C-130/96

FAZENDA PÚBLICA v SOLISNOR ESTALEIROS NAVAIS

OPINION OF ADVOCATE GENERAL LÉGER delivered o n 13 M a r c h 1997 *

1. The question submitted in this case by the duty in the amount of ESC 43 586 400 in Supremo Tribunal Administrativo (Supreme respect of a works contract concluded o n Administrative Court) asks the Court, once 28 December 1989 with Sociedade Portu- again, to interpret Article 33 of the Sixth guesa de Navios e Tanques SA (hereinafter VAT Directive ' (hereinafter the 'Sixth 'Soponata') concerning construction of an oil Directive'), which precludes Member States tanker for transporting crude oil. from maintaining or introducing charges which can be characterized as turnover taxes. The Portuguese court is seeking the infor- mation which will enable it to analyse the characteristics of a national charge in order to determine whether it is lawful. 4. Solisnor subsequently requested, and obtained, annulment of the payment of that charge pursuant to a judgment delivered o n 21 March 1994 by the Tribunal Tributario de Primeira Instância (Fiscal Court of First I — Facts and national proceedings Instance), Setúbal. The Fazenda Pública (Public Treasury) appealed that judgment t o the Supremo Tribunal Administrativo.

2. The dispute before the national court arises from payment of a charge introduced, in the form of a stamp duty, by Article 91 of 5. Before that court, the Fazenda Pública the 'Tabela Geral do Imposto do Selo' (Gen- argues that the stamp duty is not a turnover eral Scale of Stamp Duties, hereinafter the tax and is therefore not contrary to Article 'TGIS'). 33 of the Sixth Directive. 2

10. The Supremo Tribunal Administrativo has accordingly considered it appropriate to refer the following question to the Court for 7. According to the national court, that duty a preliminary ruling: is applicable generally to 'all the documents, books, papers, acts and products specified in the TGIS' 4 and, more specifically, to 'works contracts and contracts for the supply of materials or any kind of consumer article ...'. 5 The amount of the stamp duty is calcu- 'Is the stamp duty having the characteristics lated on the basis of a rate, varying according mentioned above to be regarded as a turn- to the subject-matter of the contract, applied over tax in the terms of Article 33 of the to the value of the act. abovementioned Sixth Directive, subject to a possible derogation under Article 378 of the Act annexed to the Treaty of Accession or any other provision of Community law?' 8. Article 91 of the TGIS was repealed by Article 3 of Decree-Law N o 223/91 of 18 June 1991, the preamble to which justified the removal of the articles relating to works contracts, including Article 91, on the ground of their 'incompatibility with the 11. Article 378 of the Act of Accession of general tax on consumption covered by value the Portuguese Republic refers to Annex added tax'. 6 XXXII, which sets out a list of measures applicable to the Portuguese Republic, including the Sixth Directive, and defines the conditions under which they are to apply. In the case of the Sixth Directive, Annex 9. The Supremo Tribunal Administrativo XXXII refers to the option which the Portu- points out that on 28 December 1989, the guese Republic is recognized as having,

16. The First VAT Directive 10 (hereinafter the 'First Directive') sets out the basic prin- 13. Article 33 of the Sixth Directive provides ciples of this system. It states that the objec- as follows: tive pursued is to '... achieve such harmoni- zation of legislation concerning turnover taxes as will eliminate, as far as possible, fac- tors which may distort conditions of compe- tition ...'. n Within the logic of that text,

'Without prejudice to other Community provisions, the provisions of this Directive 8 — Sec, recently, Case C-208/91 Bcaulande v Directeur des Ser- vices Fiscaux, Nantes [1992] ECR 1-6709, paragraph 13. shall not prevent a Member State from main- 9 — Case 73/85 Kerrutt v Finanzamt Mönchengladbach-Mitte taining or introducing taxes on insurance [1986] ECR 2219, paragraph 22, and Joined Cases 93/88 and 94/88 Wisselink and Others v Staatssecretaris van contracts, taxes on betting and gambling, Financien [1989] ECR 2671, paragraph 14. excise duties, stamp duties and, more gener- 10 — First Council Directive 67/227/EEC of 11 April 1967 on the harmonization of legislation of Member States concern- ally, any taxes, duties or charges which can- ing turnover taxes (OJ, English Special Edition 1967, p. 14). not be characterized as turnover taxes.' 11 — Third recital in the preamble.

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harmonization supposes '... the abolition of which can be 'characterized as turnover cumulative multi-stage taxes' 1 2 in force in taxes'. some Community States, the main character- istic of which is to tax, for each transaction, the total price, without any possibility of deducting tax paid at the preceding stage. Such a charge is in no way neutral in regard to the process of production and distribution since, by a mechanical effect, it favours inte- grated economic circuits and increases the 19. The Court interpreted this concept in its price of goods and services in proportion to judgment in Rousseau Wilmot: the level of the value created during the first stages of their production.

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21. The first, second and third paragraphs of payable on a transaction is calculated after Article 2 of the First Directive define VAT deducting the tax paid on the previous trans- and are worded as follows: action'. 16

'The principle of the common system of value added tax involves the application to goods and services of a general tax on con- 23. It is for that reason necessary to examine sumption exactly proportional to the price of whether each of those elements features in a the goods and services, whatever the number tax such 'as described in Article 91 of the of transactions which take place in the pro- T G I S ' , , 7 which would, in that case, come duction and distribution process before the under the prohibition in Article 33. stage at which tax is charged.

IV — The legal nature of the stamp duty O n each transaction, value added tax, calcu- under Article 91 of the TGIS lated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of value added tax borne directly by the various cost components.

logically argue that the charge in question is term, since the taxable amount on which it is a turnover tax'. 19 based consists in the value of the contract, which, in principle, represents the trader's turnover. This may be so a fortiori since the criterion of proportionality is not disputed, given that the stamp duty is quantified by application of a percentage to a taxable 25. The fact that the stamp duty is imposed amount. 20 To resume the line of reasoning on the contract and not on the transaction set out in the previous point, the proportion- does not, in my view, suffice to allow classi- ality of the charge to the price of the goods fication as a turnover tax to be discounted. or services would be upset only if discrepan- The written conditions of a contract consti- cies that were frequent and of unequal value tute rules which the contracting parties have in relation to the price contractually defined defined with a view to being bound by them. resulted in that price bearing no relationship By making the value specified in the contract to the actual contract ultimately performed. the basis for the charge, the national law thus refers to the price, which, in most cases, will be the actual price of the transaction under- lying the charge.

not imposed on these in their totality, but is products specified in the TGIS',2b which levied only on certain very clearly defined reveals the limiting nature of the charge in its categories, such as works contracts. 22 widest definition. A fortiori, the Article 91 stamp duty, which is applicable to 'works contracts and contracts for the supply of materials or any kind of consumer article', cannot be regarded as being general in char- acter, given the strict limitation on the subject-matter of the acts on which the duty can be levied. 30. Solisnor, in contrast, contends that the stamp duty is not a specific charge levied on only one category of persons but is in fact a general tax 23 since it applies to all legal per- sons concluding works contracts. 33. The feature of being general in character, which the Court has laid down in its case- law, is thus absent in this case. It is next nec- essary to examine whether the stamp duty is levied at each stage in the production and distribution process. 31. The Court has ruled that a '... duty [which] is not ... intended to apply to all economic transactions in the Member State concerned' is not a general tax. 24 34. The contract in question relates to the construction by Solisnor of an oil tanker ordered by Soponata. In order to satisfy the condition just mentioned, each stage in the construction of the oil tanker, from the pur- chase of the raw materials to delivery of the 32. There is in the present case no doubt vessel, ought to give rise to payment of the that a tax such as that described by the charge. national court is not general. While it applies to a large number of measures — which, moreover, it would be more accurate to describe as 'aids' given the size of the list in the Law — the stamp duty does not, how- 35. As appears from reading the text, and as ever, relate to all economic transactions in the Commission indicates, the stamp duty the Member State concerned. The text of seems to be applied only to part of the pro- Article 1 of the stamp duty regulation 2S duction process. 2 7 In order to determine refers to 'documents, books, papers, acts and whether Article 91 is sound in law, the national court will, in my view, have to examine whether each of phases contributing 22 — Point 12 of its written observations. 23 — Page 14 of the French translation of its written observa- tions. 24 — BeauUnde, cited above, paragraph 16. 26 — Emphasis added. 25 — Point 7 of the present Opinion. 27 — Point 12 of its written observations.

38. In any event, the criteria already exam- ined are in this case sufficient to dispel any 42. If input tax is not deductible, this results such classification of the disputed stamp in the charge having a cumulative effect,30 duty. such that an interpretation under which Article 33 prohibits only deductible taxes would ultimately amount to authorizing reimposition of precisely the type of charges

39. More generally, it seems to me that, by 28 — Fourth recital in the preamble. Point 16 of the present making classification as a turnover tax sub- Opinion. See also the Opinion of Advocate General Mischo in Wisselink and Others, cited above, points 19 to 21. ject to the requirement of a system of deduc- 29 — Point 18 of the present Opinion. tion, the objectives pursued by the common 30 — Point 16 of the present Opinion.

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which the abovementioned directives set tort conditions of competition and adversely themselves the task of eliminating. 31 affect harmonization. 33

45. Turnover taxes having these characteris- 33 — I would point out that the sense of the Court's judgments interpreting Article 33 would not have been different in the tics alone are, in my view, among those absence of a criterion relating to deductibility. Thus, this situation would not have altered the classification of a tax which are most liable to jeopardize the func- such as the fiscal contribution described in Dansk Denkavit and Pouhen Trading, cited above, since the other conditions tioning of the common system of VAT in so permitting it to be classified as a turnover tax were satisfied. far as, whether deductible or not, they dis- Likewise, if this criterion had not been required, that would not have altered the content of the judgments holding that certain taxes were not turnover taxes, in so far as all those decisions, in so far as I am aware, were based on the finding that at least one condition other than that relating t o deductibility had not been satisfied. 31 — Sec, in particular, D. Berlin, 'Droit communautaire et fis- 34 — Opinion of Advocate General Tesauro in Dansk Denkavit calité. Harmonisation des fiscalités', Troué de droit euro- péen, in Juris-CUiseur 'Europe', 1996, vol. 4, fascicule 1630, and Poulsen Trading, cited above, point 8. paragraph 10 et seq.; P. Farmer and R. Lyal, EC Tax Law, 35 — Ibid. 1994, p. 132 et seq. 36 — Point 44 of the present Opinion. 32 — Point 16 of the present Opinion. 37 — Point 16 of the present Opinion.

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38 — Point 12 of the French translation of the written observa- tions.

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