C-375/95

COMMISSION v GREECE

OPINION OF ADVOCATE GENERAL LA PERGOLA delivered on 26 June 1997 *

1. By this action, the Commission is asking imported new; the rate of the duty varies, the Court to declare that the Greek system depending on the cubic capacity of the of taxation as applied to used private motor engine; the taxable value is calculated on the vehicles imported from other Member States net sale price. When a vehicle already regis- is contrary to Article 95 of the Treaty. ' tered in Greece is sold second hand, the tax is no longer payable. By contrast, it is charged when a used vehicle is imported. In that case, the taxable value is equal to the original price of the new car, with a deduc- tion of 5% for each year of use. 4 The maxi- 2. For full understanding of the allegations mum reduction allowed is 20%. 5 made against the Hellenic Republic and of its arguments in its defence, it would be useful to recall the national legislation in dispute.

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OPINION OF MR LA PERGOLA — CASE C-375/95

The flat-rate added special duty was altered Furthermore, no Member State shall impose during the pre-litigation procedure. In its on the products of other Member States any original form, under Article 3 of Law No internal taxation of such a nature as to afford 363/1976, it was levied on the first registra- indirect protection to other products.' tion of a vehicle and the amount was fixed solely in relation to engine capacity. Imported used cars were subject to the duty in the same way as new ones: that is to say, there was no provision for any reduction to allow for their being used vehicles. Follow- ing the issue of the Commission's reasoned opinion, Law N o 2187/1994 7 made amend- ments to the duty in dispute: the rate varies, depending on engine capacity, while the tax- After initiating the pre-litigation procedure able value of imported used cars is calculated under Article 169 of the Treaty, the Commis- according to the same criteria as the special sion applied to the Court of Justice for a consumer tax, namely by taking into account declaration that the Hellenic Republic had the price of the new model, reduced by 5% failed to fulfil its obligations. per year, with a maximum allowance of 20%.

the vehicle is allowed. The applicant criti- Commission v Denmark9 and Case cizes the method of calculating the duty in C-345/93 Nunes Tadeu,10 in which the respect of imported used cars on the ground Court was specifically asked to rule on the that the vehicle's taxable value is higher than compatibility with Article 95 of internal its actual value. Consequently, the vehicle is taxation arrangements for imported used subject to a greater amount of duty than the vehicles. Those decisions clearly set out the residual amount incorporated in the price of principle that the fiscal neutrality required a corresponding vehicle already on the by that provision must be assessed with Greek market. regard 'not only to the rate of direct or indi- rect internal taxation on domestic or imported products but also to the basis of assessment and the detailed rules for levying the tax'. n With specific reference to used The Greek Government contends, to the cars, the Court has held that the amount of contrary, that its system of taxation does not the tax charged must be determined having have the effect of favouring Greek products regard to the vehicle's 'actual deprecia- at the expense of those imported from the tion'. 12 Consequently, as Advocate General other Member States. 8 In its view, the tax- Jacobs stated in his Opinion in Nunes Tadeu, able value calculated in respect of imported the tax on a[n imported] used car must be used cars reflects the actual depreciation of 'determined on the basis of its actual value those vehicles for two reasons: the average because the tax on the similar domestic life of a car is longer in Greece than else- product inevitably depends on its actual where, and the price taken into account in value'. 1 3 calculating the amount of the tax is the price for the year in which the vehicle was manu- factured and not the price for the year in which it was imported. Moreover, it claims that the system is justified because it is intended to discourage vehicles from being put into circulation which are old, polluting and dangerous to traffic.

It is quite obvious that such a method of cal- 6. To my mind, that conclusion still remains culation leads to overvaluation of the valid when confronted by the arguments put imported used product: first, depreciation forward by the Greek Government to justify limited to an annual 5% is contrary to the its own system of taxation. It claims that the evidence of common experience, which aim pursued by the contested provisions is shows rather that used cars depreciate by a to discourage old highly pollutant vehicles far greater proportion than the standard rate which are a threat to road safety from being fixed by the Greek rules; second, limiting put into circulation. However, I need depreciation to a maximum of 20% is wholly scarcely point out that such a purpose can- unjustified and is based on the unlikely not in any circumstances justify a breach of assumption that cars in Greece cease to the principle of fiscal neutrality laid down by depreciate once they are four years old. Article 95 of the Treaty: even on the assump- Thus, whilst the tax burden on a domestic tion that the disputed legislation was used car decreases as the car depreciates, the inspired by the wish to protect the environ- duty is levied on imported used cars on the ment, the fact remains that, far from apply- basis of a fictitious taxable amount which is ing equally to domestic and imported prod- clearly greater than the actual value of the ucts, it imposes a heavier burden of duty on vehicle. 14 The result — which the Court has imported products and is therefore discrimi- explicitly held to be contrary to Article 95 of natory for the purposes of Article 95. the Treaty — is that the amount levied exceeds 'the residual tax incorporated in the value of similar second-hand motor vehicles already registered in the national terri- tory'. 15 In the light of the guidance given by

observes that the discriminatory treatment is the duty is open to the same reproach as the due to practical difficulties in setting up a tax. control system to check whether the imported used vehicles satisfied the technical conditions for benefiting from the reduced rates; difficulties that plainly, according to the Court's case-law, 16 cannot be pleaded in 9. Before expressing my views on the justification in Treaty infringement proceed- substance of the matter, I think it necessary ings. to dwell for a moment on a preliminary point, which is whether the grounds of com- plaint put forward by the applicant are admissible. With respect to the legislation in force before the amendments under Law N o 2187/1994, the Commission states its com- plaints by a reference to the reasoned opin- 8. I shall now turn to the legislation intro- ion. In other cases, however, the Court has ducing the flat-rate added special duty held that to proceed in such a manner is con- which, as I have said, has been amended fol- trary to Article 19 of the Protocol on the lowing the issuing of the reasoned opinion. Statute of the Court of Justice of the EEC In its application the Commission finds fault and Article 38(1 )(c) and (d) of the Rules of with both the old version and the new. As Procedure, which require the application to regards the former, the applicant institution indicate among other things the subject- refers in its application to the arguments set matter of the dispute, the forms of order out in its reasoned opinion, in which, begin- sought and a brief statement of the pleas in ning with the observation that the duty con- law on which the application is based. In sisted of a fixed sum varying in relation to particular, in its judgment in Case C-43/90 the vehicle's engine capacity and increasing Commission v Germany,17 it clearly stated with the value of the vehicle, the Commis- that 'an application does not satisfy that sion discerned discrimination in that the requirement if the Commission's complaints duty applied to imported used cars as though are not accurately set out in it and simply they were new, without taking their depre- appear by way of reference to "all the rea- ciation into account; by contrast, the amount sons set out in the letter of formal notice and of the duty incorporated in the price of in the reasoned opinion".' domestic used cars decreased proportion- ately as their value diminished. Conse- quently, there was less advantage in buying imported used cars than used cars already present on the domestic market. With regard Nor, moreover, may it be said that the refer- to the amendments made by Law N o ence in this case to the reasoned opinion is 2187/1994, the Commission points out that limited to a few marginal aspects of the ques- the amount of the duty in issue is calculated tion to be resolved, or that the intention is according to detailed rules similar to those simply to clarify the scope of the applicant's laid down for the special consumer tax: the complaints, circumstances in which Advo- applicant institution therefore considers that

Nevertheless, I do not seek to conceal the fact that this solution is somewhat unsatis- In the light of that case-law, this part of the factory from the point of view of substantive action could be perceived to be inadmissible. justice, particularly since, as regards the It does not, however, seem to me that the substance of the matter, it seems to me obvi- abovementioned decisions are to be under- ous that the Hellenic Republic has failed to stood in absolute terms. The Court itself has fulfil its obligations; , 9 moreover, compliance recognized that where a change in the legis- with the requirements laid down by the pro- lation occurs between the pre-litigation pro- visions referred to did not call for the appli- cedure and the bringing of the action, it is cant institution to strain its powers of drafts- sufficient, for the new charges to be admis- manship. However, the meaning of the sible, 'that the system established by the leg- provisions is clear, and so is the Court's islation contested in the pre-litigation pro- interpretation of them: consequently, it does cedure has as a whole been maintained by not seem to me possible to rule on the the new measures which were adopted by substance without a reversal of the case-law the Member State after the issue of the rea- which I have cited above. soned opinion and have been challenged in the application'. 21 This is so inasmuch as — to my mind — the Court has intended to protect the interest of a Member State, so that no substantially new and different alle- 10. It remains to be seen whether the gations are levelled against it on which it had Commission's complaint concerning the no opportunity to put forward its own argu- ments. The interest protected is therefore that of the right to a fair hearing. In the light of this consideration it is my view that, in 18 — Cited in the preceding footnote (page 1-4767 in the Opin- ion). 19 — It is not denied that it is possible to establish a taxation sys- tem based on engine capacity. What is objectionable is the fact that imported used cars must bear the tax as though they were new. In that way, the duty to which they arc sub- 20 — See, ex mullis, Case C-61/94 Commission v Germany [1996] ject cannot help but be greater than the residual amount of ECR 1-3989, paragraph 42. the tax sdii incorporated in equivalent domestic cars. 21 — Case C-105/91 Commission v Greece, paragraph 13.

Conclusion

I n the light of the foregoing, I p r o p o s e that t h e C o u r t :

(1) declare t h e application inadmissible in so far as it relates t o the g r o u n d of c o m - plaint c o n c e r n i n g t h e flat-rate added special d u t y in the version in force u n d e r Article 3 of L a w N o 363/1976;

(2) allow t h e r e m a i n d e r of the action and o r d e r t h e defendant t o p a y t h e costs.

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