C-383/01

DE DANSKE BILIMPORTØRER

DRAFT OPINION OF ADVOCATE GENERAL JACOBS delivered on 27 February 2003 1

1. In Denmark, new passenger cars are restrictions and measures having equivalent subject to a registration tax levied at a effect, and internal taxation — and the particularly high rate. An association of car conditions of their application also differ. importers objects to the level of the tax and has challenged it in the national courts on a number of grounds, alleging in particular that it constitutes a measure having an effect equivalent to a quantitative restric- tion on imports, prohibited by Article 28 EC. In that connection, the Østre Landsret (Eastern Regional Court) wishes to know 3. Articles 23 to 31 EC concern free (i) whether such a tax is capable of being movement of goods. They provide for a caught by that prohibition and, (ii) if so, customs union and for a prohibition of whether it may none the less be justified on quantitative restrictions on trade. any of the grounds set out in Article 30 EC or accepted by the Court in its case-law.

4. In particular, Article 25 provides: 'Cus- toms duties on imports and exports and charges having equivalent effect shall be Relevant Treaty provisions prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.' 2

2. The EC Treaty contains three specific sets of provisions prohibiting obstacles to trade in goods between Member States: Articles 23 and 25; Articles 28 to 30, on which a ruling is sought; and Article 90. 5. Article 28 provides: 'Quantitative They apply to different types of obstacle — restrictions on imports and all measures respectively, customs duties and charges having equivalent effect, quantitative 2 — Article 25 is often referred to in tandem with Article 23, which contains the same prohibition but does not explicitly include 'customs duties of a fiscal nature'; for the sake of 1 —Originallanguage: English. simplicity I shall refer only to Article 25.

DE DANSKE BILIMPORTØRER

Background and procedure of 9% to take account of dealer margin, regardless of the margin actually taken by the dealer. It would thus seem that a car with a basic price equivalent to EUR 10 000 is likely to cost the purchaser some EUR 30 000 in all, including some EUR 17 000 in registration tax, and one whose basic price is EUR 30 000 would cost some EUR 10. All Member States except Germany, 107 000 in all, including some EUR 67 000 France, Luxembourg, Sweden and the in registration tax. United Kingdom levy a registration tax on the acquisition of new passenger cars. In Italy the amount is fixed, in Belgium and Portugal the tax base is the cubic capacity of the vehicle, and in the remaining States the basis of calculation is the price of the car. In Spain, Greece, the Netherlands, Austria and Finland, that basis is the price excluding VAT, whilst in Denmark and Ireland it already includes VAT. Percentage rates vary considerably between Member States, and may also vary according to other criteria (such as cubic capacity or 12. Such an overall tax burden often type of use) within each Member State. 5 exceeding 200% is unrivalled in any other Member State — the next heaviest rates of taxation, in Finland and Greece, do not attain 100% for an engine capacity of under 2000 cc and the proportion of regis- tration tax is less there because it is levied before VAT. In Luxembourg, by complete contrast, the only tax on the purchase price of (new) cars is 15% VAT, and Belgium, 11. Although variation is thus great and the Germany, Greece, France, Italy, Sweden differences in method of calculation make and the United Kingdom all levy under precise comparisons difficult, the amount 30% in all. and proportion of registration tax levied in Denmark are very significantly higher than in any other Member State. The tax is levied at a rate of 105% of purchase price up to a threshold determined each year — apparently some DKK 53 000 (EUR 7 122) in 2002 — and 180% of the remainder, where the price taken as tax base already includes 25% VAT and a flat-rate mark-up

17. The Commission's action was based solely on what is now Article 90 EC, and both parties agreed that the tax was inter- 15. Before 1990, the tax was applied to nal taxation for that purpose. However, the imported second-hand cars in a way which role of that article is to guarantee complete did not adequately reflect depreciation in neutrality of internal taxation as between their value. Considering the tax on both domestic and imported products. It cannot new and second-hand cars to be incom- be invoked against a tax imposed on patible with Community rules, the Com- imported products where there is no similar mission initiated Treaty-infringement pro- or competing domestic production; in par- ceedings against Denmark, culminating in ticular, in the absence of any discrimina- the Court's judgment of 12 December tory or protective effect, it does not provide 1990, 6 in which it was found that, by a basis for censuring the excessiveness of imposing a registration duty on imported the level of taxation which a Member State used motor vehicles generally based on an might adopt for particular products.

6 — Case C-47/88 Commission v Denmark [1990] ECR I-4509. 7 — 100% of the price of the vehicle when new for a vehicle less At the material time, the threshold between the 105% and than six months old, 90% of that price for all older vehicles. 180% rates was DKK 19 750. 8 — Paragraphs 5 to 14 of the judgment.

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22. The Østre Landsret, hearing the case, wishes to obtain guidance from the Court specifically on the interpretation of Article 28 EC; in its order for reference, it does not address the alternative claims based on the other provisions mentioned 20. It has brought proceedings against the in the preceding paragraph. It has stayed Danish Treasury in which it claims that the tax is unlawful in the light of a number of provisions of Community law, and claims a 11 — Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States reimbursement. relating to turnover taxes — Common system of value added tax: uniform basis of assessment, OJ 1977 L 145, p. 1. 12 — Commission Regulation (EC) No 1475/95 of 28 June 1995 on the application of Article [81(3)] of the Treaty to 9 — Case 31/67 Stier [1968] ECR 235. certain categories of motor vehicle distribution and servic- 10 — Paragraph 13 of the judgment. ing agreements, OJ 1975 L 145, p. 25.

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the proceedings and referred the following Assessment questions for a preliminary ruling:

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The concept covers any charge, however discriminatory internal taxation, and thus small, levied by reason of the fact that to guarantee complete neutrality of internal goods cross a frontier. 14 It includes charges taxation as between domestic and imported in connection with administrative formal- products. 16 ities such as inspections, unless the charges do not exceed the actual costs involved and unless the formalities in question are obli- gatory and uniform, are prescribed by Community law in the general interest of the Community and promote free move- ment of goods, in particular by neutralising obstacles which could arise from unilateral measures. 15 Otherwise, the prohibition is absolute and independent of any restrictive 28. As with Article 25, there is no provi- effect on trade — although it might be sion for taxation to escape the prohibition thought that some degree of restrictive on the basis of any de minimis rule or any effect is normally inherent in any such justifying ground. However, the prohib- charge. Where such a duty or charge exists, ition is not of taxation but of discrimi- however minute it may be, compliance with nation or protection so that it is enough to Article 25 can be achieved only by its eliminate the discriminatory or protective abolition. element in order to comply with the article. The situation is considered globally when deciding whether there is any discrimi- nation or protection, so that compensating factors may come into play — depending on the conditions of its application, a flat-rate tax may in fact give rise to discrimination, 17 and it would be possible to conceive of a charge applied only to imported products which in fact redresses an imbalance caused by the imposition of a different charge on domestic goods at an earlier stage in production.

effect. The concept is very broad 18 and 31. Clearly, in view of the different con- again (it is generally accepted) there is no sequences flowing from application of the de minimis rule. 19 However, in contrast to three articles, it is important to know with the situations governed by Articles 25 or certainty in each case which one of them is 90, if a national measure is in principle relevant. If a charge is caught by Article 25 caught by Article 28, it may none the less it must be abolished, whereas if it is caught be justified, and thus escape the prohib- by Article 90 then only the discriminatory ition, on any of the grounds set out in or protective element need be removed. A Article 30 EC and the Court's case-law. 2 0 measure caught by Article 28 may be permitted if it pursues one or more justified aims in a manner proportionate to their achievement, whereas the scope for justifi- cation under Articles 25 or 90 is very much more limited. On the other hand, those two articles apply only in a limited set of circumstances, always involving a charge or tax, whereas Article 28 is capable of applying to a very wide variety of measures which may hinder trade.

30. Compared to Articles 25 and 90 EC, Article 28 is clearly very broad in scope and serves something of the purpose of a safety-net. The Court has said that it covers in general all barriers to imports which are not already specifically covered by other 32. In those circumstances, it is not surpris- Treaty provisions. 21 In relation to those ing that the Court has repeatedly indicated articles, each of which constitutes a lex that there are barriers between the respect- specialis, it has been described as a lex ive scopes of the three articles, only one of generalis. 22 which can apply to any given measure.

obstacles covered by other, specific provi- law quoted in paragraph 33 above, it might sions of the Treaty... obstacles which are of fall to be examined under either Article 25 a fiscal nature or have an effect equivalent as a charge having an effect equivalent to to customs duties and are covered by that of a customs duty or Article 90 as a Articles [25 and 90] do not fall within the measure of internal taxation. prohibition laid down in Article [28].... The Court must consider, first, whether a measure... is covered by Articles [25 or 90], and only if it finds that it is not will it have to decide whether the measure in question comes within the scope of Article [28]...' 36. However, Article 25 applies only to charges levied by reason of the fact that goods cross a frontier. Here, although the tax is probably levied in practice shortly after importation, it seems that the charge- able event is the first registration for use on 34. And as regards the separate scopes of the road in Denmark rather than the cross- Articles 25 and 90, the Court has con- ing of the frontier. Although the Court does sistently held 24 that 'provisions relating to not have full details of the mode of charges having equivalent effect and those application, it may be presumed that the relating to discriminatory internal taxation tax would also apply if an enthusiast were cannot be applied together, with the result to build his own car in Denmark and seek that, under the system established by the to use it on the road there. Conversely, it Treaty, the same charge cannot belong to seems plausible that a vehicle imported both categories at the same time'. solely in order to be exhibited in a museum or, perhaps, used exclusively on private property might escape the levy. It has not in any event been suggested, either before this Court or — apparently — before the national court, that the tax is in fact a customs duty or charge having equivalent effect, that it is levied by reason of the fact that cars cross a frontier or that it should be Articles 25 and 90 EC in the present case assessed in the light of Article 25 EC.

40. It is true that DBI has alleged, in a comment on other aspects of its case before the national court, that the fact that a 38. The registration tax in issue here fixed-rate 9% dealer margin is automati- appears to meet that definition. It applies cally included when taxing new cars but systematically to categories of vehicles in not used cars and that spare parts and accordance with objective criteria. Vehicle repairs are not affected favours used cars registration taxes have moreover consist- (overwhelmingly a 'domestic product') over ently been assessed by the Court as internal new cars (all imported) and thus introduces taxation within the meaning of what is now a discrimination prohibited by Article 90. Article 90 EC. 2 6And in Commission v However, no other argument having been Denmark, 27the Danish tax was regarded submitted — and no question having been by both parties and by the Court as internal referred — in that regard, I do not think it taxation within the meaning of that article. appropriate for the Court to address that point.

39. However, in that judgment the Court very clearly decided that Article 90 EC was not infringed by the tax on new cars since there was no similar or competing domestic 41. At this stage, therefore, it seems necess- ary to conclude that, being part of a system 25 —Case 90/79 [1981] ECR 283, at paragraph 14 of the judgment. of internal dues rather than being levied by 26 — In, for example, a series of cases involving French motor- reason of the crossing of a frontier, the vehicle taxes; see, for a recent instance,"Case C-265/99 Commission v France [2001] ECR I-2305. registration tax in issue falls to be assessed 27 — Cited above in note 6. with reference not to Article 25 EC but to I - 6076

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47. It may also be justified on grounds of 50. It appears that the only case other than legal certainty. Commission v Denmark in which the Court may have alluded to the possibility of applying what is now Article 28 to exceptionally high internal taxation is Stier, which it cited in Commission v Denmark. It may be noted, though, that in Stier the Court did not refer specifically to that provision but more generally to free move- ment of goods, no restraint on which, 48. The three articles explicitly concern resulting from the imposition of particu- different types of measure and apply dif- larly high charges, can be presumed to exist ferent criteria to their assessment. It is 'when the rate of taxation remains within important that national authorities — and the general framework of the national affected individuals — should know what system of taxation of which the tax in criteria each specific measure must meet. question is an integral part'. 30 Indeed, it Member States must be able to determine seems plausible that the Court may have the areas in which their fiscal sovereignty been thinking rather of what is now may freely be exercised and aware of the Article 25 EC. 31 limits beyond which that sovereignty is constrained. Moreover, if a fiscal obstacle to trade falling within the scope of, but not within the prohibition laid down by, either Article 25 or Article 90 could be assessed under Article 28, it could in principle be allowed if it were justified on one of the grounds set out in Article 30 or in the Cassis de Dijon case-law. 29 If on the other hand it fell within either prohibition, it 51. It may also be noted that the Court's could not be allowed on those grounds. It statements did not in fact lead to examin- does not seem reasonable that a fiscal ation under Article 28 in either Stier or measure adopted by a Member State should Commission v Denmark and might thus be be thus assessed on the basis of an alter- viewed as adventitious in those contexts. native standard.

which might have been thought to fall 54. It thus seems to me desirable, for the under Article 90. In Commission v reasons expressed in paragraphs 45 to 49 France, 32 for example, as the Commission above, that a clear dividing line should be has pointed out, it examined a tax advan- maintained between the scopes of the tage granted to newspaper publishers in articles in question and that fiscal measures respect of publications printed in France should not — unless they in some way fall but not in other Member States, and outside the scope of both Article 25 and concluded that since such an advantage Article 90 — be e x a m i n e d u n d e r was likely to restrict imports it must be Article 28. regarded as a measure having an effect equivalent to a quantitative restriction pro- hibited by Article 28. And in Franzén 33 a national licensing system for importers of alcoholic beverages, under which traders had to pay a high fixed charge to apply for a licence and a high annual fee to keep the licence, was examined with reference to Article 28 and found incompatible. That Scheme and analysis of Article 28 EC system, the Court held, constituted an obstacle to the importation of alcoholic beverages from other Member States in that it imposed additional costs on such bever- ages, including payment of charges and fees for the grant of a licence.

55. Not only does the suggested assessment of an internal tax under Article 28 EC clash with the scheme of the Treaty, it also and even more significantly clashes in various ways with the scheme of that article itself and with the Court's analysis of it in consistent case-law.

61. However, on the one hand, the intro- duction of such a threshold is impossible to reconcile with the general view, reflected in the Court's consistent case-law, that there — Need for a threshold is not even a de minimis exception to Article 28; 35 and on the other hand, in defining such a threshold, it would seem impossible to meet the necessary require- ments of practical applicability and legal certainty without selecting some purely arbitrary criterion. 58. First, any tax on goods of which there is no domestic production must fall within the Dassonville definition as 'capable of hindering, directly or indirectly, actually or potentially, intra-Community trade'. A number of Member States have no car production, so that any registration taxes levied there would be concerned, whatever their level, and other taxes may be levied on 62. If such difficulties are to be overcome, many types of goods not produced domes- the proper route might seem to be via tically. clarification in the Treaty itself rather than judicial intervention, particularly since the authors of the Treaty appear to have intended the effects of internal taxation on intra-Community trade to be dealt with in accordance with the provisions of Article 90. 59. Yet to regard all such charges as falling within the scope of the prohibition in 34 — Commission v Denmark, paragraph 12 of the judgment. Article 28 would be a momentous inno- 35 — See for example the case-law cited in note 19 above; it may vation going far beyond what is suggested be noted that the criterion of uncertain and indirect effect referred to there would be of no assistance in a case such as in Commission v Denmark. the present.

67. If a charge compatible with Article 90 EC were caught by the prohibition in Article 28, its inherently economic nature 64. If the Danish car registration tax is to would appear, on the basis of the case-law be examined under Article 28 EC and if it cited, to disqualify it from any justification. proves to be caught by the prohibition in that article then the answer to that second question is, in principle, clear. Once a restriction falls to be assessed under Article 28, the various grounds of justifi- cation available under Article 30 or the Cassis de Dijon case-law may come into play. 68. Such an outcome would be perverse, requiring taxes not prohibited by Article 90 EC to run, none the less, the gauntlet of Article 28 without allowing the State to plead in justification the very aim for which they were levied, namely the raising of revenue, though it can scarcely be denied that the aim of financing public expendi- 65. However, as both DBI and the Com- ture by public taxation is itself justifiable. mission have pointed out, the Court has held that 'aims of a purely economic nature cannot justify a barrier to the fundamental principle of the free movement of goods'. 36

36 — Case C-120/95 Decker [1998] ECR I-1831, paragraph 39 of the judgment; see also Case 7/61 Commission v Italy [1961]ECR 317 at p. 329, Case 95/81 Commission v Italy 69. However, the case-law cited by DBI [1982] ECR 2187, paragraph 27, and Case 238/82 Duphar [1984] ECR 523, paragraph 23. and the Commission is not entirely con-

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71. That case-law seems to suggest that an economic objective, such as raising revenue to finance public spending, cannot itself 74. If they were to do so, however, it would constitute a justification under Article 30 or still be necessary for the levying of the tax the Cassis de Dijon case-law but that its to comply with the principle of propor- presence does not negate the existence of a tionality; it must be proportionate to the public-interest justification of that kind if objective to be achieved, 4 1and it cannot qualify for a derogation if the aims sought can be achieved as effectively using meas- 37 — Cited above in note 36. 38 — Case 72/83 Campus Oil [1984] ECR 2727, at paragraphs 35 and 36 or the judgment. 41 — See, for example, Case C-405/98 Gourmet International 39 — Cited above in note 36. Products [2001] ECR I-1795, at paragraph 28 of the 40 — Emphasis added. judgment.

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ures which are less restrictive of intra- 77. It may also seem anomalous — having Community trade. 42In that case, it would regard to the case-law on Articles 25 and be for the national court to verify com- 90 EC — that the most minute charge pliance with the principle. levied on the occasion of goods crossing a frontier infringes the Treaty whilst a very high internal tax in many cases does not, regardless of the respective effects of each on intra-Community trade.

Final considerations

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inter alia, to achieve a degree of restructur- reduction. I express no view on the content ing and approximation of national taxation of those recommendations but a legislative on motor vehicles with a view in particular initiative seems to me to be more appropri- to improving the functioning of the internal ate, for a matter of taxation, than a case- market and encouraging CO 2 emissions by-case approach under Article 28.

Conclusion

80. I am therefore of the opinion that the Court should give the following answer to the Østre Landsret:

A charge levied by a Member State on the first registration of a motor vehicle is not in principle a measure having an effect equivalent to a quantitative restriction on imports prohibited under Article 28 EC but falls to be assessed under Article 90 EC as internal taxation, unless the mode of imposition is such that it constitutes a customs duty or charge having equivalent effect within the meaning of Article 25 EC.