C-441/98

KAPNIKI MIKHAILIDIS

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 16 March 2000 *

1. These two references from the Hellenic inafter 'the relevant period'), in accordance Republic ask whether a Greek tax on the with Article 7 of the Law No 2348/1953 . exportation of tobacco amounts to a charge (hereinafter 'the 1953 Law'), as amended, having equivalent effect to a customs duty in respect of exports from Greece of Greek- on exports prohibited by the EC Treaty, produced tobacco to other Member States and, if so, whether reimbursement of the and non-member countries. 1 Kapniki con- taxes improperly collected can be refused tends that the impugned tax constitutes a on the ground of unjust enrichment. charge having equivalent effect to a cus- toms duty since it is levied on exports by virtue of the fact that they cross a frontier.

I — The legal and factual context 3. The national court has referred the following two questions to the Court:

country from another Member State? 4. Although it is clear from the order for Alternatively is the abovementioned reference that the claims involved in the proportional contribution payable by main proceedings concern exports both to tobacco exporters — which is levied Member States and to third countries, the and credited as income of the IKA, a national court has confined its questions to social security institution, for the ben- intra-Community trade. In the absence of efit of the Tobacco Workers' Pensions further information or of any argument Branch — by reason of its objective, about the legal issues relating to the that is to say boosting the financial imposition of the tax on exports outside resources of the particular insurance the Community, I propose only to consider branch, not inconsistent with Commu- the validity of the impugned tax in so far as nity law, in that it constitutes in a it affects exports to other Member States. broader sense a contribution in favour of an insurance body for the purpose of achieving the social security objectives in respect of the particular group of workers, who may be employed in undertakings like the plaintiff's, and are in any event entitled, even by means of the imposition of charges such as the B — National law one in this case, to social security, in accordance with the appropriate provi- sions of the constitution of the parti- cular Member State? 5. The tax impugned in this case ('the impugned tax') was established by the 1953 Law concerning the amendment, sup- plementation and repeal of provisions on the processing of tobacco leaves and con- cerning the amalgamation of the Tamio Asfaliseos Kapnergaton (Tobacco Workers' Insurance Fund; 'TAK') with the Idryma 2. If the first part of the first question is Koinonikon Asfaliseon ('IKA'), the general answered in the affirmative, is a Mem- Greek social security institution. Arti- ber State in principle obliged to refund cle 6(1) of the 1953 Law provided: to a trader financial charges on the value of exported goods which must be regarded as levied in breach of Com- munity law, on the basis that it is established that the person who was required to pay the charges at issue in 'For the purpose: fact passed them on to other persons, namely the purchasers of the goods, and it does not follow, nor does the trader claim, that that charge caused an increase in the price of the products and a reduction in the volume of his (a) of continuing to pay pensions to per- sales with the result that he suffered sons already entitled to a pension from subsequent loss?' the TAK and to persons who acquire

a special account with the National Bank of Greece and Athens called "Special account 7. At first sight and in the absence of for the benefit of pensioners of the Tamio explanation, the 1953 Law seems incom- Asfaliseos Kapnergaton as amalgamated patible with the Treaty rules in force at the with the IKA" is hereby set up.' time of the facts giving rise to the main proceedings, namely those contained in Articles 9 and 12 of the EC Treaty (now, after amendment, Articles 23 EC and 25 EC) and Article 16 of the EC Treaty (repealed by the Treaty of Amsterdam). Article 9(1) of the EC Treaty (now, after Article 6(2), indent (c), provided that the amendment, Article 23(1) EC) provides special account would be funded, inter alia, that the Community is 'based upon a by revenue from 'the proceeds of the customs union', which, inter alia, shall contribution, in accordance with the fol- involve 'the prohibition between Member lowing article, on the value of exported States of customs duties on imports and tobacco'. exports and of all charges having equiva- lent effect'. 4

8. Written and oral observations have been submitted by Kapniki, the IKA, Greece and the Commission. 11. As the Court has consistently stated, in particular in the first Diamantarbeiders case, to which Kapniki and the Commis­ sion allude, it follows 'from the general and absolute nature of the prohibition of any customs duties applicable to goods moving between Member States that customs duties A — The nature of the impugned tax are prohibited independently of any con­ sideration of the purpose for which they were introduced and the destination of the revenue obtained therefrom'. 6The exten­ 9. The Hellenic Republic, supported by the sion of the prohibition of customs duties to IKA, submits that the impugned tax con­ charges having equivalent effect is intended stitutes internal taxation that falls within to promote the efficacy of the former so as the scope of Article 95 rather than Arti­ to ensure, 'in trade between Member cles 9, 12 and 16 of the EC Treaty. 5More States', that 'the imposition of any pecuni­ particularly, it alleges that its purpose, ary charge on goods circulating within the despite being described in the 1953 Law Community by virtue of the fact that they as an 'export' tax, is merely to include cross a national frontier' is avoided. 7The tobacco destined for export within the following broad definition of a charge scope of a single consumption tax that having equivalent effect has therefore, since equally affects the Greek tobacco that its formulation over 30 years ago, been remains on the domestic market. There is consistently applied by the Court: 8 nothing, however, in the order for reference or in the wording of the first question that suggests that the national court considered that the impugned tax constituted a com­ ponent of such a general system of taxa­ tion. '... any pecuniary charge, however small and whatever its designation and mode of application, which is imposed unilaterally on domestic or foreign goods by reason of the fact that they cross a frontier and which is not a customs duty in the strict sense, 10. By its first question, the national court constitutes a charge having equivalent asks in substance whether, notwithstanding the fact that the impugned tax is imposed only on exports, it may escape classifica­ 6 — Joined Cases 2/69 and 3/69 Diamantarbeiders v Brachfeld tion as a charge having equivalent effect to [1969] ECR 211, paragraph 13 (hereinafter 'Diamantarbei­ ders ľ). 7 — Ibid. 8 — Diamantarbeiders I, loc. cit. See also, among many others, 5 — Greece refers, in particular, to Case 158/82 Commission v Case C-209/89 Commission v Italy [1991] ECR I-1575, Denmark [1983] ECR 3573, paragraph 24. paragraph 7.

The fact that the present case concerns 13. I turn to consider the contention that exports is not significant since no distinc- the export tax contributes, nevertheless, a tion has been drawn depending on whether mere incidental aspect of a genuine and the relevant charge affects imports or non-discriminatory system of internal taxa- exports. 9 tion. Apart from reciting the legislation to which I have already alluded (paragraphs 5 and 6 above), the national court refers only to the fact that, according to Article 59(4) of Law No 2084/1992 (hereinafter 'the 1992 Law'), the revenue available to the IKA comprises various sources, which are said to include 'contributions' on exported 12. The mere fact that the purpose of the tobacco, on consumed tobacco products impugned tax is to finance social security and on 'tobacco land tax', without, how- benefits for tobacco workers is irrelevant. ever, specifying the precise taxation provi- National social objectives, even if adopted sions other than the first. 13 pursuant to national constitutional provi- sions (as implied in the first question), may not be financed by Member States through the imposition of charges that are incom- patible with Community law. Thus, although 'Community law does not detract from the powers of Member States to organise their social security systems', they 14. It is important to bear in mind, of 'must nevertheless comply with Commu- course, that it is ultimately for the national nity law when exercising those powers'. 10 court to interpret the relevant provisions of Thus, conditions of national social security Greek law. The Court, in its answers to the regulations may be incompatible with the questions posed, can give guidance as to rules on free movement of goods if they how it should approach the contention that the impugned tax constitutes part of a general system of internal taxation. 9 — See Case 51/74 Hulst v Produktschap voor Siergewassen [1975] ECR 79, paragraphs 13 and 14, Joined Cases 36/80 and 71/80 Irish Creamery Milk Suppliers Association v Ireland [1981] ECR 735, paragraph 23 and Case C-111/89 Bakker Hillegom [1990] ECR I-1735, paragraphs 9 and 10. 11 — Case 238/82 Duphar v Netherlands [1984] ECR 523, 10 — Case C-120/95 Decker v Caisse de Maladie des Employés paragraph 2 1 . Privés [19981 ECR I-1831 (hereinafter 'Decker'), para- 12 — Decker, loc. cit., paragraph 46. graphs 21 and 2 3 . 13 — FEK I, p. 165.

15. Greece asserts that there is a fine effect and internal taxation is clear from distinction between the pecuniary charges the case-law. that fall to be considered as charges having equivalent effect to customs duties and those that may be considered to constitute internal taxation and that the latter should be considered in the light of Article 95 of the EC Treaty. I do not agree. 17. In Denkavit v France, the Court had to consider whether a charge imposed on the importation of pig meat could escape classification as a charge having equivalent effect to a customs duty because it was intended to compensate for the imposition of a domestic levy on the slaughter of swine. 16 It held that '... in order to relate to a general system of internal dues, the charge to which an imported product is 16. In Diamantarbeiders I the Court natu- subject must impose the same duty on rally recognised that 'the concept of a national products and identical imported charge having equivalent effect does not products at the same marketing stage and include taxation which is imposed in the that the chargeable event giving rise to the same way within a State on similar or duty must also be identical in the case of comparable domestic products, or at least both products'. 17 It was 'not sufficient that which falls, in the absence of such pro- the objective of the charge imposed on ducts, within the framework of general imported products [wa]s to compensate for internal taxation, or which is intended to a charge imposed on similar domestic compensate for such internal taxation products — or which ha[d] been imposed within the limits laid down by the on those products or a product from which Treaty'. 14 The rationale underlying the they [we] re derived — at a production or distinction is clear. As Advocate General marketing stage prior to that at which the Gand explained in his Opinion in that case, imported products are taxed', since, '[t]o 'charges having equivalent effect and inter- exempt a charge levied at the frontier from nal taxation constitute different fields and the classification of a charge having equiva- are not subject to the same system', since lent effect when it is not imposed on similar the former are 'unlawful solely by virtue of national products or is imposed on them at the fact that [they constitute] an obstacle to different marketing stages or, again, on the trade, whereas internal taxation is unlawful basis of a different chargeable event giving only if, and to the extent to which, it is rise to duty, because that charge aims to imposed more heavily on imported pro- compensate for a domestic fiscal charge ducts than on domestic products'. 15 Thus, applying to the same products ... would Member States are free to determine the make the prohibition on charges having an level of internal taxation but they may not effect equivalent to customs duties empty exercise that competence so as to impose and meaningless'. 18 Thus, a charge such as obstacles to trade. The distinction in prin- the impugned tax in this case which is ciple between charges having equivalent

levied at a national frontier must be (in Sicily) appeared effectively to be presumed to constitute a charge having untaxed, 2 3 constitute a charge having equivalent effect, unless the supposedly equivalent effect to a customs duty, because comparable charge on domestic products it was satisfied that it formed 'part of a is applied at the same rate, at the same general system of internal dues applying marketing stage and as a result of the systematically to categories of products', occurrence of the same chargeable event. the levy in question constituting one of 'the 19 taxes on consumption [that were] gov- erned by common tax rules and [were] charged on categories of products irrespec- tive of their origin in accordance with an objective criterion, namely the fact the product falls into a specific category of goods'. 24 The Court also referred specifi- cally to the fact that the place of production 18. It is instructive to contrast Denkavit v of the taxed categories of goods '[did] not France with the later case of Commission v seem to have a bearing on the rate, the basis France, where the Court rejected a Com- of assessment or the manner in which the mission infringement action directed tax is levied', as well as to the fact that the against the imposition of a levy on the use yield from the taxes 'is not earmarked for a of 'reprographic' equipment and seeking a specific purpose ... [but] constitutes tax declaration that, in so far as it applied to revenue identical to other tax rev- imported equipment, it constituted a charge enue . . . ' . 25 having equivalent effect to a customs duty. 19 The levy in question applied to 'eight different types of equipment', which comprised 'all types of reprographic equip- ment designed for reproduction of the written word', and was related to a levy 19. The notion of what constitutes a 'gen- on the publication of books imposed by the eral system of internal taxation' is not to be same national law. 2 0Although the Court interpreted broadly. In Commission v Den- appeared to regard French domestic pro- mark, the Court rejected Denmark's duction of the taxed equipment as being defence that groundnuts and Brazil nuts insignificant, it was, none the less, satisfied constituted a specific group of products to that 'the particular features of the levy in which the impugned import charge was issue [led] to its being accepted as forming applied systematically on the basis of part of a general system of internal dues'. 21 objective criteria (the particularly grave In Co-Frutta v Amministrazione delle risk to health posed by possible contamina- Finanze dello Stato, 22 the Court held that tion). 26 It held that 'such a limited number subjecting bananas, upon importation, to a of products [could] not fall within the consumption tax did not, notwithstanding broad concept of "whole classes of... the fact that a small domestic production

products" ... , a concept which implies a growing tobacco. Quoting from Article 6 much larger number of products deter- of the 1953 Law, Greece asserts that the mined by general and objective criteria'. 27 single consumption tax dates from Arti- cle 2(4)(b) of Law No 3460/28. 29 In the absence of any information in the order for reference regarding this supposed (single) consumption tax and since Article 59(4)(f) of the 1992 Law, which is cited by the 20. More recently, in CRT France Interna- national court, does refer to 'a contribution tional, the Court held that a flat-rate tax on on tobacco land tax', the Court posed a the supply of radio transmitting-receiving number of questions to Greece for a written sets, which operate on two-way channels, response. viz. CB sets, and imposed by a French Law effectively on imports only did not consti- tute internal taxation within the meaning of Article 95 of the EC Treaty but, instead, a charge having an effect equivalent to a customs duty. 28 This was because, although most other forms of radio-relay system devices were taxed in France, the method of taxing CB sets was different; 22. Before evaluating the material provided unlike the other equipment, where the tax in that response, I would make two pre- was borne by the users, the supply of CB liminary observations. First, the impugned sets was taxed. This case illustrates clearly tax is a single tax imposed upon the export the need for uniformity in the method of of raw tobacco. Secondly, it is important to application of allegedly comparable keep in mind the distinction between a tax charges. imposed on specific acts relating to a product and legal provisions relating to the allocation of the proceeds of taxation.

27. As concerns the 'contribution on con- sumed tobacco products' (emphasis added) which is mentioned at Article 59(4)(e) of the 1992 Law, the information provided by the abovementioned IKA document states 25. Regrettably, the Court has also been that it is regulated by three provisions. 30 It supplied with other contradictory, or at seems to be accepted that those provisions least confusing, information. The greatest effectively provided for the allocation of a confusion surrounds the question of a fixed sum (GRD 12 780 000) from the former tax on land under cultivation and general consumption tax on the retail sale its later modification. Since the national of tobacco. It would also appear that the court alone can determine the true position former land tax has been subsumed into in Greek law regarding the existence of this 'contribution'. The latter, however, such a tax, I shall refer only briefly to the does not, itself, constitute a tax in the main elements of the information provided. accepted legal sense but rather an alloca- tion of tax proceeds.

taxable event is the exportation of tobacco provided information (Annex C to the and not its retail sale, it is difficult to response) that this tax exists and that, up envisage how it may be compared with a to 1994, its basis of assessment comprised (single) consumption tax on cigarettes and the total of the sale price of raw tobacco as other tobacco products. Moreover, the augmented by the value of the relevant contribution of 4% of 16% of the price Community tobacco premium, while, more of tobacco does not appear, as I have recently, the basis of assessment has com- already noted, to represent a tax at all prised only the price paid for the tobacco. but, instead, a system of allocation of the The existence of this tax was acknowledged proceeds of the general tax on cigarette at the hearing by counsel for Kapniki. 32 consumption. She asserted, however, that it applies to all unprocessed tobacco put into circulation within Greece regardless of its intended destination and that it affects tobacco destined for export, which is thus doubly taxed.

30. None the less, a doubt persists regard- ing the existence of a tax at the rate of 2 % of the price of tobacco sold by producers to 32. For Greece's contention to succeed, the tobacco brokers or processors. The national court must ultimately be satisfied National Tobacco Organisation, in appar- of the precise comparability of the relevant ent contradiction of the information sup- taxes. Several points are noteworthy in this plied by the Ministry of Finance, has 32 — Article 10 of Legislative Decree 3758/1957 (FEK I, p. 184) is cited, along with several earlier laws, as providing the 31 — See, in particular, Council Directive 92/12/EEC of 25 Feb- legal basis in Greek law for its application. The agent for ruary 1992 on the general arrangements for products the Commission, who described it as 'a tax on cultivation', subject to excise duty and on the holding, movement and was of the impression that it had been abolished and that monitoring of such products; OJ 1992 L 76, p. 1. its appellation alone had been retained in the 1992 Law.

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KAPNIKI MIKHAILIDIS

B — The scope of the obligation to refund

36. The real recovery issue raised in the present case concerns the question of proof. There is no discussion in the order for 34. In the light of the view I have taken reference of any findings of fact having regarding the nature of the impugned tax, it been made by the national court regarding is necessary to consider the national court's the passing on by Kapniki of the burden of second question. It is clear from the word- ing of that question that the national court wishes to know whether Community law 33 — See, inter alia, Case 199/82 Amministrazione delle Finanze would permit a Member State to refuse to dello Stato v San Giorgio [1983] ECR 3595 (hereinafter 'San Giorgio'), Joined 'Cases C-192/95 to C-218/95 refund unlawfully levied charges in circum- Comateb and Others v Directeur Général des Douanes stances where it is established that an et Droits Indirects [1997] ECR I-165 (hereinafter 'Coma- teb') and Case C-343/96 Dilexport [1999] ECR I-579. unjust enrichment would arise, and on 34 — Kapniki forcefully submitted at the hearing that both whom the burden of establishing such a Greek legislation and Council of State case-law precludes reliance on purported unjust enrichment to defeat claims possible enrichment would lie. by taxpayers for repayment of unlawfully levied charges.

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OPINION OF MR FENNELLY — JOINED CASES C-441/98 AND C-442/98

I - 7158

KAPNIKI MIKHAILIDIS

If, on the other hand, ... it is for the administration to show, by any form of evidence generally accepted by national law, that the charge was passed on to other 41 — See, in this respect, paragraph 50 of the Opinion of persons, the provisions in question are not Advocate General Jacobs in Case C-228/98 Dounias v Ypourgou Oikonomikon [2000] ECR I-577, where he to be considered contrary to Community took the view that national legislation restricting the calling of witnesses could, if their evidence were critical to law.' a claimant's case, render impossible the exercise of its Community-law-derived rights. The Court agreed but (in its judgment of 3 February 2000) held that the legislation in question would only be incompatible with Community law if the claimant could not benefit from the exceptions 39 — Loc. cit., footnote 33 above, paragraph 48. and if adducing written evidence would not permit him to 40 — Ibid., paragraphs 52 and 53. establish his case; see paragraphs 71 and 72.

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OPINION OF MR FENNELLY — JOINED CASES C-441/98 AND C-442/98

44. In applying this exceptional principle, the Court has had regard to whether the relevant provision of Community law has already been interpreted by the Court and C — The temporal effects of the judgment the extent to which the Commission might have contributed to any uncertainty regard- ing its interpretation. 43 No such factors are applicable in the present case. The Court's case-law defining the scope of the prohibi- tion of charges having equivalent effect to a 42. The IK A submitted, for the first time, customs duty has been well-established at the hearing that the Court should limit since the late 1960s and has been fully ex nunc the effects of its judgment if it applicable in the Hellenic Republic since its decides that a charge such as the impugned accession. To consider limiting the effects tax is incompatible with Community law. The request was based on the important adverse financial effects for the financial 42 — See Case 24/86 Blaizot v University of Liège and Others [1988] ECR 379 (hereinafter 'Blaziot'), paragraphs 28 and stability of the IKA of having to reimburse 30, Case C-163/90 Administration des Douanes et Droits the amounts collected. No details of these Indirects v Legros and Others [1992] ECR I-4625 (here- inafter 'Legros'), paragraph 60 and Case C-437/97 Evan- alleged financial difficulties were presented gelischer Krankenhausverein Wien [2000] ECR I-11 (hereinafter 'Krankenhausuerein'), paragraph 57. to the Court. Moreover, its application was 43 — See Blaizot, paragraphs 29 and 33, Legros, paragraphs 31 vigorously opposed by Kapniki. and 32 and Krankenhausverein, paragraph 58.

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affect its characterisation as a charge having equivalent effect to a customs duty on exports;

(2) A taxpayer who has been obliged to pay a charge which constitutes a charge having equivalent effect to a customs duty on exports may only be precluded from claiming the repayment of the sums levied if the relevant tax administration is able to establish that the taxpayer passed on the entire financial burden of the charge to third parties and in so doing suffered, whether through reduced sales or profits, no consequential financial loss or damage.

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