C-234/91

1. In these proceedings the Commission claims that a Danish tax, the labour market contribution (hereinafter 'the contribution') (a) The contribution levied on value added introduced by Law No 840 of 18 December affects both activities subject to VAT and 1987 ('Law No 840'), is incompatible with a number of activities exempt from VAT. Article 33 of the Sixth Council Directive As regards the former, the basis of assess- 77/338/EEC ('the Sixth Directive').> I would ment of the contribution is identical to observe forthwith that the Court has already that of VAT; it is therefore charged on the had occasion to give a preliminary ruling on difference between the value of sales and the compatibility of Law No 840 in the the value of purchases as they are judgment in Dansk Denkavit. 2 accounted for for the purposes of charg- ing VAT (see Article 7 of Law No 840). As regards the latter, the basis of assess- 2. Whilst I would refer to the Report for the ment is also constituted by the value of Hearing and to the judgment in Dansk Den- sales less the value of purchases (see Arti- kavit for further particulars, I shall start by cle 8(1)(1) of Law No 840); in that case, recalling the main aspects of the rules gov- of course, it is not possible to use VAT erning the tax at issue. The contribution in accounting as the basis, since the activities question, as governed by Law No 840 as are not subject to VAT; however, the basic amended, is imposed in principle on any criterion remains the same, since the con- commercial activity consisting in the supply tribution is levied on the value added by of goods or services (see Article 1 of Law the relevant activities. No 840). Saving a few exceptions, it is charged on both activities subject to VAT and to activities exempt from VAT (see Arti- cle 2 of Law No 840). (b)The contribution based on aggregate wages and salaries relates to a number of activities which are not subject to VAT 3. As regards the basis of assessment of the and specifically set out in the Law for contribution, a distinction can be made which the criterion of value added is not applicable (see Article 8(1 )(2) of Law No 840). The activities in question are chiefly * Original language: Italian. activities of the financial sector. In rela- 1 — Sixth Council Directive 77/388/EEC of 17 May 1977 on the tion to such activities, the contribution is harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uni- charged on the amount of aggregate form basis of assessment (OJ 1977 L 145, p. 1). wages and salaries paid by the undertak- 2 — Judgment of 31 March 1992 in Case C-200/90 Dansk Den- kavit and Poulsen v Skatteministeriet [1992] ECK. 1-2217. ing increased by a flat-rate 90%.

In the context of the system of judicial rem- The contribution based on value added edies created by the Treaty, references for preliminary rulings under Article 177 have completely independent and different objec- 5. In this connection, the Danish Govern- tives and effects by comparison with the ment maintains that the action is to no pur- infringement proceedings provided for in pose and hence inadmissible, since the con- Article 169; consequently, the existence of tribution was repealed by Law No 891 of remedies available through the national 21 December 1991 and declared incompati- courts, in the context of which a reference ble with Article 33 of the Sixth Directive by for a preliminary ruling under Article the Court in the judgment giving a prelimi- 177 can be made, cannot in any way preju- nary ruling in Dansk Denkavit. dice the making of the application referred to in Article 169. 4 Subject, therefore, to the Commission's power to discontinue 6. In that connection, as the Court has con- infringement proceedings at any time, it sistently held, the subject-matter of an action must be considered that the mere fact that brought under Article 169 of the Treaty is national legislation has already been consid- defined by the Commission's reasoned opin- ered by the Court in proceedings brought ion and even where the contested infringe- under Article 177 is not in itself such as to ment has been brought to an end after the render proceedings brought by the Commis- expiry of the period prescribed by the rea- sion under Article 169 against the same leg- soned opinion, there remains an interest in islation to no purpose and hence inadmissi- pursuing the action. 3In the instant case it is ble. clear that the tax legislation at issue was not amended by the Danish legislature until after the proceedings were brought and that hence 8. Furthermore, it should also be observed when the period prescribed by the reasoned that the Danish Government's objection to opinion expired, the legislation in question the effect that the Court's judgment in was still in force. Consequently, from that Dansk Denkavit makes it pointless to pursue point of view the application cannot be these infringement proceedings is based on regarded as being to no purpose. an assessment simply of the expediency of maintaining the Article 169 proceedings, which is a matter for the Commission alone 7. As for the fact that in dealing with the to assess and docs not fall within the pur- request for a preliminary ruling in Dansk view of the Court. As the Court has consis- Denkavit the Court has already considered tently held, under the system established by

Article 169 of the Treaty, the Commission specifically with regard to that levy in the enjoys a discretionary power as to whether it pre-litigation phase of the procedure. Indeed, will bring and pursue an action for failure to the Government observes, on close examina- fulfil obligations and it is not for the Court tion objections to the contribution based on to judge whether that discretion was wisely aggregate wages and salaries do not appear exercised. 5 even in the application; it is only in the reply that the Commission, for the first time, chal- lenges the consistency of the contribution 9. As for the substance, I note that the Dan- based on aggregate wages and salaries with ish Government acknowledges that the Article 33 of the Sixth Directive. Conse- charge made against it is well founded. It quently, the complaint made with regard to therefore recognizes that the contribution that aspect of the Danish legislation at issue charged on the value added by undertakings, should be regarded as inadmissible. whether or not they are taxable persons for the purposes of VAT, which was introduced by Law N o 840 constitutes a turnover tax 12. I shall say forthwith that I consider that within the meaning of Article 33 of the Sixth the Danish Government's objection to that Directive and is therefore prohibited by head of the action is completely justified on Community law. It is, moreover, for that the following grounds. reason that the Danish legislature decided to repeal the legislation at issue by adopting, albeit belatedly, Law N o 891 of 21 Decem- I would recall in the first place that, accord- ber 1991. Furthermore, it should be stressed ing to well-known case-law, an action that in the judgment in Dansk Denkavit the brought under Article 169 is inadmissible in Court clearly held that the contribution so far as it relates to complaints not covered based on value added was in the nature of a by the pre-litigation procedure and, likewise, turnover tax which was incompatible with a complaint raised before the Court which Article 33 of the Sixth Directive. has not been duly set out in the application is inadmissible. 6

15. Furthermore, it emerged unambiguously 13. In this case, it should be observed that from the arguments put forward at the hear- the contribution based on aggregate wages ing that neither in the form of order sought and salaries constituted — at least in an nor in the part of the application dealing essential respect, that of the basis of assess- with the law — and not even in the docu- ment — a tax which was completely different ments of the pre-litigation phase — did the from the charge based on value added. Con- Commission actually set out any complaints sequently, the Commission should have spe- about the contribution based on aggregate cifically challenged its legality, as it did in the wages and salaries. case of the contribution based on value added, by specifying, as from the pre- litigation phase, the legal and factual particu- lars supporting its claim. 16. I therefore consider that the head of the action relating to that contribution, which the Commission set out only in the reply (moreover in vague, general terms), must be 14. In contrast, the Commission merely regarded as being manifestly inadmissible. refers to the contribution based on aggregate wages and salaries in its general description of the system provided for by Law No 840 and neither in the prc-htigation phase nor in the application itself did it set out any 17. In the alternative, in case the complaint specific complaint regarding that contribu- should be held to be admissible, I would tion or indicate the reasons for which it argue that it should be dismissed in any maintains that it is incompatible with Article event as unfounded. As I have already men- 33 of the Sixth Directive (no such reasons, tioned, the Commission has not adduced — moreover, are even given in the reply). As not even at the hearing — any particulars the Danish Government rightly observes, the showing that the contribution based on legal arguments set out by the Commission aggregate wages and salaries (plus 90%), relate in fact only to the contribution which has very different characteristics from charged on value added: the Commission the contribution based on value added, is in analyses only the nature and lawfulness of the nature of a turnover tax within the mean- that charge — and not the nature and lawful- ing of the Sixth Directive; on the contrary, ness of the different contribution based on the details contained in the case file seem aggregate wages and salaries — in order to instead to suggest that it is not in the nature reach the conclusion that it is a turnover of a turnover tax, since the contribution based on aggregate wages and salaries is not charged on a 'cascade' basis at each stage of the marketing chain and does not take the 7 -- Sec the judgment in Case C 347/88 Commission v Belgium, cited in footnote 3. paragraphs 24, 28 and 29 form of a tax on value added.