C-24/92

Mr President, the Conseil d'État (State Council) of Luxem- Members of the Court, bourg (hereinafter referred to as the 'Conseil d'État') recognized its status as a court in contentious matters in a judgment of 26 July 1. The reference for a preliminary ruling 1963, 1 and in non-contentious matters in a made to the Court by the Directeur des judgment of 18 December 1968. 2 Neverthe- Contributions Directes et des Accises of the less, such recognition is not enough to confer Grand Duchy of Luxembourg (Director of on that authority the status of a 'court or tri- Direct Taxes and Excise Duties, hereinafter bunal' within the meaning of Article 177, referred to as the 'Directeur des Contribu- since that concept does not refer in any way tions') seeks, in substance, an examination, in to the internal law of Member States, but is the light of Article 48 of the Treaty, of a sys- an autonomous concept which has been tem of taxation which, for the purpose of defined by the case-law of this Court. calculating income tax, takes into account the whole of a taxpayer's income, including the income he receives in the State concerned as 5. The cornerstone of that case-law is the a non-resident. judgment in the Vaassen-Gòbbels case, 3 in which, it will be recalled, the question was whether the Scheidsgerecht, an arbitration 2. Mr Corbiau, who is a Belgian national, tribunal with jurisdiction to resolve disputes lived and worked in Luxembourg until between a Dutch social security institution 25 October 1990, when he transferred his and the recipients of certain benefits, consti- residence to Belgium while remaining tuted a court. In the event it was recognized employed in Luxembourg. As a result, he as such, because it was a permanent body of has since that time been taxed in Luxem- statutory origin, reference to it was compul- bourg as a non-resident taxpayer. sory, and it gave its rulings after a proper hearing and in accordance with legal rules. 3. Having thus established the context of the reference, the first matter, before any exami- nation of the substance of the case, must be 6. In its judgment in the Politi case, 4 how- to determine whether the Directeur des ever, the Court held that, even if the Contributions constitutes a 'court or tribu- procedure of the body in question did not nal' within the meaning of Article 177 of the involve a proper hearing, reference to the Treaty. Court might still be allowed, in so far as

'...The President of the Tribunale di Torino is bunal in the proceedings which gave rise to performing a judicial function within the the reference for a preliminary ruling are not, meaning of Article 177 and ... he considered strictly speaking, of a judicial nature' 7 an interpretation of Community law to be necessary to enable him to reach a decision, there being therefore no need for the Court 10. That idea of independence, which is an to consider the stage of the proceedings at integral element of the judicial function, was which the questions were referred'. 5 referred to again in the Court's judgment in the Pardini 8case, delivered on a reference 7. In summary proceedings in which the from a national court in non-adversarial pro- defendant does not appear, the absence of the ceedings. adversarial element is compensated for by the complete impartiality of the judge and his independence with regard both to the 11. Let us now consider whether the Direc- dispute and the parties to it. teur des Contributions, when ruling on an application in non-adversarial proceedings brought by a taxpayer, is exercising a genu- 8. Because the defendant is absent, the judge ine judicial activity, or whether he acts as an must consider the merits of the applicant's administrative authority within a system of claims even more carefully, so as to mitigate internal appeals. the effects of there being no full exchange of argument in the procedure. 12. Both the Commission (apparendy 9. Thus, the element of independence, the because it thought it opportune to do so 9 ) necessary concomitant of the absence of a and the Luxembourg Government maintain full hearing, which was not mentioned in the that the authority in question meets the cri- Court's earlier decisions, appeared in the teria established by the Court. Whilst the judgment in the Pretore di Salò case 6 in the answers given by the Luxembourg Govern- following terms: ment in the oral procedure have clarified some of the attributes of that authority and the course of the procedure before it, those 'It must be observed that the Pretori are answers have, nevertheless, entirely failed to judges who, in proceedings such as those in convince me that the authority is judicial in which the questions referred to the Court in character. this case were raised, combine the functions of a public prosecutor and an examining magistrate. The Court has jurisdiction to reply to a request for a preliminary ruling if 13. It is true that the Directeur des Contri- that request emanates from a court or tribu- butions does in fact exercise his functions nal which has acted in the general framework within the framework of the Loi portant of its task of judging, independently and in réorganisation de l'administration des accordance with the law, cases coming within contributions directes et des accises (Direct the jurisdiction conferred on it by law, even Taxes and Excise Duties Reorganization Law though certain functions of that court or tri-

19. Concerning, first, the application of legal 15. Accordingly, the Ministerial Order of rules, let us remember, in the first place, that 10 April 1946 designated the Judicial Com- all admininistrative authorities are obliged to mittee of the Conseil d'État du Luxembourg comply with them, and that, in the second 'to rule at final instance on appeals in matters place, in an action such as this the Directeur of taxation, contributions and entitle- des Contributions does not rule in law but as ments'. 10 a matter of fairness, being clearly directed to do so by a statutory rule, and weighs up spe- cial circumstances which, under Paragraph 16. However, the mere fact that those three 131 of the Tax Code, justify the repayment criteria (permanent existence, statutory ori- or crediting of State taxes already paid. 12 gin and obligatory reference) are fulfilled is Such circumstances, which might reveal clearly not enough for an administrative unfair treatment, could arise either from the authority to be considered a judicial body. personal situation of the taxpayer at the time Indeed, whilst in principle all administrative when the tax was collected, or from an authorities indisputably meet those criteria, unduly strict application of tax law in the their fulfilment cannot be enough, otherwise particular case. references could be made to the Court by

11 — See G. Isaac: Droit communautaire general, Masson, 3rd ed., p. 290. 10 — Article 1. 12 — Report for the Hearing, IIA, fourth subparagraph.

I -1289

OPINION OF MR ADVOCATE GENERAL DARMON — CASE C-24/92

23. When a complaint is made in administra- 27. That does not appear to be the case with tive proceedings of this kind, the taxpayer the Directeur des Contributions, who seems seeking a repayment or reduction of taxes to be both judge and party at the same time. may refer the matter simply by letter to the Directeur des Contributions, who gives his decision without hearing further argument and in the absence of the applicant. Thus, the 28. In the first place, the Directeur is placed procedure does not involve a proper hearing. institutionally 'under the immediate auth- ority of the Minister of Finance'. 15 Thus, his authority derives from the central power of the State. 24. In the Politi case already referred to, 14 the Court admittedly recognized the Presi- dent of the Tribunale di Torino as a court, 29. In the second place, his task is to resolve a dispute between the administration of 13 — Judgment of 11 October 1988 in Bertrand v Administration des Contributions, N o 7803 on the Court Roll, entered 25 July 1986. 14 — See footnote 4 above. 15 — See R Majerus: L'État luxembourgeois, 6th ed., 1990, p. 288.

I - 1290

CORBIAU v ADMINISTRATION DES CONTRIBUTIONS

'This has been recognized by the legislature, which, in a Law of 1 December 1978 regulat- 31. By lodging a written statement of his ing non-contentious administrative pro- administration's case, in its name and on its cedure, has appreciably strengthened the behalf, the Directeur des Contributions thus rights of members of the public when deal- acts as an actual party to the proceedings ing with central and local authorities. brought before him. That is enough to dem- onstrate that the taxpayer's application addressed to him constitutes an internal hier- archical appeal, and not an appeal to a court. The basic principle on which the Law is based is observance of the right of due pro- cess. Compliance with that principle means that the authorities cannot base their deci- 32. Is this to be regarded as a vestige of the sions on reasons which are not known to the old doctrine of ministre juge, whereby the citizen. That rule necessarily entails recogni- minister decided at first instance? Be that as tion of the citizen's right of free access to his it may, that doctrine has now been aban- file, the right to be given reasons, and the doned, and appeals to a minister are to be right to submit observations'. 18 regarded as hierarchical appeals before a purely administrative authority.

35. Whilst the duty to give reasons is an inherent part of judicial decision-making, it 16 — See the cases judged on 6 March 1963 in Heuardt v Admin- istration des contributions (Nos 5768 and 5884 on the Court Roll), 7 July 1971 in Pirotte v Administration des contribu- tions (Nos 5984 and 6314), 22 January 1985 in Ruppert v Administration des contributions (No 6374), 22 May 1985 in Compagnie générale pour le gaz v Administration des con- 17 — Arendt: 'L'information de l'administré en droit luxembour- tributions ( N o 7552), and 11 October 1988 in Bertrand v geois, diagonales à travers le droit luxembourgeois', Livre Administration des contributions, referred to in note jubiliaire de la conférence Saint-Yves, 1946-1986, p. 13. 14 above. 18 — Ibid., p. 17.

38. Indeed, Pescatore 20 does not mention the Directeur des Contributions as one of the courts of Luxembourg, even though the 'If on the other hand the term in question latest edition of his work was published after [court or tribunal] were to be construed as a delivery of the judgments of the Conseil reference to national law, Member States d'État referred to above. would have it in their power to take away from certain decision-making bodies which have to apply Community law the right, and in some cases the obligation, to request a 39. Even more explicitly, Schockweiler has preliminary ruling, by making provision to no hesitation in writing:

21 — F. Schockweiler:Le contentieux administatif et la procédure 19 — Olinger: Études fiscales, N o s 81 to 85, November 1989. administrative non contentieuse en droit luxembourgeois, 20 — P. Pescatore: Introduction à la science du droit, Centre uni- N o 44, p. 20. versitaire de l'État luxembourgeois, 1960, with revisions 22 — Judgment in Case 246/80 Broekmeulen v Huisarts Regis- 1978, N o 272, p. 389. tratie Commissie [1981] ECR 2311.

I - 1292

CORBIAU v ADMINISTRATION DES CONTRIBUTIONS

that effect within their system of administra- 45. It is therefore for that court to make a tion of justice. This would lead eventually to reference to the Court of Justice of the Euro- the fragmentation of Community law, which pean Communities when faced with a ques- is precisely what the procedure under Article tion of interpretation of a Community rule. 177 is designed to avoid. Thus the law of the Member States can be relevant only in so far as that law is able to determine whether the minimum characteristics required by Com- munity law are present in a given case'. 23 46. I do notice, however, that Article 8 goes on to provide:

I - 1293

O P I N I O N OF MR ADVOCATE GENERAL D A R M O N — CASE C-24/92

Human Rights and Fundamental Freedoms, independent and impartial tribunal estab- to which, moreover, this Court has taken lished by law.' care to make express reference.

52. In its judgment in the Golder case, 28 the 50. I refer in this connection to the judg- European Court of Human Rights inter- ment in the Johnston case, 25 in which the preted that article as follows: Court stated:

25 — Judgment in Case 222/84 Johnston v Chief Constable of the Royal Ulster Constabulary [1986] ECR 1651. 26 — The article in question is Article 6 of Council Directive 28 — Judgment in Golder v United Kingdom, Series A, N o 18. 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as 29 — Paragraph 32. regards access to employment, vocational training and pro- 30 — Paragraph 34. motion, and working conditions (OJ 1976 L 39, p. 40). 31 — Paragraph 19 of the Johnston case, referred to in footnote 27 — Paragraph 18. 25 above.

I - 1294

CORBIAU v ADMINISTRATION DES CONTRIBUTIONS

come within the meaning of that article. taxpayer's income, preclude the Luxembourg Otherwise, as I said in my Opinion in the Treasury from taking into account the whole Johnston case, there is a risk that a 'no-go of the income received by the taxpayer in area for the law' might be created, thus call- Luxembourg during the reference year, ing into question the very foundations of the including income received by him as a non- Community legal order. 32 resident?

54. It follows from the foregoing that every individual has an inalienable right under 58. Income received by a person in Luxem- Community law to apply to a court or tribu- bourg, whether as a resident or a non- nal within the meaning of Article 177 of the resident, is not taxed in Belgium under the Treaty whenever a question of the interpreta- Double Tax Convention (United Nations tion of Community law is raised, nothwith- model) signed between those two Member standing any limitation on such remedy States on 17 September 1970, in particular under national law. Thus the unity and uni- Article 17 thereof, which provides: formity of Community law are perfectly preserved.

tax authorities take the most recent remuner- the reference year, on the basis of Article ation as a basis and assume that the salary 154(6) of the Loi sur l'Impôt sur le Revenu earner will receive twelve times that amount (Income Tax Law), which provides: during the reference year. Adjustments are made at the end of the year, either upwards or downwards, according to whether the actual taxable income has increased or 'Amounts duly deduced from capital income diminished. shall remain the property of the Treasury and shall not be repayable. The same shall apply to deductions of tax from the salaries 62. In the present case, the year-end tax cal- and wages of employed persons who are res- culation made by the Administration des ident taxpayers for only part of the year Contributions in respect of the first ten because they take up residence in the coun- months of the year was carried out solely on try or leave it during the course of the year.' the basis of the income received by Mr Cor- biau as a resident taxpayer, at the tax rate applicable to that amount of income if 65. In its judgment, the Court ruled that: received over a whole year, thereby leaving out of account the income received by Mr Corbiau as a non-resident. It then turned out, when the actual amount of tax due came 'Article 48(2) of the Treaty precludes a Mem- to be ascertained, that, by taking into ber State from providing in its tax legislation account only the income received during the that sums deducted by way of tax from the first ten months, the rate obtained was lower salaries and wages of employed persons who than the initial rate, and showed a difference are nationals of a Member State and are res- of LFR 180 048 compared with the amount ident taxpayers for only part of the year of tax which would arise from applying the because they take up residence in the coun- rate applicable to the whole of Mr Corbiau's try or leave it during the course of the tax income for the year. year are to remain the property of the Trea- sury and are not repayable'. 34

'even if the objectives pursued by the national legislature in seeking to introduce '... the rules regarding equality of treatment, the equivalent of a clause ensuring that pro- both in the Treaty and in Article 7 of Regu- gressive rates of taxation are not called in lation N o 1612/68, forbid not only overt dis- question, the manifestly discriminatory crimination by reason of nationality but also nature of the rule at issue is evident in partic- all covert forms of discrimination which, by ular in all cases in which the national con- the application of other criteria of differenti- cerned received no income during the year in ation, lead in fact to the same result'. 39 question in the Member State of origin or destination.' 38

73. So, does a progressive tax system like the one at issue here (envisaged in particular in 69. In holding as it did, the Court did not international conventions based on the confer any automatic right to a refund on United Nations or O E C D models 40) give individuals who go from being resident to rise to discrimination of an overt or covert non-resident. kind?

70. Equally, the Directeur des Contributions is not asking the Court whether he can con- 74. I start with the observation that in inter- tinue applying the disputed provision in cer- national tax law there are two methods of tain situations, but only whether he may cal- avoiding double taxation. culate the tax rate on income taxed in

39 — Judgment in Case 152/73 Sotgiu v Deutsche Bundespost [1974] E C R 153, at paragraph 11. 36 — Paragraph 14. 40 — See, in that respect, Article 23 of the Double Tax Conven- 37 — Judgment referred to in footnote 33 above. tion between the Kingdom of Belgium and the Grand 38 — Paragraph 10. Duchy of Luxembourg.

78. The facts of that case are worth recalling. When taxing the income of the wife of an 81. Moreover, Advocate General Lagrange official of the European Communities, the said the following about taxpayers not hav- Belgian tax authorities had requested the ing the benefit of the Protocol on Privileges official to provide them with details of his and Immunities: salary in order to enable them to calculate the tax rate on other income, in particular the income of his wife. The official refused, '... in spite of the exemption granted [by a invoking the immunity to taxation of his sal- double tax convention], the income in ques- tion had to be taken into account in deter- mining the rate applicable to other income 41 — Plagnet Droitfiscalinternational, Litec 1986, No 103, p. 58. 42 — Ibid., No 104, p. 58. 43 — Judgment in Case 6/60 Humblet v Belgium [1960] ECR 1125. 44 — Judgment in Humblet, referred to above, at p. 578.

I - 1298

CORBIAU v ADMINISTRATION DES CONTRIBUTIONS

(2) Alternatively, Article 48(2) of t h e T r e a t y d o e s n o t p r e c l u d e t h e State in w h i c h a t a x p a y e r has been resident, w h e n d e t e r m i n i n g the rate of tax applicable t o his i n c o m e , f r o m t a k i n g i n t o c o n s i d e r a t i o n the w h o l e of his i n c o m e d u r i n g t h e reference year, including i n c o m e h e received in t h a t same State as a n o n - resident, p r o v i d e d t h a t t h e p e r s o n c o n c e r n e d enjoys t h e same benefits a n d allowances as nationals of that State.

45 — Humblet case referred to above, Opinion of Advocate Gen- eral Lagrange, p. 583, at pp. 590 and 587: '... It is conceiv- able that, in the context of a system of personal taxation on income on a rising scale, an individual source of income may be taken into account in determining the total income subject to tax, in particular for determining the rate of tax, but may subsequently be relieved of the application of this rate which, however, remains applicable to income from other sources.'

I - 1299