C-70/99
ECLI:EU:C:2001:125
- Súd
- Súdny dvor Európskej únie
- IČS
- 61999CC0070
- Zdroj
- eur-lex.europa.eu ↗
COMMISSION V PORTUGAL
OPINION OF ADVOCATE GENERAL ALBER delivered on 6 March 2001 1
I — Introduction cle 84(2) of the EC Treaty (now Arti- cle 80(2) EC), the Council may decide whether, to what extent and by what procedure appropriate provisions may be laid down for air transport. 1. By this action for failure to fulfil obliga- tions, the Commission is challenging provi- sions of Portuguese law under which intra- Community flights are subject to higher passenger-service and security taxes than those applicable to domestic flights.
3. On that legal basis, the Council adopted Regulation (EEC) No 2408/92 of 23 July 1992 on access for Community air carriers II — Relevant legislation to intra-Community air routes. 2 Arti- cle 3(1) of that regulation reads as follows:
A — Community law
2. Under Article 61(1) of the EC Treaty (now, after amendment, Article 51(1) EC), 'Subject to this regulation, Community air freedom to provide services in the field of carriers shall be permitted by the Member transport is governed by the provisions of State(s) concerned to exercise traffic rights the Title relating to transport. Under Arti- on routes within the Community.'
1 — Original language: German. 2 — OJ 1992 L 240, p. 8.
I - 4847
OPINION OF MR ALBER — CASE C-70/99
B — Portuguese law (c) Implementing provisions
(1) Provisions relating to the passenger service tax 6. The actual rates of the passenger service tax payable at airports on the mainland and on the Azores respectively are fixed sepa- rately by Ministerial Decree (Portaria) No 555/95 of 8 June 1995 as follows:
(a) Decree-Law No 102/91 of 21 March 1991
Domestic flights PTE 580 (Lisbon, Oporto, Faro) PTE 510 (Azores) 4. Decree-Law No 102/91 forms the legal basis for the levying of various taxes at the airports administered by the Portuguese State-operated company Empresa Pública Aeroportos e Navegação Aérea, ANA, E.P. International flights Under Article 18 of the Decree-Law, the PTE 1 550 (Lisbon, Oporto, Faro) competent ministry fixes the rates of the PTE 1 385 (Azores) taxes by ministerial decree. Under Arti- cle 30 of the Decree-Law, details relating to the various taxes may be laid down by regulatory decree.
By Ministerial Decree No 310/97 of 12 May 1997, those rates were raised as follows:
(b) Regulatory Decree No 38/91 of 29 July 1991 (amended by Regulatory Decree No 24/95 of 12 September 1995) Domestic flights PTE 591 (Lisbon, Oporto, Faro) PTE 580 (Azores)
5. Article 10(1) of Regulatory Decree No 38/91 provides for the introduction of a passenger service tax payable by every passenger checked in. A distinction is International flights drawn in this regard between international PTE 1 619 (Lisbon, Oporto, Faro) flights and domestic flights. PTE 1 601 (Azores) I - 4848
COMMISSION V PORTUGAL
(2) Provisions relating to the security tax the autonomous regions of the Azores and Madeira, or between airports in those regions, or between those airports and other airports, in so far as they are classified by ministerial circular as regional (a) Decree-Law No 102/91 of 8 March flights. 1991
7. Article 2(1) of Decree-Law No 102/91 I n t r a - C o m m u n i t y flights are flights governs the levying of a security tax on between the territory of the Portuguese every passenger checked in. Article 2(2) State and the territory of any other Mem- provides that the rate of the tax is to be ber State of the Community and between determined by the type of flight to be airports within national territory in so far undertaken. as they are not regional flights.
(b) Implementing provisions International flights are those between the national territory and the territories of other States that are not members of the Community. 8. By Ministerial Decree No 1172/92 of 22 December 1992, the competent minis- tries fixed the rates of the tax at PTE 200 for domestic flights and PTE 400 for international flights. A three-tier rate was then introduced by Ministerial Decree No 240/98 of 16 April 1998: Ill — Procedure
Regional flights PTE 250 Intra-Community flights PTE 550 9. By a letter of 11 December 1996, the International flights PTE 750 Commission complained that higher pas- senger-service and security taxes were being levied on flights from Portuguese airports to Member States of the Community than on domestic flights. This, it argued, was Regional flights are those between airports incompatible with the freedom to provide on the Portuguese mainland and airports in services guaranteed in Article 59 of the EC
I - 4849
OPINION OF MR ALBER — CASE C-70/99
Treaty (now, after amendment, Article 49 IV — Forms of order sought EC) and Article 62 of the EC Treaty (repealed by the Treaty of Amsterdam), with Regulation No 2408/92 and with the freedom of movement enjoyed by every citizen of the Community under Article 8 a 13. On 26 February 1999, the Commission of the EC Treaty (now, after amendment, brought this action. It claims that the Court Article 18 EC). should:
(1) declare that
10. In its letter of reply of 17 March 1997, the Portuguese Republic justified the dif- ferent rates of tax by reference to the higher cost of handling passengers for interna- — by maintaining in force Article 10 tional flights and the fact that the autono- of Regulatory Decree No 38/91 of mous regions of the Azores and Madeira 29 July 1991, under which flights are a special case because they are islands. from Portugal to other Member States are subject to higher taxes than those applicable to domestic flights, and
11. On 30 June 1998, the Commission — by maintaining in force the provi- issued a reasoned opinion in which it sion in Decree-Law No 102/91 of reiterated that the Portuguese provisions 8 March 1991, as implemented by were incompatible with Article 3(1) of subsequent ministerial decrees, Regulation No 2408/92, which introduced under which flights from Portugal the principle of freedom to provide services to other Member States are subject in the field of air transport. to higher taxes than those applic- able to certain domestic flights,
the Portuguese Republic has failed to 12. The Portuguese Government did not fulfil its obligations under the com- respond to the reasoned opinion. Nor were bined provisions of Article 59 of the the contested provisions amended as the EC Treaty and Article 3(1) of Council Commission had requested. Regulation (EEC) No 2408/92;
I - 4850
COMMISSION V PORTUGAL
(2) order the Portuguese Republic to pay consistent with the principle of freedom to the costs of the proceedings. provide services enshrined in Article 59 of the EC Treaty.
14. The Portuguese Republic contends that the Court should: 16. In its submission, the scope of the provisions on freedom to provide services was extended to the field of air transport in 1992 by the 'third package' of provisions on air transport, to which Regulation No 2408/92 belongs. The principle of free- (1) dismiss the action as unfounded; dom to provide services which therefore applies does more than merely prohibit discrimination on grounds of nationality; it renders inadmissible any restriction which is not justified by compelling reasons of public interest and which is not consistent with the principle of proportionality. (2) order the Commission to pay the costs.
17. The Commission bases its interpreta- tion of Community law on the Court's judgment concerning the application of the V — Arguments of the parties principle of freedom to provide services to maritime transport. In its judgment in Case C-381/93 in particular, the Court made it clear that, in the perspective of a single market and in order to permit the realisa- tion of its objectives, freedom to provide 15. The Commission takes the view that services precludes the application of any the Portuguese provisions infringe Arti- national legislation which has the effect of cle 3(1) of Regulation No 2408/92, since making the provision of services between Article 10 of Regulatory Decree No 38/91 Member States more difficult than the and the combined provisions of Decree- provision of services purely within one Law No 102/91 and its implementing Member State. 3 orders impose higher taxes on intra-Com- munity flights than on domestic flights. Article 3(1) of Regulation No 2408/92, it 3 —Judítim-ní in Case C-381/93 Cummission v France [1994] contends, must be interpreted in a manner ECU I-5145, paragraph P .
I - 4851
OPINION OF MR ALBER — CASE C-70/99
18. The Commission takes the view that charges at Portuguese airports, the Com- the Portuguese Republic has not demon- mission applied the procedure under Arti- strated any compelling reasons of public cle 90(3) of the EC Treaty (now Arti- interest that satisfy the requirements laid cle 86(3) EC) and addressed a decision4 down by case-law to justify the different to the Portuguese Republic. It finds it rates of tax applicable to intra-Community difficult to understand why, in this case, flights and domestic flights respectively. It which is similar in substance to that just explains the differentiation by reference to mentioned, the Commission has brought the higher cost of international flights. As the matter before the Court of Justice regards the security tax, however, no straight away, even though court proceed- explanation is given as to why intra-Com- ings should be the last resort. Moreover, the munity flights require more expensive Commission has not revealed what mea- checking procedures. Nor has the Portu- sures it has taken against other Member guese Government explained how a differ- States with a comparable tax regime. ence of 100% in the case of the security tax and of almost 300% in the case of the passenger-service tax is proportionate.
21. In its view, Article 3(1) of Regulation No 2408/92 governs only the principle of 19. The fact that the legislation aims to freedom of access to the intra-Community promote the island regions of the Azores market in air transport. The Portuguese tax and Madeira, as Portugal contends, is not legislation does not restrict such access, but capable of justifying the tax regime at issue. lays down conditions for the exercise of That aim can also be achieved by means of that freedom. Regulation No 2408/92 does direct compensation to the air carriers not apply to such legislation. serving the relevant routes under Arti- cle 4(1)(f) and (h) of Regulation No 2408/92. Portugal already makes use of that possibility. Furthermore, the rules complained of go beyond what is necessary to attain the objective sought, because all national flights, not just those between the mainland and the island regions, are given preferential treatment. 22. The Community can lay down rules on the establishment of conditions of exercise only by means of a harmonising directive.
4 — Commission Decision of 10 February 1999 relating to a proceeding pursuant to Article 90 of the Treaty (Case No IV/35.703, C(1999) 243, OJ 1999 L 69, p. 31). The action 20. The Portuguese Government points out brought by Portugal against that decision is pending under case number C-163/99. Advocate General Mischo delivered first that, in order to challenge the landing his Opinion on 19 October 2000.
I - 4852
COMMISSION V PORTUGAL
The Commission's proposal of 23 April VI — Assessment 1997 5for a directive on airport taxes has not yet got beyond the draft stage, however. Singling out the Portuguese rules, it main- tains, leads to distortion of competition. ( 1 ) Choice of the action for failure to fulfil obligations
26. First, the Portuguese Government's argument that the Commission should have adopted a decision on the basis on Arti- 23. The taxes on both security checks and cle 90(3) of the EC Treaty, instead of passenger services are fixed for each pas- bringing the present action for failure to senger solely on the basis of his destination. fulfil obligations, must be rejected. It falls No distinction is drawn according to the within the Commission's discretion to nationality or identity of the air carrier determine whether and when to bring an concerned. There is therefore no discrimi- action for failure to fulfil obligations nation on the ground of the operator's against a Member State. 6The considera- nationality. tions which have led it to make that decision are not subject to judicial review. 7 Consequently, if the Commission wishes to challenge the Portuguese legislation on passenger-service and security taxes by way of an action for failure to fulfil obligations but to take action against land- ing charges by means of a decision under 24. Even if the tax regime complained of Article 90(3) of the EC Treaty, it has does restrict the freedom to provide ser- discretion to do so. The Commission does vices, it maintains that such a restriction is not have to set out in detail the considera- justified since international transport neces- tions which prompted it to act in this way. sitates special customs-clearance and tran- The Court of Justice examines merely sit facilities. whether the procedure chosen is in princi- ple an admissible means of addressing the alleged infringement. It must be made clear in this regard that the action for failure to fulfil obligations which the Commission has chosen to bring is in any event an admissible procedure for the purpose of examining the compatibility with Commu- 25. Moreover, since the distances on nity law of the Portuguese legislation on domestic routes are usually shorter and passenger-service and security taxes. the air fares correspondingly lower, the lower taxes are appropriate. 6 — Judgments in Case C-35/96 Commission v Italy[1998] ECR I-1851, paragraph 27, and Case 2 4 7 / 8 7Star F r u i t v 5 — Commission proposal of 23 April 1997 for a Council Commission [1989] ECR 291, paragraph 11. Directive on airport charges ( C O M / 9 7 / 0 1 5 4 final, 7 — See the Opinion of Advocate General Mischo in Case OJ 1997 C 257, p. 2. amended by a proposal of 14 Sep- C-161/99 Portugal v Commission [2001] ECR I-2613, tember 1998, COM/98/0509 final, OJ 1998 C-319, p. 4). paragraph VI.
I - 4853
OPINION OF MR ALBER — CASE C-70/99
(2) Application to air transport of the 29. On the basis of that provision, the freedom to provide services Council adopted on 23 July 1992 Regula- tion No 2408/92 on access for Community air carriers to intra-Community air routes. 10 Article 3, cited in point 3 above, 27. The question is therefore whether the grants Community air carriers the right to Commission's action is well founded. The exercise traffic rights on routes within the Commission claims that there has been an Community. infringement of Article 3 of Regulation No 2408/92 in conjunction with the prin- ciple of freedom to provide services. Under Article 61(1) of the EC Treaty (now, after amendment, Article 51(1) EC), freedom to provide services in the field of transport is governed by the provisions of the Title relating to transport. That restriction 30. The Commission takes the view that means that the objective laid down in the freedom to provide services in the field Article 59 of the EC Treaty of abolishing of air services has been introduced in full. It during the transitional period restrictions bases that view, in particular, on the on freedom to provide services is to be judgment of the Court of First Instance in attained in the framework of the common Air Inter v Commission. 11 The Portuguese transport policy provided for in Article 74 Government, on the other hand, takes the of the EC Treaty (now Article 70 EC) and view that Regulation No 2408/92 governs Article 75 of the EC Treaty (now, after only access to traffic rights but not the amendment, Article 71 EC). 8The Court exercise of such rights. The passenger- has held 9 that, even on expiry of the service and security tax legislation, how- transitional period, Articles 59 and 60 of ever, relates to the exercise of traffic rights the EC Treaty (now, after amendment, and is consequently not covered by Reg- Article 50 EC) are not of direct application ulation No 2408/92. The question, there- in the transport sector. fore, is to what extent Regulation No 2408/92 makes the rules on freedom to provide services applicable to air trans- port.
28. In the context of air transport, Arti- cle 84(2) of the EC Treaty must also be taken into consideration. Under that arti- cle, the Council decides whether, to what extent and by what procedure appropriate provisions are to be laid down for air transport. The provisions on transport 31. The Court of Justice addressed this policy therefore apply to air transport only issue for the first time in Case C-361/98. within the framework laid down by the With reference to the first, 2nd and 19th Council. recitals in the preamble to Regulation No 2408/92, it held that the purpose of
8—Judgment in Case C-18/93 Corsica Ferries [1994] ECR I-1783, paragraph 24. 10 — Cited in footnote 2. 9 — Judgment in Case 13/83 Parliament v Council [1985] ECR 11 — Judgment in Case T-260/94 Air biter v Commission [1997] 1513, paragraph 63. ECR II-997.
I - 4854
COMMISSION V PORTUGAL
that regulation was, inter alia, to define the 33. That is a clear indication that the conditions for applying in the air transport provisions on freedom to provide services sector the principle of freedom to provide are to apply to intra-Community maritime services so that all matters of market access transport. Moreover, Article 8 of Regula- were dealt with in the same regulation. 12 In tion No 4055/86 transposes the provision so doing, it endorsed the view expressed by contained in the third paragraph of Arti- Advocate General Cosmas in his Opinion cle 60 of the EC Treaty to the sphere of in that case. 13 maritime transport. Finally, under Arti- cle 1(3) of Regulation No 4055/86, the provisions of Articles 55 to 58 and Arti- cle 62 of the EC Treaty (now Articles 45 to 48 EC, partially amended; Article 62 has been repealed) are to apply to maritime transport. On the basis of all those provi- 32. That view must ultimately be accepted. sions of Regulation No 4055/86, the Court It is true that the wording of Regulation came to the conclusion that Regulation No 2408/92, or at least the operative part No 4055/86 made the freedom to provide of it, contains no express reference to the services applicable in the sphere of mar- provisions of Article 59 et seq. of the EC itime transport. 15 Treaty (now, after amendment, Article 49 et seq.). To that extent, the rules on air transport are less explicit than those on maritime transport, which the Commission cites by way of comparison. The relevant provision, Article 1(1) of Regulation (EEC) No 4055/86 applying the principle of free- 34. Regulation No 2408/92, on the other dom to provide maritime transport services hand, refers to the provision of services between Member States and between only in the second recital in the preamble. Member States and third countries, 14 reads That recital reproduces the content of as follows: Article 7a of the EC Treaty (now, after amendment, Article 14 EC), which defines the internal market. However, the second recital in the preamble to Regulation No 2408/92 must be read in conjunction with the first recital, which states that it is important 'to establish an air transport 'Freedom to provide maritime transport policy for the internal market over a period services between Member States and expiring on 31 December 1992'. This between Member States and third countries means that Regulation No 2408/92 is shall apply in respect of nationals of intended to establish the internal market Member States who are established in a in the field of air transport. One of the Member State other than that of the person features of the internal market is the for whom the services are intended'. guarantee of freedom to provide services, as is clear from Article 7a of the EC Treaty. The first two recitals in the preamble to 12 —Judgment in Cast· C-361/98 Italy v Commission [2001] ECR I-385, paragraph 32. 11 — Opinion in Case C-361/98 Italy v Commission [2001] KCR 1-185, points 47 and 48. 15 —Judgment in Cast- C-381/93 Commission v France [1994] ECR I-5145. paragraphs 11 and 12. 14 — O J 1986 L 378, p. 1.
I - 4855
OPINION OF MR ALBER — CASE C-70/99
Regulation No 2408/92 therefore indicate operators are granted access to the market that the purpose of the legislature in in air services. adopting that regulation was to introduce freedom to provide services in the field of air transport.
38. Further support for that interpretation can be found in the third recital in the preamble to Regulation No 2408/92, 35. Reference should also be made to the where Council Decision 87/602/EEC of 19th recital in the preamble to the regula- 14 December 1987 16 and Council Regula- tion, which reads: '[w]hereas it is appro- tion (EEC) No 2343/90 of 24 July 1990 17 priate to deal with all matters of market are described as '... the first steps towards access in the same regulation'. achieving the internal market in respect of access for Community air carriers to sched- uled intra-Community air routes'. It fol- lows that Regulation No 2408/92 constitu- tes a further step towards the liberalisation of access to the market and thus to the establishment of the internal market. 36. That recital relates to the rule con- tained in Article 3 of the regulation, which, as already mentioned in point 3, reads: '[s]ubject to this regulation, Community air carriers shall be permitted by the Member State(s) concerned to exercise traffic rights on routes within the Community'. 39. Thus far, the Portuguese Government concurs with this interpretation of Regula- tion No 2408/92. It takes the view, how- ever, that the regulation governs only access to, and not the exercise of, freedom to provide services in the field of air transport, that is to say the conditions under which traffic rights may be exercised and used. 37. A comparison of the wording of Arti- Regulation No 2408/92 did not, therefore, cle 3(1) of Regulation No 2408/92 with in its submission, introduce the freedom to that of Article 1(1) of Regulation No 4055/86, cited in point 32, shows that the rules on air transport are less explicit 16 —Council Decision 87/602/EEC of 14 December 1987 on than those on maritime transport. How- the sharing of passenger capacity between air carriers on ever, the 19th recital and Article 3(1) of scheduled air services between Member States and on access for air carriers to scheduled air-service routes Regulation No 2408/92 support the con- between Member States (OJ 1987 L 374, p. 19). clusion that the legislature introduced free- 17 — Council Regulation (EEC) No 2343/90 of 24 July 1990 on access for air carriers to scheduled intra-Community air dom to provide services in the field of air service routes and on the sharing of passenger capacity between air carriers on scheduled air services between transport at least in so far as market Member States (OJ 1990 L 217, p. 8).
I - 4856
COMMISSION v PORTUGAL
provide services in the field of air transport (3) The existence of a restriction on the generally, but only partially. National leg- freedom to provide services islation on airport taxes that is applied without discrimination to national and Community carriers does not restrict the right of access to and use of traffic rights. To that extent, Community law has not been infringed. 42. Since it has been established that the principle of freedom to provide services applies in the field of air transport, it remains to be examined to what extent the Portuguese legislation to which the Commission objects restricts the freedom to provide services.
40. The distinction which the Portuguese Government draws between the rules on access to traffic rights and the rules on the exercise of those rights does not, however, seem consistent with the content of the regulation. It is true that the title of the 43. As the Court emphasised in the judg- regulation, the 3rd, 18th and 19th recitals ment in Mediawet, Article 59 of the EC in the preamble, and Article 1(1), Arti- Treaty precludes the application of national cle 3(4) and Article 4(1 )(d) refer to 'access' rules which, without objective justification, to traffic rights. However, rules on the make it more difficult for a person provid- exercise of traffic rights are contained in ing services to make use of that freedom. 18 Article 3(1), Article 4(1)(a), Article 8(2) The Court thus made it clear that the and Article 9(1) of the regulation. The guarantee contained in Article 59 of the EC regulation therefore concerns both access Treaty is more than a mere prohibition of to and exercise of traffic rights. discrimination on grounds of nationality. The Portuguese Government's objection that the contested provisions relate not to the nationality of the service provider but to the destination of the flight must there- fore be dismissed as irrelevant.
41. If, however, the regulation does lay down rules on both access to and the exercise of traffic rights, it must be seen as a comprehensive body of rules on freedom to provide services in the field of air transport. 44. According to case-law, a restriction on That interpretation is consistent with the the freedom to provide services exists objective of establishing an internal market in air transport set out in the first two recitals in the preamble. It follows that 18 —Judgment in Case C-288/89 Collectieve Antennevoorzien- Regulation No 2408/92 introduced free- ing Couda [1991) ECR I-4007, paragraph 12 et seq., 'Mediawet'. See also the judgments in Case C-381/93 dom to provide services in the field of air (cited in footnote 15, paragraph 17), Case C-3/95 Reise- büro Broede [1996] ECR I-6511, paragraph 25, and Case transport as a whole. C-58/98 Carsten [2000] ECR I-7919, paragraph 33.
I - 4857
OPINION OF MR ALBER — CASE C-70/99
where the measure in question makes the Government to justify the difference in provision of a service across borders more treatment as between intra-Community expensive than the comparable service flights and domestic flights. provided nationally. 19 The present case concerns air services and the taxes payable for the provision of such services in the context of passenger handling. The con- tested Portuguese rules impose on intra- Community flights higher passenger-service (a) Allocation of costs according to origin and security taxes than those applicable to domestic flights. In this respect, they make the cross-border provision of a service — for instance, a flight from Lisbon to Madrid — more expensive than a similar service provided nationally — for 47. The Portuguese Government submits instance, a flight from Lisbon to by way of justification first that the taxes Oporto — and therefore constitute a represent consideration for the use of restriction on the freedom to provide facilities and personnel. The rates of the services. taxes were fixed on the basis of the necessary expenditure. With regard to the passenger service tax, it states that passen- gers on domestic flights require less space than those on international flights because there are no border formalities to complete (customs and passport control, accommo- 45. It can therefore be concluded for the dation for security and customs staff, time being that the contested national separate passenger service facilities) and legislation concerning passenger-service because there are no stopovers by transit and security taxes constitutes a restriction passengers. The security tax, the Portu- on the freedom to provide services. guese Government submits, represents con- sideration for use of the services provided by the security personnel and the associated use of certain items of equipment (such as X-ray machines and metal detectors).
(4) justification of the restriction on the freedom to provide services 48. In the judgment in Mediawet, the Court cited a number of public-interest reasons which are capable of justifying a restriction on the freedom to provide 46. It therefore remains to examine the services.20 In subsequent case-law, 21 it reasons put forward by the Portuguese 20 — Case C-288/89 (cited in footnote 18), paragraph 14. 21 —Judgments in Case C-55/94 Gebhard [1995] ECR [-4165, 19 — Judgment in Case 205/84 Commission v Germany [1986] paragraph 37, and Case C-3/95 (cited in footnote 18), ECR 3755, paragraph 28. paragraph 28.
I - 4858
COMMISSION V PORTUGAL
went on to summarise the conditions which 50. The question arises, however, as to such a restriction must meet, as follows: what extent the discrimination established is justified by reasons of public interest. The Portuguese Government contends first that the purpose of the tax regime at issue is the fair allocation of costs according to origin. In principle, there can be no objec- tion to the graduation of costs according to their origin, since, under such a system, — a restriction must be applied in a non- costs are allocated in accordance with an discriminatory manner; objective criterion. Where that is the case, however, regard must be had to the above- mentioned case-law to the effect that the principle of freedom to provide services requires that tax rules should not subject cross-border services to a heavier tax burden than that applicable to comparable — it must be justified by compelling services provided nationally.22 reasons of public interest;
51. It should be emphasised in this connec- tion that the Portuguese Government has not demonstrated how expenditure on — it must be suitable for securing the services of the kind at issue here is in fact attainment of the objective which it greater in the case of intra-Community pursues; and flights than in the case of domestic flights. Nor has it furnished any actual figures to show which costs were used as the basis for fixing the rates of tax applicable to the various types of flight, or how far the taxes levied cover those costs. This in itself raises considerable doubts as to the factual accu- — it must not go beyond what is necessary racy of Portugal's case. in order to attain the objective.
52. The arguments put forward by the Portuguese Government to justify higher passenger service taxes are unconvincing. 49. There is no evidence that the Portu- In view of the rules applicable within the guese provisions result in discrimination against providers of services on account of their nationality. To that extent, the first of 22 — Sec tle judgment in Case 201/84 (titccl in tomnoti' 19), the above conditions is fulfilled. paragraph 2 8 .
I - 4859
OPINION OF MR ALBER — CASE C-70/99
Community to the free movement of goods principle required to the same extent. This and persons and the provisions on checks ground of justification must therefore be on persons contained in the Schengen dismissed as well. Agreement, to which Portugal has acce- ded, 23 there is no reason for the expendi- ture associated with the handling of pas- sengers for intra-Community flights to be any greater than for domestic flights. The Portuguese Government has not shown why levying a passenger service tax which is three times as high for intra-Community (b) Promotion of regional development traffic as for national traffic is necessary in order to cover costs. If the rates of the passenger service tax were in fact propor- tionate to the expenditure necessary in each 54. The Portuguese Government also sub- case, the rate for intra-Community flights mits that the lower taxes on regional flights would in any event have to be lower than are intended to promote the island regions that for international flights, where pass- of the Azores and Madeira. With regard to port and customs checks have to be carried this argument based on the promotion of out in full. They are not, however, unlike regional development, it must be observed the security tax rates. As far as the passen- first of all that, under Article 1(4) of ger service tax is concerned, intra-Commu- Regulation No 2408/92, the autonomous nity and international flights are treated in region of the Azores was partially the same way. exempted from the application of that regulation. That exemption applied up to and including 30 June 1998. When it was ascertained that the amendments to the Portuguese legislation that would become necessary as from 1 July 1998 had not been drawn up, the Commission drafted a rea- soned opinion on 30 June 1998. In the ninth recital in the preamble to Regulation No 2408/92, the exemption is justified by reference to the inadequate state of devel- 53. Nor is it clear why the cost of security opment of the air traffic system in the checks should vary according to the desti- Azores. To that extent, the regulation nation of the flight. The security risks and already contains a measure to promote the precautions taken to avoid them are regional development. just as great on a domestic flight as they are on an intra-Community flight. Accordingly, checks on persons and luggage are in
23 — Agreement on the Accession of the Portuguese Republic to 55. Since 1 July 1998, Regulation the Convention implementing the Schengen Agreement of No 2408/92 has been applicable to all 14 June 1985 between the Governments of the States of the Benelux Economic Union, the Federal Republic of Portuguese territory without restriction. It Germany and the French Republic on the gradual abolition of checks at their common borders signed at Schengen on is therefore necessary to consider the extent 19 June 1990, to which the Italian Republic acceded by the Agreement signed at Paris on 27 November 1990 to which Portugal's submissions concerning (OJ 1990 L 239, p. 76). the promotion of regional development,
I - 4860
COMMISSION v PORTUGAL
over and above the aforementioned legis- rules on the subject which precludes the lative exemption, are capable of justifying recognition of further exemptions from the the different rates of tax. principle of freedom to provide services.
58. The Portuguese Government's submis- 56. Article 4(1) of Regulation No 2408/92 sion that the tax regime at issue is justified also makes provision for the possibility of on grounds relating to the promotion of promoting certain areas. Under subpara- regional development must also be rejected graph (a), a Member State may impose a for the following reason. The preferential public service obligation '... in respect of treatment which has been found to be scheduled air services to an airport serving accorded to domestic flights in the levying a peripheral or development region in its of passenger-service and security taxes territory or on a thin route to any regional applies not only to flights to and from the airport in its territory...'. Under Arti- Azores and Madeira but to all domestic cle 4(1)(f) and (h), a Member State may flights. However, according preferential reimburse an air carrier for satisfying such treatment to flights between the three air- an obligation. Portugal has availed itself of ports of Oporto, Lisbon and Faro cannot that provision as well, in connection with help promote regional development in the air services both to the Azores 24 and to Azores and Madeira. Madeira. 25
59. This ground of justification for the different rates of tax must therefore be dismissed as well. 57. Regulation No 2408/92 does not pro- vide for any further form of promotion for regional development. In view of the fact that the text of the regulation itself lays down measures to that end, the promotion of regional development cannot at the same time be recognised as justification for restrictions on the freedom to provide services. The aforementioned provisions (c) Proportionality of the taxes as a share of on the possibilities for promoting regional the total cost development under Community law must thus be understood as a definitive body of
24 — See OJ 1998 C 267, p. 4. 25 — See Communication from the Commission 95/C/200/03 60. Finally, the Portuguese Government and 200/04 (OJ 1995 C 200, p. 3). contends that the lower taxes on domestic
I - 4861
OPINION OF MR ALBER — CASE C-70/99
flights are proportionate to the shorter Government alleges there to be between the routes and lower fares on such flights. length of the route and the amount of the air fare in fact exists. On the one hand, in terms of distance, flights within the Portu- guese mainland are not always shorter than intra-Community flights. A flight from Lisbon to Madrid will be shorter than a 61. This ground of justification must like- flight from Lisbon to the Azores or wise be dismissed. It is true that taxes Madeira. Yet the passenger service and account for a larger share of the total price security taxes for the shorter flight are of a ticket for a cheaper flight than for a higher than for the longer flight. This is an more expensive flight. To that extent, indication that the taxes are not in fact economic considerations could lead to a linked to the length of the route. On the tax regime graduated according to the fare other hand, it should be pointed out that, for the flight. The Court has held, however, even if flights within Portuguese territory that economic objectives do not in principle are by and large shorter than flights to constitute grounds of public policy within other Member States, that does not neces- the meaning of Article 56 of the EC Treaty sarily mean that fares for domestic flights (now, after amendment, Article 46 EC) that will be correspondingly lower than for could justify different treatment according intra-Community flights. As well as dis- to whether services were provided nation- tance, the time of the flight and the demand ally or across frontiers. 26 for the air service are other potential factors determining the fare.
62. It must further be pointed out that the services for which those taxes are paid are 64. Finally, the objective of not making air provided irrespective of the length of the fares disproportionately expensive can also route or the amount of the air fare. For that be achieved without restricting the freedom reason also, the length of the route and the to provide services. The same low rates of amount of the air fare do not constitute a tax could be applied to intra-Community compelling reason of public interest which flights as are applied to domestic flights. In is capable of justifying a differentiation in this way, the cross-border provision of the rates of the passenger-service and services would be no more adversely security taxes. affected than the provision of services nationally. At the same time, the rates of tax on domestic flights would remain unchanged.
63. Moreover, there are doubts as to whe- ther the close link which the Portuguese 65. Nor, therefore, can the difference in the 26 tax burden as between domestic flights and — Judgment in Case C-288/89 (cited in footnote 18), paragtaph 11. intra-Communityflights be justified by
I - 4862
COMMISSION V PORTUGAL
reference to the proportionality of the taxes amendment, Article 49 EC) and Article 3 as a share of the total cost. of Regulation No 2408/92.
66. To sum up, the grounds put forward by V I I— Costs the Portuguese Government are not capable of justifying the restriction on freedom to provide services resulting from the system of passenger-service and security taxes at 67. Under Article 69(2) of the Rules of issue. The further question whether the Procedure, the unsuccessful party is to be restriction is proportionate is therefore ordered to pay the costs if they have been irrelevant. The rules on passenger-service applied for in the successful party's plead- and security taxes therefore run counter to ings. Since the Portuguese Republic has the freedom to provide services within the been unsuccessful in its submissions, it meaning of the combined provisions of must be ordered to pay the costs, as applied Article 59 of the EC Treaty (now, after for by the Commission.
V I I I— Conclusion
68. For the foregoing reasons, I therefore propose that the Court should:
(1) declare that
— by maintaining in force Article 10 of Regulatory Decree No 38/91 of 29 July 1991, under which flights from Portugal to other Member States are subject to higher taxes than those applicable to domestic flights, and
I - 4863
OPINION OF MR ALBER — CASE C-70/99
— by maintaining in force the provision in Decree-Law No 102/91 of 8 March 1991, as implemented by subsequent ministerial decrees, under which flights from Portugal to other Member States are subject to higher taxes than those applicable to certain domestic flights,
the Portuguese Republic has failed to fulfil its obligations under the combined provisions of Article 59 of the EC Treaty (now, after amendment, Article 49 EC) and Article 3(1) of Regulation (EEC) No 2408/92;
(2) order the Portuguese Government to pay the costs of the proceedings.
I - 4864