C-347/95

União das Cooperativas Abastecedoras de Leite de Lisboa, UCRL (UCAL),

on the interpretation of Articles 9, 12 and 95 of the E C Treaty and Article 33 of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1),

T H E C O U R T (Fifth Chamber),

composed of: J. C. Moitinho de Almeida, President of the Chamber, L. Sevón, D. A. O. Edward, P. Jann and M. Wathelet (Rapporteur), Judges,

* Language of the case: Portuguese.

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having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 23 January 1997,

gives the following

Judgment

1 By judgment of 11 October 1995, received at the Court Registry on 13 November 1995, the Supremo Tribunal Administrativo (Supreme Administrative Court)

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4 Originally, the revenue from those charges accrued to the Junta Nacional dos Produtos Pecuários (National Board for Livestock Products), an organization responsible for economic coordination set up in 1939.

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JUDGMENT OF 17. 9. 1997 — CASE C-347/95

5 Following the Portuguese Republic's accession to the European Communities all the rights and powers of that body were transferred, by Decree-Law N o 15/87, to a newly created public body, the Instituto Regulador e Orientador dos Mercados Agrícolas (Agricultural Guidance and Stabilization Board, hereinafter 'IROMA').

7 U p o n the adoption of Decree-Law N o 282/88 of 12 August 1988, all those respon- sibilities, with the exception of the management of slaughterhouses, were trans- ferred to a new body, the Instituto Nacional de Intervenção e Garantia Agrícola (hereinafter 'INGA'), which was attached to IROMA.

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8 However, I R O M A continued to received one-half of the revenue from the charges at issue in this case, the other half being allocated to I N G A .

9 Decree-Law N o 56/90 of 13 February 1990 then established a new specialized directorate within the Ministry of Agriculture, the Direcção-Geral dos Mercados Agrícolas e da Industria Agro-Alimentar (hereinafter 'DGMAIAA'). By the same decree-law, all the responsibilities previously held by IROMA and I N G A (Article 6), together with numerous other specific responsibilities concerning the manage- ment and stabilization of markets in agricultural and livestock products, were transferred to DGMAIAA (Article 2).

io Thus, pursuant to Article 2(2) of Decree-Law N o 56/90,

1 1 Subsequently, upon the entry into force of Decree-Law N o 284/91 of 9 August 1991, 15% of the revenue from the charges in question was appropriated to D G M A I A A . The aggregate revenue from those charges, as from that year, was thus shared between D G M A I A A , INGA and IROMA.

1 2 The charges in question ceased to be payable under Portuguese law on 23 October 1993, the date of the entry into force of Decree-Law N o 365/93 of 22 October 1993.

1 3 I R O M A initiated a fiscal procedure for enforcement against U C A L to recover ESC 16 810 for unpaid charges payable on the marketing of diary products for the month of August 1991.

u In proceedings before the Tribunal Tributário de Lisboa (Lisbon Tax Court) U C A L contested the order resulting from that procedure, arguing that the charges in question were unconstitutional. It succeeded at first instance, but only because the court held that those charges were incompatible with Articles 9 and 12 of the Treaty.

is The Fazenda Pública appealed against that decision to the Supremo Tribunal Administrativo, which stayed proceedings and referred the following questions to the Court of Justice for a preliminary ruling:

' 1 . Are the "charges" described, which have the characteristics of taxes described above, contrary to Article 95 of the Treaty of Rome?

i7 It must first be borne in mind that provisions relating to charges having equivalent effect and those relating to discriminatory internal taxation cannot be applied con- currently, so that under the system of the Treaty the same taxation cannot belong to both categories at the same time (Case 10/65 Deutschmann v Germany [1965] ECR 469, at 473 to 474; Case 57/65 Lutticke v HauptzolUmt Saarlouis [1966] E C R 205, at 211; and Case C-266/91 Celbi v Fazenda Pública [1993] ECR 1-4337, para- graph 9).

is It is settled case-law that any pecuniary charge, whatever its designation or mode of application, which is imposed unilaterally on goods by reason of the fact that they cross a frontier, and which is not a customs duty in the strict sense, consti- tutes a charge having an effect equivalent to a customs duty within the meaning of Articles 9, 12, 13 and 16 of the Treaty, even if it is not imposed on behalf of the State (see in particular Case 158/82 Commission v Denmark [1983] ECR 3573, paragraph 18).

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i9 Pecuniary charges under a general system of internal taxation applying systemati- cally to domestic and imported products according to the same criteria, on the other hand, are covered by Article 95 et seq. of the Treaty {Celbi, cited above, paragraph 11). Those provisions prohibit a Member State from directly or indi- rectly imposing on the products of other Member States any internal taxation in excess of that imposed on similar domestic products or of such a nature as to afford protection to other domestic products, and therefore the criterion for the application of Article 95 is 'whether or not those charges are discriminatory or pro- tective (see in particular Case C-17/91 Lornoy and Others v Belgium [1992] ECR 1-6523, paragraph 19).

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FAZENDA PÚBLICA v UCAL

such a charge would constitute a breach of the prohibition of discrimination laid down by Article 95 of the Treaty.

23 If the advantages for domestic production fully offset the burden borne by it, the charge levied on the product must, being a charge having an effect equivalent to a customs duty, be regarded as unlawful in its entirety; if on the contrary those advantages only partly offset the burden borne by domestic production, the charge levied on the imported product, which is legal in principle, will simply have to be reduced proportionally (Case 94/74 IGAV v ENCC [1975] ECR 699, paragraph 13, and Compagnie Commerciale de l'Ouest and Others, cited above, paragraph 27).

24 It is also clear from the case-law of the Court that for the principle concerning the offsetting of the burden to apply, the taxed product and the domestic product ben- efiting from it must be the same (Case 77/76 Cucchi v Avez [1977] ECR 987, para- graph 19, and Case 105/76 Interzuccheri v Rezzano e Cavassa [1977] ECR 1029, paragraph 12).

25 What is more, the criterion of whether the burden is offset, in order to be usefully and correctly applied, presupposes a check, during a reference period, on the financial equivalence of the total amounts levied on domestic products in connec- tion with the charge in question and the advantages afforded exclusively to those products. Any other parameter, such as the nature, scope or indispensable charac- ter of those advantages, would not provide a sufficiently objective basis for deter- mining whether a domestic fiscal measure is compatible with the Treaty (Celbi, cited above, paragraph 18).

29 In view of those considerations, the answer to the first two questions must be as follows:

1. (a) A charge levied on domestic and imported products alike constitutes a charge having an effect equivalent to a customs duty, prohibited by Articles 9 and 12 of the Treaty, if the revenue from it is intended to finance activities benefiting only the taxed domestic products and if the resultant advantages fully offset the burden which the latter products bear; if those advantages only partly offset the burden borne by the domestic products, the charge constitutes discriminatory internal taxation prohibited by Article 95 of the Treaty and must be reduced proportionally.

(b) If the activities financed by the charge benefit domestic products and taxed imported products but the former obtain a proportionally greater advantage from them, the charge constitutes, to that extent, a charge having an effect

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FAZENDA PÚBLICA » UCAL

equivalent to a customs duty or discriminatory internal taxation, depending on whether the advantage accruing to the taxed domestic products fully or only partly offsets the burden which they bear.

JUDGMENT OF 17. 9. 1997 — CASE C-347/95

3i In order to answer that question, it must be borne in mind first of all that Article 33 of the Sixth Council Directive provides:

'Without prejudice to other Community provisions, the provisions of this directive shall not prevent a Member State from maintaining or introducing taxes on insur- ance contracts, taxes on betting and gambling, excise duties, stamp duties and more generally any taxes, duties or charges -which cannot be characterized as turnover taxes.'

32 It is clear from the wording of that provision that it prohibits the Member States from introducing or maintaining taxes, duties or charges in the nature of turnover taxes (Case 252/86 Bergandi v Directeur General des Impôts [1988] ECR 1343, paragraphs 10 and 11; Joined Cases 93/88 and 94/88 Wisselink and Others v Staatssecretaris van Financiën [1989] E C R 2671, paragraphs 13 and 14; and Case C-200/90 Dansk Denkavit and Poulsen Trading v Skatteministeriet [1992] ECR 1-2217, paragraph 10).

33 As the Court held in the judgments cited above and in Case 295/84 Rousseau Wilmot v Organic [1985] E C R 3759, paragraph 16), the aim pursued by Article 33 of the Sixth Directive is to preclude the introduction of taxes, duties and charges which, because they are levied on the movement of goods and services in a way comparable to value added tax, would compromise the functioning of the common system of value added tax. Taxes, duties and charges must be regarded as being imposed on the movement of goods and services in a way comparable to VAT if they exhibit the essential characteristics of VAT (Dansk Denkavit and Poulsen Trading, cited above, paragraph 11).

37 The answer to the third question from the national court must therefore be that a tax levied only on certain products, which is not proportional to the price of those products, is not charged at each stage of the production and distribution process and is not imposed on the added value of the products, is not in the nature of a turnover tax within the meaning of Article 33 of the Sixth Directive.

Costs

38 The costs incurred by the Portuguese Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a mat- ter for that court.

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On those grounds,

FAZENDA PÚBLICA v UCAL

(a) whether the revenue from the charge is used for stabilization only of trade with the other Member States in the products on which the charge is imposed;

(b) whether the institutional integration of the organizations representing the economic agents concerned and the implementation of the national and Community aid schemes and financial and fiscal incentives in favour of the agri-foodstuffs industry and the distribution of agri- foodstuffs, to which part of the revenue from the charges in question is appropriated, benefit only domestic production or whether they benefit such production proportionally more than imported products.

3. A tax levied only on certain products, which is not proportional to the price of those products, is not charged at each stage of the production and distri- bution process and is not imposed on the added value of the products, is not in the nature of a turnover tax within the meaning of Article 33 of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment.

Moitinho de Almeida Sevón Edward

Jann Wathelet