C-347/95

O P I N I O N O F MR TESAURO — CASES C-347/95 A N D C-28/96

OPINION OF ADVOCATE GENERAL TESAURO delivered on 23 January 1997 *

1. The pending references for preliminary which was introduced on an unspecified date rulings draw the Court's attention back to before 1974, has been amended on several the — now familiar — problem of the com- occasions. 2 patibility with Community law of charges imposed equally on domestic and imported products, the yield from which is intended to finance the institutional activities of a public body. Case C-28/96 is concerned with three charges, which are imposed on the products concerned also at the time of marketing on the Portuguese market: a charge on meats, offal and eggs; a charge on beef and veal and sheepmeat and goatmeat specifically In order to be able better to appreciate the intended to combat diseases of ruminants; a scope of the questions referred to the Court, tax on pigmeat specifically intended to com- a description should first be given of the bat swine fever. Those charges, which have nature of the charges at issue, the legislation been in force since before 1949, have also which introduced them and the responsibili- been amended on various occasions. 3 ties of the various institutions for which the yield of the charges is intended. '

3. The proceeds from those charges were initially intended to finance an economic coordination body set up in 1939 under the name of Junta Nacional dos Produtos 2. The charge involved in Case C-347/95 is Pecuários (JNPP). Following Portugal's levied on dairy products when they are mar- accession to the European Communities, all keted on the Portuguese market. The charge, the rights and powers of that body were

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transferred by Decree-Law N o 15/87 of 9 4. In 1988, as a result of the adoption of January 1987 to a newly created public Decree-Law N o 282/88 of 12 August, agency, Instituto Regulador e Orientador IROMA was joined by a new body, Instituto dos Mercados Agrícolas ('IROMA'), to Nacional de Intervenção e Garantia Agrícola which the proceeds of the charges in ques- ('INGA'). All the functions hitherto carried . tion also accrued. out by IROMA, with the exception of the administration of slaughterhouses, were transferred to this new body.

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OPINION OF MR TESAURO — CASES C-347/95 AND C-28/96

for D G M A I A A . Consequently, from 1991, 1994 and 11 October 1995, are similarly the total yield of the charges in question was worded and relate to the compatibility of the allocated among DGMAIAA, I N G A and charges at issue with Article 95 and Articles IROMA. 9 and 12 of the Treaty and with Article 33 of the Sixth VAT Directive (77/388/EEC). 5

6. The facts which gave rise to the present proceedings go back to 1991 (Case First and second questions C-347/95) and 1992 (Case C-28/96). It was for failure to pay the aforesaid charges for 1991 and 1992 that Fazenda Pública issued two tax demands to União das Cooperativas Abastecedoras de Leite de Lisboa ('UCAL') and Fricarnes S. A. ('Fricarnes') with a view 8. The national court's first and second to recovering the sums not collected. questions, which are concerned with the compatibility of the charges at issue with Articles 9 and 12, on the one hand, and Article 95, on the other, are closely linked and should therefore be dealt with together. UCAL and Fricarnes challenged the demands before the Tribunal Tributario, Lis- bon, on the ground that the charges at issue were unconstitutional. The first-instance court upheld their claims, but on the ground that the charges at issue were unlawful I consider it worth starting by calling to because they were incompatible with Com- mind, albeit briefly, the principles which the munity law, specifically Articles 9 and 12 of Court has formulated in its case-law, which I the Treaty. - would unhesitatingly describe as particularly exhaustive and settled.

within the scope of the former provisions 10. In that event, as the Court held most cannot be assessed at the same time in the recently in Scharbatke, 8 it must therefore be light of the latter provisions. 6 determined to what extent the charge col- lected on the domestic product is offset by the advantages received. Where the burden is completely offset, it must be held that the burden is in reality borne solely by the imported product and that it therefore con- stitutes a charge having equivalent effect; where the burden is partially offset, it must be held that a less onerous burden is imposed on domestic products than o n imported ones, and hence the charge will constitute discriminatory taxation within the The Court has also made it clear that, for the meaning of Article 95 of the Treaty. purposes of categorizing and effecting a legal assessment of charges imposed without dis- tinction on domestic and imported products, it is necessary to have regard to the use to which their proceeds are put. If such charges are levied to an equal decree on domestic and imported products, they may even then — It is undisputed that this determination falls precisely because of the use to which they to be made by the national court, which are put — have a substantially different alone has all the factual and other evidence impact on the two types of product so as to necessary to make such assessments. 9 cause them to be regarded, depending on the circumstances, either as charges having equivalent effect or as discriminatory internal taxation. It is settled case-law that even charges which, on the face of it, are non- discriminatory, but are used to finance activi- ties which specifically benefit the taxed domestic products, constitute, as far as 11. It appears from that same case-law of the domestic products are concerned, a burden Court that, in order for the offsetting prin- which is substantially offset by the advan- ciple to apply, the taxed product and the tages received, whereas, in the case of domestic product benefited should be the imported products, they constitute a net bur- same. 10 In order to determine whether or den which is not offset in any way by the not the tax burden has been offset, it will grant of other advantages or subsidies. 7 obviously be necessary for the revenue from the charge to accrue, at least to some extent, to the taxed domestic product and not only

14. To return to the cases before the Court, 12. The judgment in CELBI affords useful it will therefore be for the national court, guidance as to the criteria which the national applying the principles set out above, to court should employ in order to determine determine whether taxed imported products whether the offsetting in favour of the also actually derived an advantage from the domestic product is total or partial. In this various activities carried out institutionally connection, the Court held that it is neces- by the bodies which (from time to time) sary to determine, by reference to a particu- received the charges, and if so to what lar period of time, whether there was finan- extent. cial equivalence of the total amounts levied on domestic products in connection with the charge and the advantages afforded exclus- ively to those products. Any other param- eter, such as the nature, scope or indispens- able character of those advantages would not Having said this, I do not consider, however, provide a sufficiently objective basis o n that the national court could determine the which to determine whether a domestic fiscal disputes pending before it simply on the measure is compatible with the provisions of basis of an answer from the Court which the Treaty. n merely reiterated the principles emerging from its case-law. If that were so, the national court would not have stayed pro- ceedings and asked the Court to shed light on this point. 1 3 Indeed, in my view, the very fact that the national court has raised the 13. As for the consequences which the questions now being considered reflects the national court should draw from the catego- undeniable difficulties in applying the — rization of the charge under one or the other albeit essentially clear — case-law to indi- class of provisions, they are clear from the vidual cases of this kind. judgment in IGAV: if the advantages for the domestic product fully offset (or indeed exceed) the burden borne by them, the 12 — Judgment in IGAV, cited in footnote 7, paragraph 13; see charge must be regarded as completely more recently the judgment in Compagnie Commerciale de unlawful as a charge having effect equivalent l'Ouest, also cited in footnote 7, paragraph 27. 13 — It should, moreover, be borne in mind that the court which raised the questions is the same one which made the refer- ence to the Court in the CELBI case, in which it sought an interpretation of the same provisions. It manifestly follows that that court is well aware of the principles set out in the 11 — Judgment in CELSI, cited in footnote 6, paragraph 18. Court's case-law.

16. It is precisely as a result of analysing the tasks entrusted to those agencies that the

14 — In this connection, I would observe, however, that it is stiil not clear what event actually gave rise at the material time to the charges at issue. Whilst it appears from the case-file that the charges were imposed at the time when the relevant products were marketed, certain statements made at the hearing by the Portuguese Government's Agent suggest that in the case of imported products the charges were col- 17. Take, for instance, the charges specifi- lected at the time when they were imported. Consequently, the national court will have to make the requisite determi- cally intend to combat diseases of ruminants nations in regard to this point, too, and draw the necessary conclusions therefrom. and swine fever. It is clear that the revenue 15 — See points 3, 4 and 5 above. from those charges, which is earmarked to

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O P I N I O N O F MR TESAURO — CASES C-347/95 A N D C-28/96

finance measures designed to prevent and any possibility of the burden borne by cure diseases affecting livestock, were prob- domestic products being offset by advantages ably liable to benefit livestock raised on the deriving from the activities of the latter bod- national territory to a greater, if not exclu- ies. sive, extent. 1 6

19. The Commission observes for its part that a further condition laid down by the Court's case-law which has to be satisfied in 18. From the opposite perspective, the Por- order for account to be taken of any offset- tuguese Government claims that further ting of the burden is missing, that is to say, proof of the compatibility of the charges in the fact that the taxed product and the prod- question with the relevant Community pro- uct which may be favoured should be the visions is provided by the fact that, at the same. This is because the bodies in receipt of material time in both cases, only DGMA- the charges had blanket powers to organize IAA had organizational powers in the sector the whole of the market in agricultural prod- in question, whilst although I N G A and ucts and livestock, whereas the charges in I R O M A continued to receive a substantial question were levied solely on particular fraction of the revenue from the charges products. (approximately 85%), they no longer played any significant role in the sector. The Gov- ernment argues that this precludes, a priori,

That argument, however, is based on an inac- 16 — This was broadly conceded by the Portuguese Government at the hearing. curate interpretation of the Court's case-law. 17 — Sec point 3 above. As I observed in point 11 of this Opinion,

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the case-law should be properly understood tion with Article 33 of the Sixth VAT Direc- as meaning that the question of offsetting tive. That provision, as we know, debars does not arise where a tax charged on a par- Member States from introducing or main- ticular product is subsequently used to taining in force any taxes, duties or charges finance incentives which benefit other prod- which can be characterized as turnover taxes. ucts only; neither does it arise where such a charge is used to finance the activities of an entire organization of the market, which covers by definition also the product in question.

OPINION OF MR TESAURO — CASES C-347/95 AND C-28/96

22. In the light of the foregoing considerations, I therefore propose that the Court should answer the questions referred by the Supremo Tribunal Administrativo in the following terms:

(1) A charge imposed on the same terms on domestic products and imported products, the proceeds of which are intended to finance activities by which only domestic products benefit in such a way that the resulting advantages wholly offset the burden imposed on those products, constitutes a charge hav- ing effect equivalent to a customs duty contrary to Articles 9 and 12 of the Treaty. By contrast, in the event that those advantages offset only part of the burden borne by domestic products, the charge constitutes discriminatory internal taxation contrary to Article 95 of the Treaty.

It is for the national court to determine whether the total amount of the charge imposed on domestic products and the advantages which only those products enjoy are financially equivalent. In effecting that determination the national court will have to take account of the fact that the proceeds of the charge are specifically intended to combat diseases of livestock raised on the national territory and/or to regulate trade with other Member States in prod- ucts on which the charge is imposed.

(2) Article 33 of the Sixth VAT Directive (77/388/EEC) does not preclude Mem- ber States from introducing or maintaining in force charges which are not in the nature of turnover taxes: a tax which is imposed only on particular prod- ucts which is not proportional to the price of those products and is not imposed at every stage of the production and distribution process or on the added value of the products does not have the characteristics of a turnover tax.