C-318/96

JUDGMENT OF 19. 2. 1998 — CASE C-318/96

J U D G M E N T O F T H E C O U R T (Fifth Chamber) 19 February 1998 *

In Case C-318/96,

R E F E R E N C E to the Court under Article 177 of the EC Treaty by the Verwal- tungsgerichtshof, Austria, for a preliminary ruling in the proceedings pending before that court between

SPAR Österreichische Warenhandels AG

and

SPAR v FINANZLANDESDIREKTION FÜR SALZBURG

Advocate General: S. Alber, Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

— the Austrian Government, by Wolf Okresek, Ministerialrat at the Chancellery, acting as Agent,

— the German Government, by Ernst Röder, Ministerialrat at the Federal Min- istry of Economic Affairs, acting as Agent,

— the Italian Government, by Umberto Leanza, Head of the Legal Department at the Ministry of Foreign Affairs, acting as Agent, assisted by Gianni de Bel- lis, Avvocato dello Stato,

after hearing the Opinion of the Advocate General at the sitting on 20 November 1997,

gives the following

Judgment

1 By order of 18 September 1996, received at the Court on 30 September 1996, the Austrian Verwaltungsgerichtshof (Administrative Court) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty two questions on the interpretation of Articles 17 and 33 of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation 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, hereinafter 'the Sixth Directive').

2 Those questions were raised in proceedings between SPAR Österreichische Waren- handels A G (hereinafter 'SPAR') and the Finanzlandesdirektion für Salzburg con- cerning the imposition on that company of the Kammerumlage, a levy provided for in Paragraph 57(1) to (6) of the Handelskammergesetz (Austrian Law on Chambers of Commerce, BGBl N o 182/1946, hereinafter the ' H K G ' ) , referred to as the Kammerumlage 1 (hereinafter 'the KU l').

3 The K U 1 is one of the levies aimed at financing chambers of commerce and the Federal Chamber of Commerce.

8 The levy is collected by the tax authorities in accordance with the procedure laid down for the collection of VAT.

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9 SPAR brought proceedings before the Verwaltungsgerichtshof seeking the annul- ment of the decision imposing that levy on it. It claimed, in particular, that the KU 1 was contrary to Article 33 of the Sixth Directive, according to which:

'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 characterised as turn- over taxes.'

10 The Verwaltungsgerichtshof begins by querying the compatibility of the KU 1 with Article 17 of the Sixth Directive, which essentially provides, in paragraph 2, that the taxable person is entitled to deduct from the tax which he is liable to pay the VAT due or paid in respect of the goods and services used for the purposes of his taxable transactions. The national court points out in that regard that the K U 1 is based on the VAT due or paid on supplies of goods and services to the trader, is not deductible from the VAT payable by the latter and may, in those circum- stances, be viewed as an increase in VAT input tax, which is not deductible from the VAT payable by the trader. Furthermore, the fact that it may not be deducted applies to all stages of the production and distribution process since the K U 1 is payable by all the traders participating therein.

(a) the turnover tax payable on supplies or other services provided by other traders to the person subject to the levy for the purposes of his business, with the exception of that payable on sales of businesses, and

(b) the turnover tax payable by the person subject to the levy on imports of goods for the purposes of his business or on purchases effected within the Community for the purposes of his business?

2. Does Article 33 of the Sixth Directive prohibit the charging of a levy such as that described in Question 1 ?'

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The questions referred for a preliminary ruling

17 It is apparent from the recitals in the preamble to the First Council Directive (67/227/EEC) of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, English Special Edition 1967, p. 14, herein- after 'the First Directive'), that the harmonisation of legislation concerning turn- over taxes is intended to enable a common market to be established within which there is healthy competition and whose characteristics are similar to those of a domestic market by eliminating differences in the imposition of tax such as to dis- tort competition and impede trade.

18 The introduction of a common system of VAT was achieved by the Second Coun- cil Directive (67/228/EEC) of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes — Structure and procedures for applica- tion of the common system of value added tax (OJ, English Special Edition 1967, p. 16, hereinafter 'the Second Directive'), and by the Sixth Directive. That system was to contribute to the attainment of that objective by introducing, on a basis common to all the Member States, a general tax on consumption levied on the sup- ply of goods, the provision of services, and imports of goods in proportion to their price, regardless of the number of transactions carried out as far as the final con- sumer, the tax being imposed only on the value added at each stage and being definitively borne by the final consumer.

19 In order to attain the objective of ensuring equal conditions of taxation for the same transaction, no matter in which Member State it is carried out, the common system of VAT was intended, according to the preamble to the Second Directive, to replace the turnover taxes in force in Member States.

22 In order to decide whether a tax, duty or charge can be characterised as a turnover tax within the meaning of Article 33 of the Sixth Directive, it is necessary, in par- ticular, to determine whether it has the effect of compromising the functioning of the common system of VAT by levying a charge on the movement of goods and services and on commercial transactions in a way comparable to VAT (see Case 295/84 Rousseau Wilmot [1985] E C R 3759; Bergandi, cited above, paragraph 14; Giant, cited above, paragraph 11; Case C-347/95 UCAL [1997] E C R I-4911, para- graph 33; Case C-28/96 Fricarnes [1997] ECR I-4939, paragraph 37; and Case C-130/96 Solisnor-Estaleiros Navais [1997] ECR I-5053, paragraph 13). In that connection, the Court has stated that taxes, duties and charges must in any event 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 (judgments in Case C-200/90 Dansk Denkavit and Poulsen v Skatteministeriet [1992] E C R I-2217, paragraph 11; UCAL, paragraph 33; Fricarnes, paragraph 37, and Solisnor- Estaleiros Navais, paragraph 14, cited above).

23 The Court has consistently held (see, in particular, the abovementioned judgments in Rousseau Wilmot, paragraph 15; Bergandi, paragraph 15; Wisselink and Others, paragraph 18; and Giant, paragraph 12) that the principle of the common system of VAT consists, by virtue of Article 2 of the First Directive, in the application to goods and services up to the retail stage of a general tax on consumption which is exactly proportional to the price of the goods and services, irrespective of the

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27 Finally, a levy such as the KU 1 is not charged at all stages of production and distribution. In particular, it does not affect the final stage of the sale to the con- sumer, as the Advocate General noted at points 52 and 53 of his Opinion.

28 Furthermore, since the KU 1 does not exhibit the essential characteristics of VAT, Article 17(2) of the Sixth Directive does not require that the taxable person should be able to deduct it from the tax which he is liable to pay.

29 The answer to the questions submitted must therefore be that the Sixth Directive, and in particular Articles 17(2) and 33 thereof, does not preclude a levy such as the KU 1, which is payable by members of chambers of commerce whose turnover exceeds a certain amount, is calculated in principle on the basis of the VAT included in the price of the goods and services supplied to them, and is not deduct- ible from the VAT payable by them on the commercial transactions which they carry out.

Costs

The Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisa- tion of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, and in particular Articles 17(2) and 33 thereof, does not preclude a levy such as the Kammerum- loge, provided for in Paragraph 57(1) to (6) of the Handelskammergesetz, which is payable by members of chambers of commerce whose turnover exceeds a cer- tain amount, is calculated in principle on the basis of the VAT included in the price of the goods and services supplied to them, and is not deductible from the VAT payable by them on the commercial transactions which they carry out.

Gulmann Edward Puissochet

Jann Sevón

Delivered in open court in Luxembourg on 19 February 1998.

R. Grass C. Gulmann

Registrar President of the Fifth Chamber