C-438/92
ECLI:EU:C:1994:137
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RUSTICA SEMENCES v FINANZAMT
OPINION OF ADVOCATE GENERAL JACOBS delivered on 14 April 1994 *
My Lords, production into Germany and sells them to German purchasers on the market for agricultural products in Germany?
1. This case is a reference from the Finanz- gericht Baden-Württemberg; it raises the question whether special aid granted to Ger- man producers, in order to offset a partial dismantling of the system of monetary com- pensatory amounts, should also be available (2) If Question 1 should be answered in the to a French producer selling its produce on negative: the German market.
2. The Finanzgericht has referred the fol- lowing questions: Does Article 3 of Title II of Regulation N o 855/84 directly exclude the grant of special aid provided in German turnover tax law, possibly in contraven- tion of Article 3(1), for agricultural producers not having their seat in Germany?' '(1) Is it compatible with Article 3(1) of Title II of Council Regulation (EEC) N o 855/84 of 31 March 1984 (OJ 1984 L 90, p. 1) for the Federal Republic of Germany to grant special aid to an agricultural producer which does not have its seat in Germany but in another country of the EEC but which imports its products from the country of In what follows I will first set out the rele- vant Community legislation, and then turn to consider what answers should be given to * Original language: English. the questions referred.
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The Community legislation of the green mark. Given that many agricul- tural prices are set in terms of the E C U and are, as we have seen, converted into national currencies at the representative rates, such a revaluation led to a reduction of farm incomes in Germany. As the 13th recital to the Regulation observes:
3. Monetary compensatory amounts (MCAs) are employed in order to avoid dis- tortions of trade resulting from disparities between actual exchange rates and the artifi- cial or 'representative' rates used for the pur- poses of the common agricultural policy; the '... adaptation of the representative rates in latter are used, in particular, to convert agri- the Federal Republic of Germany and the cultural prices set in terms of the E C U into Netherlands entails a reduction in prices national currencies. 1 The representative rates expressed in national currencies and conse- are sometimes referred to as the 'green' rates, quently lower farm incomes; ... by way of and the corresponding values as 'green' cur- compensation, the possibility of granting rencies. Where, for a particular currency, the national aids to the financing of which the green rate is below the market rate of Community will contribute on a temporary exchange, the corresponding MCAs are pos- and degressive basis should be provided for.' itive, that is to say they take the form of a levy on imports and a subsidy on exports. Conversely, where the green rate is above the market rate, the corresponding MCAs are negative, taking the form of a subsidy on imports and a levy on exports. Article 3 of the Regulation accordingly pro- vides that:
4. Council Regulation (EEC) N o 855/84 2 (hereafter 'the Regulation') introduced mea- ' 1 . Any special aid granted to German agri- sures to eliminate the need for positive cultural producers under the conditions MCAs by adjusting the representative rates referred to below shall be deemed to be of exchange. Those adjustments included, in compatible with the common market. particular, an increase in the representative rate for the German mark, i. e. a revaluation
1 — MCAs were first introduced by Council Regulation (EEC) N o 974/71 (OJ, English Special Edition, 1971(1), p. 257). 2 — Council Regulation (EEC) N o 855/84 of 31 March 1984 on 2. The Federal Republic of Germany shall the calculation and the dismantlement of the monetary com- pensatory amounts applying to certain agricultural products be authorized to grant separately the special (OJ 1984 L 90, p. 1). aid by payment mentioned in the invoicing
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and/or the VAT declaration using the VAT as 5. As we have seen, the aid authorized by an instrument. the Regulation was to be granted in the form of VAT relief. However, the Sixth Directive on VAT 4 lays down a uniform basis of assessment for value added tax, as well as an exhaustive list of the deductions which can be made in determining a taxable person's liability. In order to permit the aid to be granted, therefore, it was necessary to pro- vide derogations from the provisions of the Sixth Directive. The Council accordingly The aid may not exceed 3 % of the ex-VAT adopted a Twentieth Directive on VAT. 5 price paid by the purchaser for the agricul- Articles 1 and 2 of the Twentieth Directive tural product.' authorize Germany, by way of derogation from the Sixth Directive, to use VAT in order to grant the special aid permitted in Regulation N o 855/84 and Decision 84/361. By Article 3, Germany is required to take the necessary steps to ensure that Articles 1 and 2 do not affect the calculation of 'own resources' for the purposes of the Commu- nity budget. 6 By Article 7, the directive applies from 1 July 1984 to 31 Decem- It is clear that, in the above provision, 'Ger- ber 1991 at the latest. man agricultural producers' should be under- stood as meaning 'agricultural producers in Germany', since it was those farmers who were affected by the revaluation of the green mark. Thus Germany was authorized to grant aid to such producers in the form of a reduction in the producer's liability to value added tax (VAT), up to a maximum of 3 % of the price of the product. That limit was increased to 5%, for the period 1 July 1984 to 31 December 1988, by Council Deci- sion 84/361/EEC. 3 The preamble to the decision explains that the 3 % limit laid down by the Regulation had proved insufficient in view of the particular difficulties encoun- 4 — Sixth Council Directive 77/388/EEC of 17 May 1977 on the tered by German agriculture. However, harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uni- nothing in the present case turns upon the form basis of assessment (OJ 1977 L 145, p. 1). difference between the 3 % allowed by the 5 — Twentieth Council Directive 85/361/EEC of 16 July 1985 on the harmonization of the laws of the Member States relating original regulation and the 5% permitted by to turnover taxes — Common system of value added tax: the subsequent decision. derogations in connection with the special aids granted to certain farmers to compensate for the dismantlement of monetary compensatory amounts applying to certain agri- cultural products (OJ 1985 L 192, p. 18). 6 — See Council Decision 85/257/EEC, Euratom of 7 May 1985 on the Communities' system of own resources (OJ 1985 3 — Council Decision 84/361/EEC of 30 June 1984 concerning L 128, p. 15), now replaced by Council Deci- an aid granted to farmers in the Federal Republic of Ger- sion 88/376/EEC, Euratom of 24 June 1988 on the system of many (OJ 1984 L 185, p. 41). the Communities' own resources (OJ 1988 L 185, p. 24).
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Consideration of the questions referred 8. As we have seen, the aid authorized by the Regulation is granted in order to com- pensate producers in Germany for a loss in income consequent upon the revaluation of the green mark. Rustica argues that the prin- ciple of non-discrimination requires that the aid must also be made available to producers 6. The plaintiff in the main proceedings in other Member States who sell their pro- (hereafter 'Rustica') is a French company duce on the German market. It suggests that which carries on, in France, the business of such producers will have been affected by plant-breeding and seed-growing. In the rel- the dismantling of MCAs in exactly the same evant period, it exported seeds for cereals way as German farmers, and that they and oil seeds from France to Germany and should therefore be entitled to the same VAT sold them on the German market. Rustica relief to compensate for their loss in income. was liable for VAT in Germany in respect of those sales. In making its VAT returns for the years 1986 and 1987 Rustica claimed an abatement of 5% under Paragraph 24a of the Umsatzsteuergesetz, which gives effect in German law to the authorization granted by Article 3 of Regulation N o 855/84 and Arti- cle 1 of Decision 84/361. 7 Those abatements 9. Rustica also relies upon Article 95 of the were refused by the defendant Tax Office, Treaty, first paragraph, which provides that: and Rustica brought proceedings against that decision before the Finanzgericht Baden- Württemberg.
' N o Member State shall impose, directly or indirectly, on the products of other Member The first question States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.'
7. By its first question, the Finanzgericht asks whether the aid authorized by the Reg- ulation can be granted to a producer in another Member State which exports its pro- Rustica submits that Paragraph 24a of the duce to Germany and sells it on the German Umsatzsteuergesetz must be interpreted in market. accordance with that provision, and that the aid granted under Paragraph 24a must accordingly be available to the producers of 7 — Paragraph 24a was inserted into the Umsatzsteuergesetz by other Member States as well as to German the Erste Gesetz zur Änderung des Umsatzsteuergesetzes, producers. For otherwise the products sup- of 29 June 1984 (BGBl. I, 796): see Sölch/Ringleb/List Umsatzsteuergesetz (Munich 1993), Paragraph 24a, Note 2. plied by the former producers would, indi-
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rectly, bear a greater burden of VAT than ers', and why the preamble to Deci- that borne by equivalent German products. sion 84/361 refers to the 'particular difficul- ties encountered by German agriculture' (and its title to 'an aid granted to farmers in the Federal Republic of Germany').8 As I have emphasized, the difficulties in question arose from a revaluation of the green mark. There is no reason to depart from a literal construction of those provisions, and inter- pret them as applying to a French producer 10. In my view, those submissions cannot be which sells its produce in Germany. To grant accepted. First, it is clear from the wording such a producer compensation for the reval- of Article 3 of the Regulation that producers uation of the green mark would be to grant in other Member States are not intended to compensation for a non-existent loss. be covered. That is also clear, moreover, from its purpose. For we have seen that the aid authorized by the Regulation is intended to compensate for the revaluation of the green mark. But, as the Commission points out, the income of producers exporting their produce from another Member State will not have been affected by that revaluation. Where the price of the product in question is fixed by intervention arrangements, any reduction of the price (expressed in German marks) resulting from a revaluation of the 12. That is particularly easy to see in the green mark will be compensated by a corre- case of the products presently at issue. For, sponding reduction in the MCA levied on as the Commission observes, the common import. Where, on the other hand, the price organization of the market for seeds gener- is not fixed by intervention arrangements, a ally takes the form of a system of production revaluation of the green mark can have no aids rather than of intervention prices. 9 effect on the value· received for the goods. Of Thus, even in the case of German producers, course, in the latter case the value received the income obtained from the sale of seeds in by the producer (expressed in the currency Germany will not have immediately been of its own Member State) may be affected by affected by the revaluation of the green changes in the market exchange rate; but it is mark, although that revaluation will have clear that it cannot be affected by changes in affected the amounts of production aids the green rate of exchange. (expressed in German marks) which are paid
8 — See, similarly, the subsequent Council Decision 88/402/EEC of 30 June 1988 on an aid granted to farmers in the Federal Republic of Germany (OJ 1988 L 195, p. 70), and Council Decision 92/392/EEC of 30 June 1992 on temporary national compensation for farmers in Germany (OJ 1992 L 215, p. 100). 9 — See Council Regulation (EEC) N o 2358/71 of 26 Octo- ber 1971 on the common organization of the market in seeds (OJ, English Special Edition 1971(111), p. 894), last amended 11. It is no doubt for that reason that Arti- by Council Regulation (EEC) N o 1239/89 of 3 May 1989 cle 3(1) of the Regulation refers to 'special (OJ 1989 L 128, p. 35). However, Article 6 of Regulation N o 2358/71 provides for the fixing of annual reference prices aid granted to German agricultural produc- in the case of hybrid maize for sowing.
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to German farmers. On the other hand, the The second question value of the production aids paid to French farmers will depend only upon the rate of the green franc.
15. By its second question the Finanzgericht asks in substance whether Article 3 of the Regulation precludes the grant of aid, in the form of VAT relief, to producers not falling within the scope of that provision.
13. Nor, in my view, is Rustica assisted by Article 95 of the Treaty. Since the meaning of 16. It is clear that Article 3 of the Regulation the Regulation is clear, both from its terms does not in itself prohibit the grant of aid, and in the light of its purpose, any argument but has the effect only of authorizing the based on Article 95 would go to the validity grant of aid satisfying the conditions laid rather than the interpretation of the Regula- down. Authorization is required from two tion. As we have seen, the Regulation must points of view. be interpreted as authorizing only aid granted to producers in Germany. It is to be noted, however, that the validity of the Reg- ulation has not been put in issue in these proceedings; and it is clear, in any event, that Rustica would not be assisted in its present 17. In the first place, aid granted by a Mem- claim by a finding of invalidity. For if the ber State favouring certain undertakings or Regulation were to be declared invalid, the the production of certain goods may be result would not be to authorize the grant of incompatible with the common market, and aid, in the form of VAT relief, to producers accordingly contrary to Article 92 of the in other Member States, but only to remove Treaty. It is true that Article 42 of the Treaty authorization for the grant of such aid to states that the provisions of the chapter of producers in Germany. the Treaty relating to rules on competition, which include the rules relating to State aids, 10 shall apply to agricultural products only to the extent determined by the Coun- cil within the framework of Article 43(2) and (3). However, rules providing for a common organization of the market frequently pro- vide for the application of the State aid pro- visions of the Treaty. Thus, Article 8 of Reg- ulation N o 2358/71 n applies Articles 92
14. I conclude therefore that the first ques- tion referred by the Finanzgericht is to be 10 — Now in Part Three, Tide V, Chapter 1, Section 3, of the answered in the negative. It is accordingly Treaty. necessary to answer the second question. 11 — Cited above, note 9.
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to 94 of the Treaty to the products falling 18. In the second place, as we have already under the common organization of the mar- seen, 12 the grant of aid in the specific form ket in seeds, except as otherwise provided in of VAT relief is in principle contrary to the that regulation. Depending upon the circum- Sixth VAT Directive. u For that reason, the stances, therefore, the grant of aid falling grant of such aid requires the authorization outside the scope of Regulation N o 855/84 given, by way of derogation from the Sixth (or, as the case may be, Decision 84/361) Directive, by the Twentieth VAT Direc- may be prohibited by Article 92 of the tive. 14 It follows that the grant of VAT relief Treaty. Moreover, a Member State proposing outside the limits specified in the Twentieth to grant such aid must in any event comply Directive would be contrary to the provi- with the notification requirements laid down sions of the Sixth Directive. It will be by Article 93(3). Aid falling within the scope recalled that the derogation given by the of the Regulation, on the other hand, is of Twentieth Directive is limited to the special course deemed to be compatible with the aid permitted by Regulation N o 55/84 and common market. Decision 84/361.
Conclusion
19. I am accordingly of the opinion that t h e questions referred b y t h e Finanzgericht B a d e n - W ü r t t e m b e r g should be answered as follows:
(1) Article 3 of C o u n c i l Regulation ( E E C ) N o 855/84 a n d Article 1 of C o u n c i l Decision 8 4 / 3 6 1 / E E C c a n n o t b e i n t e r p r e t e d as a u t h o r i z i n g t h e grant of special aid in t h e f o r m of V A T relief t o a p r o d u c e r in a M e m b e r State o t h e r t h a n G e r - many, n o t w i t h s t a n d i n g that t h e p r o d u c e r i m p o r t s its p r o d u c t s into G e r m a n y and sells t h e m there.
(2) T h e grant of such aid t o a p r o d u c e r i n a M e m b e r State o t h e r t h a n G e r m a n y is accordingly precluded, in particular, b y C o u n c i l Directive 7 7 / 3 8 8 / E E C in c o n - j u n c t i o n w i t h C o u n c i l Directive 8 5 / 3 6 1 / E E C .
13 — Cited above, note 4. 12 — See paragraph 5 above. 14 — Cited above, note 5.
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