June of every subsequent year for as long E C U 2 290 (for an Sri) in Italy. as the company remains on the register. The latter provision is still in force and is among the measures contested by the Commission.

16. In its application, the Commission 18. As far as the registration of the other objects to the charges levied in both of the acts mentioned in the Presidential Decree of circumstances I have just mentioned, namely 26 October 1972 is concerned, it appears that (1) the charge on first registration of a com- the amount of duty payable has been pany, and (2) the annual charge on the main- increased from the original level of tenance of the company on the register. The LIT 20 000 to a current level of LIT 98 000. Commission's application does not however relate to the other heads specified in the 1972 decree (namely (b) — (e) in paragraph 15 above).

Compatibility with the directive years of registration; for if a charge in respect of the registration required before the com- mencement of business of a company is pro- hibited, a charge imposed in subsequent years in respect of that same registration (1) 'taxes . . . in respect of registration' must equally be forbidden. Any other con- clusion would lead to the absurd result that a prohibited charge became lawful as long as payment of it was deferred to a subsequent year. Thus, I cannot accept the Italian Gov- ernment's argument, put forward in its

The first step in the Commission's argument, therefore, is to say that the contested provisions impose a duty 22. In my view, therefore, the prohibition falling within the scope of the prohibition in contained in Article 10(c) cannot be confined Article 10(c). to charges which accrue before a company has actually commenced business. The provi- sion is clearly intended to prevent the charg- ing of any taxes, other than capital duty, in respect of the formality of registration, as well as the charging of any taxes in respect of

I conclude were imposed solely in respect of subsequent therefore that the prohibition contained in

23. In an effort to escape such a conclusion, the Italian Government refers, with 25. It is important, moreover, not to lose approval, to the arguments of the United sight of the ultimate purpose of the directive, Kingdom put forward in its written observa- which is explained in its second recital as fol- tions submitted to the Court in Case lows: C-71/91. In those observations, as well as in its observations submitted in Case C-178/91, the United Kingdom suggests that an annual charge cannot be prohibited by the directive, because the directive is only concerned with '... the indirect taxes on the raising of capital, taxes relating to the raising of capital, such as in force in the Member States at the present for instance occurs when a company is first time ... give rise to discrimination, double registered and is consequently able to issue taxation and disparities which interfere with shares. In the view of the United Kingdom, the free movement of capital and which, con- no charge arising after commencement of sequently, must be eliminated by harmoniza- business is covered by the directive unless tion'. the charge relates to a further raising of cap- ital, by means of an increase in the capital of the company, or to changes in its residence or corporate structure, or, finally, if it consti- It is clear that an annual charge on the main- tutes what the United Kingdom refers to as a tenance of the registration of a capital com- 'flagrant attempt to evade the provisions of pany will tend to interfere with the free the directive'. movement of capital in exactly the same way as a charge on first registration, since, as I have already observed, a company is nor- mally formed and registered with a view to continued trading over a period of years. Those contributing capital to the company 24. As I have already mentioned, however, it will be aware of its continuing liability to the does not seem to me that any distinction can annual charge, and their willingness to con- sensibly be drawn between a charge required tribute capital will be affected in exactly the for the first registration of a company, and a same way by that liability as by a charge on subsequent annual charge which the com- first registration. Indeed, the raising of capi- pany is required to pay as long as it remains tal may well be more affected by an annual on the register. In the normal case, a com- charge, which is a continuing burden on the pany completes the formal requirements for company, than by a payment made once

only. It seems to me therefore that all ECR 5 at paragraph 11 of the judgment. attempts to draw a distinction between a sin- Such a charge must not however exceed the gle and an annual charge must necessarily actual cost of the operations in respect of fail. which it is levied, a condition which is only satisfied if there is a direct link between the basis for the assessment of the charge and the cost of the operations in question: see Case C-111/89 Bakker Hillegom [1990] ECR I- (2) 'duties paid by way of fees or dues' 1735, at paragraphs 11 to 13 of the judgment. Furthermore charges may, in certain circum- stances, also be compatible with Articles 12, 13 and 16 of the Treaty where they are made in respect of operations which are carried out, not in the interests of the producer, but 26. Even if a charge falls within the scope of pursuant to obligations imposed by Com- the prohibition contained in Article 10(c) of munity law: see Bauhuis, at paragraph 31 of the directive, it will of course be permitted if the judgment, and Bakker Hillegom, at para- it falls within one of the limited number of graph 10. exceptions provided by Article 12(1). In the present case, the only exception which is rel- evant is that contained in Article 12(1)(e). It remains therefore to consider the second step in the Commission's argument, according to which the charges levied by the contested provisions fall outside the scope of that der- 28. Registration of a company in the official ogation. register is not of course a service which is performed solely in the interests of the com- pany, although, as we have seen, the require- ment that a company be so registered is imposed pursuant to Community law: see paragraph 11 above. However it is clear, in 27. It will be recalled that by virtue of Arti- any case, from the express terms of Article cle 12(1)(e), Member States may, notwith- 12(1)(e), that a charge paid by way of fee or standing Article 10(c), charge 'duties paid by due may be levied in respect of the registra- way of fees or dues' in respect of the regis- tion of a company. It seems to me therefore tration of a company. The Commission that the scope of the derogation provided by points out that the directive contains no def- Article 12(1)(e) is to be determined, in the inition of the concept of 'fees or dues', but first instance, in the light of the wording and suggests that assistance may be obtained, in purpose of the directive itself, rather than in interpreting that expression, from the the light of the Court's case-law on Articles Court's case-law on Articles 12, 13 and 16 of 12, 13 and 16 of the Treaty. the Treaty. Thus, the Court has held that that prohibition of charges having equivalent effect to customs duties which is contained in those articles does not extend to a charge which is 'the consideration for a benefit pro- vided in fact for the exporter representing an 29. It is no doubt true that in recognizing a amount proportionate to the said benefit': limited exception, in respect of fees having a see Case 46/76 Bauhuis v NetherLnds [1977] remuneratory character, to the prohibition of

charges having an equivalent effect to cus- whose acts are entered on the register. The toms duties, the Court was guided by con- keeping of a companies' register might also siderations similar to those which inspired be thought to serve the needs of other the Community legislature in the case of branches of the public administration, for Article 12(1)(e) of the directive. Thus, in example the police, the prosecution service, both cases it was evidently thought that the and the Government departments responsi- prohibition in question should not extend to ble for company statistics and economic fees which could be justified as remuneration affairs. for services performed, whether that perfor- mance was at the request of the recipient of the service or pursuant to a requirement imposed by Community law. To that extent therefore, in assessing whether a particular charge is permitted by the directive, some assistance may be derived from the Court's 31. Contrary to the view of the Italian Gov- jurisprudence on charges equivalent to cus- ernment, it does not seem to me that the cat- toms duties, although that case-law should egory of 'fees or dues' permitted by Article not be assumed to extend without qualifica- 12(1)(e) of the directive can be so broad as to tion to charges covered by the directive. include all charges which finance the public services associated with the disclosure requirements of capital companies. As a der-

ister. At the hearing, the Italian Government moreover, by the French version of the again made it clear that the aim of the dis- directive, which as we have seen refers to puted charges was that of financing the 'droits ayant un caractère rémunératoire'. entire machinery of disclosure of documents and particulars relating to capital companies, and pointed out that it was that objective which explained the annual nature of the charges. As the Italian Government con- cedes, such a system serves the public at large, to whom the information is made 32. It follows that the only costs which can available, and not merely the companies be taken into consideration, when the levels

of fees for company registrations are set, are within the meaning of Article 12(1)(e) of the the administrative costs of effecting the reg- directive, and must therefore be taken to be istrations in question. The other costs of the prohibited by Article 10(c). It does not seem system, and in particular those involved in to me at all surprising, furthermore, that the providing information to the public, must be Member States' freedom of action should be financed by other means, for instance by thus limited, given that Article 10(c) is means of a fee charged to the recipients of clearly intended to preclude the imposition

The absence of any direct connection between fee levels and registration costs is also suggested by the striking disproportion between the charges levied in Italy and those imposed in respect of equivalent operations in other Member States. Contrary to sugges- tions made by the Italian Government at the hearing, it seems to me doubtful in the extreme whether such substantial differences in fee levels could be accounted for by the higher costs occasioned by a decentralised system of company registration, or by the 33. In its written observations submitted in relative inefficiency of the officials concerned Cases C-71/91 and C-178/91, the United (which was also mentioned as a possibility Kingdom suggests that the directive cannot by the Italian Government). It is clear, in any have been intended to circumscribe the fund- case, that the Italian Government does not ing by a Member State of its registration sys- seek to justify its fee levels in terms of the tem or its system of companies administra- costs occasioned by registration operations, tion, and that any fee levied for such a since it openly admits that the charges are purpose must accordingly be permitted by designed to finance the entire system of

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even any evidence before the Court which in the interests of both the registered compa- would be sufficient to rebut the Commis- nies and the registration service itself for a sion's suggestion, made in paragraph 20 of its standard fee to be laid down in advance, and application, that the monies raised by the the costs occasioned by registration are contested provisions are intended purely and unlikely to vary substantially from company simply as a source of revenue for the Italian to company. Furthermore, a scale of charges Treasury. for different categories of company might also be thought to be consistent with the aims of the directive, since a company with a higher capital value is less likely to be affected by a given level of fee, and the impo- 35. There is accordingly no doubt in my sition of a higher charge on such a company opinion that, by maintaining in force the would enable the burden to be reduced for contested provisions, Italy is in breach of its smaller companies. From the information obligations under Article 10(c) of the direc- given in the Commission's application in tive, and is hence in breach of its obligations Case C-176/91, it appears that several Mem- under Article 189 of the Treaty. ber States do indeed apply a scale of charges which vary according to the capital value of the company concerned. It seems to me that such a system of charges is permissible in Cases C-71/91 and C-178/91 principle, as long as the total amount raised by way of registration charges does not sig- nificantly exceed the total costs occasioned by registrations.

(2) order the Italian Republic to pay the costs.

40. I am furthermore of the opinion that the questions referred by the Tribunale di Genova in Case C-71/91 and by the Tribunale di Milano in Case C-178/91 should be answered as follows:

Article 10(c) of Council Directive 69/335/EEC must be interpreted as prohibiting the imposition of charges in respect of the entry of a capital company on the offi- cial register or in respect of the maintenance of that registration, whether levied annually or on first registration of the company, unless those charges are based upon the actual costs of entering and maintaining companies on the register.

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