C-208/91

6. The relevant national and Community 3. As the land had not been built on within provisions, to which I shall refer where nec­ the prescribed period, the tax authorities essary, are set out in the Report for the rejected an application for an extension of Hearing. the period and on 26 February 1985 sent the

* Original language: French. 7. Under French law, the system of VAT on I — Sixth Council Directive No 77/388/EEC of 17 May 1977 on real estate transactions has gradually moved the harmonization of the laws of the Member States relating away from traditional stamp duty, which was to turnover taxes —Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1). originally intended to cover all conveyances

I-6719

OPINION OF MR DAKMON — CASE C-208/91

of real property. 2 Increasing urbanization 10. Having failed to fulfil this undertaking, and the emergence of an important sector of and thus to furnish proof that the intended economic activity, namely the construction work had been carried out (Article 691(II)(2) 3 sector, led the national legislature to make of the CGI), MrBeaulande received a economic operators involved in the purchase demand for payment of the amounts men­ of undeveloped land subject to a neutral tax, tioned above pursuant to Article 1840 G ter VAT, upon the first sale of the completed of the CGI. However, in accordance with building. Article 291 of Annex II to the CGI, the VAT paid at the time of purchase and not yet deducted was offset against the stamp duty claimed.

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RAYMOND BEAULANDE v DIRECTEUR DES SERVICES FISCAUX, NANTES

13. On some ten previous occasions 5 the the creation of a harmonized tax system, the Court has been called upon to examine the aim of which is to achieve neutrality in com­ compatibility of national taxation with the petition. Sixth Directive, and more precisely with Article 33 thereof.

18. The concern that emerges from that measure, and which can be seen as a long- 14. The decisions given by the Court stake term objective, is 'to achieve such harmoni­ out the ground, so to speak. The applicant in zation of legislation concerning turnover the main proceedings knows this well and taxes as will eliminate, as far as possible, fac­ asserts that, as is apparent from its case-law, tors which may distort conditions of compe­ 'the Court's interpretation of that provision 8 tition'. (Article 33) is surprising and appears open to 6 criticism in many respects'.

19. The practical means chosen to achieve 15. Before studying the salient characteris­ this objective consist in establishing a com­ tics of the Community concept of turnover mon system of VAT, which necessarily tax, in the light of which the validity of the entails the 'abolition of cumulative multi­ 9 charge will be assessed, it is necessary to stage taxes'. remind ourselves of the general scheme of the common system of VAT.

20. Nevertheless, tax systems in Member States differ widely, hence in order not to 16. Indeed, it is this rationale that forms the undermine national legislation in sensitive basis of my interpretation. economic and budgetary areas, only a grad­ ual abolition of these cumulative multi-stage taxes could be envisaged; the Sixth Directive is therefore but one step in the direction of 17. It is necessary to go back to the First the harmonization objective. 7 Council Directive of 11 April 1967 (herein­ after the 'First Directive') in order to grasp the general and practical objective that led to

22. Although the prohibition on the cumu­ lation of VAT with a tax having the charac­ 26. Finally, the Wisselink judgment sum­ 14

teristics of a turnover tax is clearly laid down marizes perfectly in the following terms a in this article, the list of charges that can be rationale whose purpose is to prevent the combined with VAT is not exhaustive. Suf­ harmonized system of VAT from being fice it to note that stamp duty is included in undermined by means of the derogation in the list and that it is necessary to assess each Article 33: tax in the light of its inherent characteristics, regardless of any formal criterion or designa­ tion, in order to determine whether or not it can be equated to a turnover tax. 'The Member States were thus prohibited from maintaining, either wholly or in part, or reintroducing, either wholly or in part, 23. Finally, to conclude on the subject of the any turnover taxes under the cumulative legislative background to Article 33, it is multi-stage tax system. If the Member States important to note that in all its judgments, had been allowed to introduce other kinds of and especially in the earliest ones, the Court turnover tax besides VAT, the objectives felt the need to set that article in the context underlying the common system of turnover 15 of the general scheme of the VAT system. tax would have been jeopardized'.

28. That said, when the time comes for that interpretation, it should be remembered that 32. Thus, in the Bergandi judgment, the turnover tax is a Community concept set in Court clearly indicates the objective pursued the context which I have just described. All with regard to turnover tax and gives a con­ the previous judgments make reference to its cise definition of VAT in ruling that Community character. For example, the Wis- selink judgement emphasizes that:

'In order to decide whether a tax can be characterized as a turnover tax it is necessary, in particular, to determine, as the Court stated in its judgment of 27 November 'the term "turnover tax" has a specific mean­ 1985 in Case 295/84 (Rousseau Wilmot SA v ing in the context of Article 33 of the Sixth Organic [1985] ECR 3759), whether it has Directive. The Court stated that... the scope the effect of compromising the functioning of Article 33 had to be determined in the of the common system of VAT by levying a light of the role of that provision in the har­ charge on the movement of goods and ser­ monized system of turnover tax, which takes vices and on commercial transactions in a the form of a common system of VAT.' 18 way comparable to VAT.

... The principle of the common system of VAT consists, according to the first para­ 29. It matters little, moreover, what name is graph of Article 2 of the First Directive, in given to the national charge levied in addi­ the application to goods and services of a tion to VAT; it is the analysis of its objective general tax on consumption exactly propor­ characteristics that will serve as the basis for tional to the price of the goods and services, determining whether or not it can be charac­ whatever the number of transactions which terized as a turnover tax. 19 take place in the production and distribution process before the final stage at which tax is 20 charged'.

38. The national court will therefore have to 22 adopt this reasoning and examine whether 36. In the Giant judgment, the Court first recalled the principles already referred to in the stamp duty in question meets the criteria its earlier decisions, namely the possibility laid down. for tax systems to co-exist with VAT pro­ vided that they do not compromise its func­ tioning, and then listed the characteristics of a turnover tax as follows: 39. It will only meet those criteria if it is established that:

— it is a general tax, in other words it 'A tax of the kind to which the national applies to all transactions involving the court refers in the present case does not pos­ transfer of goods or the provision of ser­ sess the characteristics of a turnover tax vices; within the meaning of Article 33 of the Sixth Directive.

23 — Paragraphs 13 and 14. 24 — See the references in footnote 5 above. 21 — Paragraph 7 of the Commission's observations. 25 — Dansk Denkavit judgment, paragraph 11, and Bozzi judg­ 22 — See the references in footnote 5 above. ment, paragraph 12.

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RAYMOND BEAULANDE v DIRECTEUR DES SERVICES FISCAUX, NANTES

— it is charged at each stage in the distribu­ nature of a capital levy applied to the entire tion or production process; value of the property, without the possibility of subsequent deduction.

40. On the first point, that is the general nature of the tax, it would seem that transfer 43. In the light of those observations, I con­ duties relate only to changes in the legal sider that a charge of the kind at issue cannot ownership of real property and not to all be characterized as a turnover tax, all the 27 economic transactions. Stamp duty is more so as in the Kerrutt judgment the restricted to the legal transfer of real estate Court ruled in this way with regard to a sold for valuable consideration, the convey­ German tax (Grunderwerbsteuer, tax on the ance of which gives rise to a number of for­ transfer of real property), the characteristics malities under civil law. To reiterate the def­ of which were very similar to those of the inition given by J.-C. Scholsem, 26 transfer duties involved in the present case. There, duties are 'analytical, real taxes, imposed on the Court stated that: isolated transactions without regard to the personality of their originator'. In that regard, the French Government has empha­ sised that stamp duty is not a general tax. '... Since Community law as it now stands does not contain any specific provision excluding or limiting the power of Member States to introduce taxes on transfers and transactions other than turnover taxes, and thus permits concurrent systems of taxation, 41. On the second point — the charging of it must be concluded that such taxes may be the tax at all stages of production and distri- levied even where, as in this case, charging bution — it should be pointed out that trans­ them on a transaction which is already sub­ fer duty is levied only when real property ject to VAT may result in the double taxation 28 passes into the ownership of the final con­ of that transaction'. sumer, while production and distribution fall within the scope of VAT on real estate trans­ actions. It is therefore apparently from the time when the property leaves the commer­ 44. Here, by contrast, the problem of double cial circuit and enters private ownership that taxation does not even arise, since, as stated it is taxed. The French Government points above, VAT paid and not recovered can be out in this regard that such tax is in the deducted from the stamp duty if no building

is erected on the building land within four the property for tax purposes. If at the end years. of the four-year period the builder has not carried on an activity as a 'producer, trader 45. The proportional nature of the charge, or person supplying services' (Article 4(2) of referred to by the national court, cannot be the Sixth Directive), it is legitimate to con­ regarded as a relevant argument in support sider that the property acquired under the of the view that transfer duties have the char­ system of VAT on real estate transactions acter of turnover taxes. While there is no and as part of his professional or trade activ­ doubt that stamp duty is proportional to the ity is not used for that purpose and, since it value of the property, that is to the stated does not form part of any economic process, price, the fact remains that the Court has no longer falls under that system but under indicated on several occasions that this cri­ the arrangements reserved for private indi­ terion alone was insufficient. 29 viduals which, unless the Member States opt for the possibility available to them under Article 4(3) of the Sixth Directive, are based 46. Finally, in reply to the final argument of on transfer duty. the applicant in the main proceedings, a point which is moreover of no great rele­ vance to the question raised and which con­ 47. Finally, it is apparent from the above cerns not the compatibility of the entire considerations that, regard being had to the national system of VAT on real estate trans­ rationale of the Sixth Directive, stamp duty actions with Community law but that of on the purchase of building land cannot, in stamp duty with Article 33 of the Sixth the event of failure to build on that land Directive, it should be noted that the concept within the statutory period of four years of building land is expressly defined by from the time of acquisition despite an national law (Article 4(3)(b) of the said direc­ undertaking to that effect given by the pur­ tive) and that in that respect the Member chaser, be considered as a turnover tax State may take the intention to build as the within the meaning of Article 33 of the criterion for determining the classification of directive.