Avis juridique important

61985J0356

European Court reports 1987 Page 03299 Swedish special edition Page 00147 Finnish special edition Page 00147

Summary

1 . TAX PROVISIONS - INTERNAL TAXATION - TREATY PROVISIONS - PURPOSE - PROHIBITION OF TAXES CAPABLE OF INDIRECTLY PROTECTING OTHER PRODUCTS - FUNCTION - ASSESSMENT CRITERIA - DISCOURAGEMENT OF CONSUMPTION OF IMPORTED PRODUCTS (EEC TREATY, ART . 95 )

2 . TAX PROVISIONS - INTERNAL TAXATION - TAXES CAPABLE OF INDIRECTLY PROTECTING OTHER PRODUCTS - COMPETING PRODUCTS - BEER AND WINE - CRITERIA FOR ASSESSMENT OF THE COMPETITIVE RELATIONSHIP - EXISTENCE OF AN ALTERNATIVE CHOICE FOR THE CONSUMER (EEC TREATY, SECOND PARAGRAPH OF ART . 95 )

3 . TAX PROVISIONS - INTERNAL TAXATION - TAXES CAPABLE OF INDIRECTLY PROTECTING OTHER PRODUCTS - COMPETING PRODUCTS - BEER AND WINE - APPLICATION TO LIGHT WINES OF FRESH GRAPES FROM OTHER MEMBER STATES OF A HIGHER RATE OF VALUE-ADDED TAX THAN THAT APPLICABLE TO BEER - PERMISSIBILITY - CONDITIONS - LACK OF PROTECTIVE EFFECT (EEC TREATY, SECOND PARAGRAPH OF ART . 95 )

Summary

1 . THE PURPOSE OF ARTICLE 95, AS A WHOLE, IS TO ENSURE THE FREE MOVEMENT OF GOODS BETWEEN THE MEMBER STATES UNDER NORMAL CONDITIONS OF COMPETITION, BY ELIMINATING ALL FORMS OF PROTECTION WHICH MIGHT RESULT FROM THE APPLICATION OF DISCRIMINATORY INTERNAL TAXES AGAINST PRODUCTS FROM OTHER MEMBER STATES, AND TO GUARANTEE ABSOLUTE NEUTRALITY OF INTERNAL TAXES AS REGARDS COMPETITION BETWEEN DOMESTIC AND IMPORTED PRODUCTS . AGAINST THAT BACKGROUND, THE SECOND PARAGRAPH OF ARTICLE 95 IS MORE SPECIFICALLY INTENDED TO PREVENT ANY FORM OF INDIRECT FISCAL PROTECTIONISM AFFECTING IMPORTED PRODUCTS WHICH, ALTHOUGH NOT SIMILAR WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95 TO DOMESTIC PRODUCTS, ARE NEVERTHELESS IN A COMPETITIVE RELATIONSHIP WITH SOME OF THEM, EVEN IF ONLY PARTIALLY, INDIRECTLY OR POTENTIALLY . WHILST THE CRITERION INDICATED IN THE FIRST PARAGRAPH OF ARTICLE 95 CONSISTS IN THE COMPARISON OF TAX BURDENS, WHETHER IN TERMS OF THE RATE, THE MODE OF ASSESSMENT OR OTHER DETAILED RULES FOR THEIR APPLICATION, IN VIEW OF THE DIFFICULTY OF MAKING SUFFICIENTLY PRECISE COMPARISONS BETWEEN THE PRODUCTS IN QUESTION THE SECOND PARAGRAPH OF THAT ARTICLE IS BASED UPON A MORE GENERAL CRITERION, NAMELY THE PROTECTIVE NATURE OF THE SYSTEM OF INTERNAL TAXATION . IT FOLLOWS THAT ANY ASSESSMENT OF THE COMPATIBILITY OF A GIVEN TAX WITH THE SECOND PARAGRAPH OF ARTICLE 95 MUST TAKE ACCOUNT OF THE IMPACT OF THAT TAX ON THE COMPETITIVE RELATIONSHIP BETWEEN THE PRODUCTS CONCERNED . THE ESSENTIAL QUESTION IS THEREFORE WHETHER OR NOT THE TAX IS OF SUCH A KIND AS TO HAVE THE EFFECT, ON THE MARKET IN QUESTION, OF REDUCING POTENTIAL CONSUMPTION OF IMPORTED PRODUCTS TO THE ADVANTAGE OF COMPETING DOMESTIC PRODUCTS . 2 . IN VIEW OF THE SUBSTANTIAL DIFFERENCES IN THE QUALITY AND, THEREFORE, IN THE PRICE OF WINES, THE DECISIVE COMPETITIVE RELATIONSHIP BETWEEN BEER, A POPULAR AND WIDELY CONSUMED BEVERAGE, AND WINE MUST BE ESTABLISHED BY REFERENCE TO THOSE WINES WHICH ARE THE MOST ACCESSIBLE TO THE PUBLIC AT LARGE, THAT IS TO SAY, GENERALLY SPEAKING, THE LIGHTEST AND CHEAPEST VARIETIES, AND THAT IS ACCORDINGLY THE APPROPRIATE BASIS FOR MAKING FISCAL COMPARISONS . CONSEQUENTLY, ONLY COMMONLY CONSUMED WINES, WHICH IN GENERAL ARE CHEAP WINES, HAVE ENOUGH CHARACTERISTICS IN COMMON WITH BEER TO CONSTITUTE AN ALTERNATIVE CHOICE FOR CONSUMERS AND MAY THEREFORE BE REGARDED AS BEING IN COMPETITION WITH BEER FOR THE PURPOSES OF THE ABOVEMENTIONED PROVISION . 3 . A NATIONAL TAX SYSTEM UNDER WHICH A HIGHER RATE OF VALUE ADDED TAX IS CHARGED ON WINE OF FRESH GRAPES FROM OTHER MEMBER STATES THAN ON DOMESTICALLY PRODUCED BEER IS NOT INCOMPATIBLE WITH THE SECOND PARAGRAPH OF ARTICLE 95 OF THE TREATY PROVIDED, FIRST OF ALL, THAT THE DIFFERENCE BETWEEN THE RESPECTIVE SALE PRICES OF WINE AND BEER OF COMPARABLE QUALITY IS SO GREAT THAT THE DIFFERENCE BETWEEN THE RATES OF TAX APPLICABLE TO THE TWO PRODUCTS IS NOT CAPABLE OF INFLUENCING CONSUMER BEHAVIOUR AND, SECONDLY, THAT NO ACTUAL PROTECTIVE EFFECT IS APPARENT FROM THE COMPARATIVE STATISTICS FOR TRENDS IN WINE CONSUMPTION AND BEER CONSUMPTION IN THE MEMBER STATE CONCERNED .

Parties

IN CASE 356/85 COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY ITS PRINCIPAL LEGAL ADVISER HENRI ETIENNE, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF G . KREMLIS, A MEMBER OF ITS LEGAL DEPARTMENT, JEAN MONNET BUILDING, KIRCHBERG, APPLICANT, SUPPORTED BY FRENCH REPUBLIC, REPRESENTED BY GILBERT GUILLAUME, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE FRENCH EMBASSY, 9 BOULEVARD PRINCE HENRI, INTERVENER, V KINGDOM OF BELGIUM, REPRESENTED BY THE MINISTER FOR EXTERNAL AFFAIRS, ( AGENT : ROBERT HOEBAER, DIRECTOR AT THE MINISTRY OF FOREIGN AFFAIRS, EXTERNAL TRADE AND COOPERATION WITH DEVELOPING COUNTRIES, ASSISTED BY JACQUES DELBEKE, ADVISER AT THE MINISTRY OF FINANCE ), WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE BELGIAN EMBASSY, 4 RUE DES GIRONDINS, DEFENDANT, APPLICATION FOR A DECLARATION THAT, BY APPLYING A HIGHER RATE OF VALUE-ADDED TAX TO WINE OF FRESH GRAPES, AN IMPORTED PRODUCT, THAN TO BEER, A DOMESTIC PRODUCT, THE KINGDOM OF BELGIUM HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE EEC TREATY, THE COURT COMPOSED OF : LORD MACKENZIE STUART, PRESIDENT, T.*F . O' HIGGINS AND F.*SCHOCKWEILER ( PRESIDENTS OF CHAMBERS ), G . BOSCO, O . DUE, U . EVERLING, K . BAHLMANN, R . JOLIET AND J.*C . MOITINHO DE ALMEIDA, JUDGES, ADVOCATE GENERAL : J.*L . DA CRUZ VILACA REGISTRAR : B . PASTOR, ADMINISTRATOR HAVING REGARD TO THE REPORT FOR THE HEARING AND FURTHER TO THE HEARING ON 17 DECEMBER 1986, AFTER HEARING THE OPINION OF THE ADVOCATE GENERAL DELIVERED AT THE SITTING ON 26 FEBRUARY 1987, GIVES THE FOLLOWING : JUDGMENT

Grounds

1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 19 NOVEMBER 1985, THE COMMISSION OF THE EUROPEAN COMMUNITIES BROUGHT AN ACTION BEFORE THE COURT UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT BY APPLYING A HIGHER RATE OF VALUE-ADDED TAX TO WINE OF FRESH GRAPES, AN IMPORTED PRODUCT, THAN TO BEER, A DOMESTIC PRODUCT, THE KINGDOM OF BELGIUM HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 95 OF THE EEC TREATY . 2 BY ORDER OF 29 APRIL 1986, THE FRENCH REPUBLIC WAS GRANTED LEAVE TO INTERVENE IN SUPPORT OF THE COMMISSION' S CONCLUSIONS . 3 IT APPEARS FROM THE DOCUMENTS BEFORE THE COURT THAT UNDER THE BELGIAN LEGISLATION IN FORCE SINCE 1 JANUARY 1983, THE SUPPLY OF CERTAIN BEVERAGES INTENDED FOR DOMESTIC CONSUMPTION, AND IN PARTICULAR WINE OF FRESH GRAPES, IS SUBJECT TO A RATE OF VAT OF 25 %. BY CONTRAST, THE RATE OF VAT APPLICABLE TO SUPPLIES OF BEER INTENDED FOR DOMESTIC CONSUMPTION IS 19 %. SINCE THE KINGDOM OF BELGIUM DOES NOT PRODUCE WINE BUT DOES PRODUCE A SUBSTANTIAL QUANTITY OF BEER, IT WOULD APPEAR THAT A GREATER TAX BURDEN IS BORNE BY THE PRODUCT FOR WHICH INTERNAL DEMAND IS MET ALMOST ENTIRELY BY IMPORTS, WHEREAS THE PRODUCT OF WHICH SUBSTANTIAL QUANTITIES ARE PRODUCED IN BELGIUM BEARS A LESSER TAX BURDEN . 4 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR DETAILS OF THE BELGIAN LEGISLATION AT ISSUE, THE COURSE OF THE PROCEDURE AND THE SUBMISSIONS AND ARGUMENTS OF THE PARTIES, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT . 5 SINCE THE COMMISSION' S APPLICATION IS BASED ON THE VIEW THAT WINE AND BEER ARE COMPETING PRODUCTS OF THE KIND REFERRED TO IN THE SECOND PARAGRAPH OF ARTICLE 95 OF THE TREATY, WHICH CONCERNS INTERNAL TAXES OF A PROTECTIONIST NATURE, THE SCOPE OF THAT PROVISION MUST FIRST BE CONSIDERED . 6 IT HAS BEEN CONSISTENTLY HELD BY THE COURT THAT THE PURPOSE OF ARTICLE 95, AS A WHOLE, IS TO ENSURE THE FREE MOVEMENT OF GOODS BETWEEN THE MEMBER STATES UNDER NORMAL CONDITIONS OF COMPETITION, BY ELIMINATING ALL FORMS OF PROTECTION WHICH MIGHT RESULT FROM THE APPLICATION OF DISCRIMINATORY INTERNAL TAXATION AGAINST PRODUCTS FROM OTHER MEMBER STATES, AND TO GUARANTEE ABSOLUTE NEUTRALITY OF INTERNAL TAXATION AS REGARDS COMPETITION BETWEEN DOMESTIC AND IMPORTED PRODUCTS . 7 AGAINST THAT BACKGROUND, THE SECOND PARAGRAPH OF ARTICLE 95 IS MORE SPECIFICALLY INTENDED TO PREVENT ANY FORM OF INDIRECT FISCAL PROTECTIONISM AFFECTING IMPORTED PRODUCTS WHICH, ALTHOUGH NOT SIMILAR, WITHIN THE MEANING OF THE FIRST PARAGRAPH OF ARTICLE 95, TO DOMESTIC PRODUCTS, ARE NEVERTHELESS IN A COMPETITIVE RELATIONSHIP WITH SOME OF THEM, EVEN IF ONLY PARTIALLY, INDIRECTLY OR POTENTIALLY . 8 THE PARTIES DISAGREE AS TO THE APPLICATION OF THOSE CRITERIA TO THE BELGIAN LEGISLATION AT ISSUE . THEIR DIFFERENCE OF OPINION CONCERNS THE EXTENT OF THE COMPETITIVE RELATIONSHIP BETWEEN WINE AND BEER AND THE QUESTION WHETHER OR NOT THE TAX PROVISIONS AT ISSUE ARE PROTECTIVE IN NATURE .

15IT FOLLOWS THAT ANY ASSESSMENT OF THE COMPATIBILITY OF A GIVEN TAX WITH THE SECOND PARAGRAPH OF ARTICLE 95 MUST TAKE ACCOUNT OF THE IMPACT OF THAT TAX ON THE COMPETITIVE RELATIONSHIP BETWEEN THE PRODUCTS CONCERNED . THE ESSENTIAL QUESTION IS THEREFORE WHETHER OR NOT THE TAX IS OF SUCH A KIND AS TO HAVE THE EFFECT, ON THE MARKET IN QUESTION, OF REDUCING POTENTIAL CONSUMPTION OF IMPORTED PRODUCTS TO THE ADVANTAGE OF COMPETING DOMESTIC PRODUCTS .

16CONSEQUENTLY, IN CONSIDERING TO WHAT EXTENT A PROTECTIVE EFFECT ACTUALLY EXISTS, THE DIFFERENCE BETWEEN THE RESPECTIVE SELLING PRICES OF BEER AND WINE COMPETING WITH BEER CANNOT BE DISREGARDED . THE BELGIAN GOVERNMENT HAS STATED THAT THE PRICE OF A LITRE OF BEER, INCLUDING TAX, IS ON AVERAGE BFR 29.75, WHEREAS THE CORRESPONDING PRICE OF A LITRE OF ORDINARY WINE IS AROUND BFR 125, FOUR TIMES THE PRICE OF BEER, GIVING A DIFFERENCE IN PRICE PER LITRE OF BFR 95.25 . IN THE BELGIAN GOVERNMENT' S VIEW IT FOLLOWS THAT EVEN IF A SINGLE RATE WERE APPLIED TO BOTH PRODUCTS, THE PRICE DIFFERENCE BETWEEN THE TWO WOULD CONTINUE TO BE SUBSTANTIAL; THE REDUCTION IN THAT DIFFERENCE WOULD BE SO INSIGNIFICANT THAT IT COULD NOT INFLUENCE CONSUMER PREFERENCE .

17IN RESPONSE TO THAT ARGUMENT THE COMMISSION DREW ATTENTION TO THE FACT THAT IN TWO BELGIAN ESTABLISHMENTS NAMED BY IT THE WINE MOST COMMONLY CONSUMED IS SOLD AT BFR 61 PER LITRE, INCLUDING TAX . THE BELGIAN GOVERNMENT DID NOT CHALLENGE THAT FIGURE BUT STATED THAT, ACCORDING TO THE INFORMATION GIVEN TO IT BY ONE OF THOSE ESTABLISHMENTS, THE SALE OF WINES PRICED AT LESS THAN BFR 80, WHICH INCLUDE WINES SOLD IN FIVE-LITRE PLASTIC CONTAINERS AND COOKING WINES, ACCOUNT FOR ONLY ABOUT 15.6% OF TOTAL WINE SALES . ACCORDING TO THE BELGIAN GOVERNMENT, IT IS MORE APPROPRIATE TO COMPARE SUCH WINES WITH TABLE BEER WHICH IS SOLD FOR AS LITTLE AS BFR 17 PER LITRE .

18IN VIEW OF THOSE OBSERVATIONS, IT MUST BE CONCLUDED THAT THE COMMISSION HAS NOT SHOWN THAT THE DIFFERENCE BETWEEN THE RESPECTIVE PRICES FOR COMPARABLE QUALITIES OF BEER AND WINE IS SO SMALL THAT THE DIFFERENCE OF 6% BETWEEN THE VAT RATES APPLIED TO THE TWO PRODUCTS IS CAPABLE OF INFLUENCING CONSUMER BEHAVIOUR . THE COMMISSION HAS THUS NOT SHOWN THAT THAT DIFFERENCE GIVES RISE TO ANY PROTECTIVE EFFECT FAVOURING BEER INTENDED FOR DOMESTIC CONSUMPTION .

19NOR DO THE STATISTICS PRODUCED BY THE COMMISSION COMPARING TRENDS IN BEER AND WINE CONSUMPTION INDICATE THE EXISTENCE OF ANY PROTECTIVE EFFECT . THE COMMISSION STATED THAT BEER CONSUMPTION IN BELGIUM REACHED A PEAK IN 1973 AND HAS BEEN ON THE DECLINE SINCE THEN . BY CONTRAST, WINE CONSUMPTION HAS TRIPLED DURING THE LAST 20 YEARS; HOWEVER, FROM 1980 ONWARDS, THE GROWTH IN WINE CONSUMPTION SLOWED DOWN AND IT LEVELLED OFF IN 1982 AND 1983 .

20WHILST THOSE FIGURES SHOW THE GENERAL TRENDS IN THE CONSUMPTION OF THE PRODUCTS IN QUESTION, THEY DO NOT SHOW WITH ANY CERTAINTY THAT THERE IS ANY CAUSAL CONNEXION BETWEEN THE PATTERNS OF CONSUMPTION DESCRIBED AND THE INTRODUCTION IN 1977 OF A HIGHER RATE OF VAT FOR WINE . CONSEQUENTLY, THE COMMISSION CANNOT SUCCESSFULLY RELY UPON THEM TO SUPPORT ITS VIEW THAT THE PROGRESSIVE INCREASE IN WINE CONSUMPTION WAS SLOWED DOWN AND FINALLY BROUGHT TO A HALT PRECISELY BECAUSE OF THE INTRODUCION OF A HIGHER RATE OF VAT FOR WINE . MOREOVER, THAT VIEW DOES NOT APPEAR TO BE BORNE OUT BY THE FACT, POINTED OUT BY THE BELGIAN GOVERNMENT AND NOT CONTESTED BY THE COMMISSION, THAT BETWEEN 1978 AND 1983 THE RATE OF VAT APPLICABLE TO BEER WAS INCREASED ON THREE OCCASIONS WITHOUT THERE BEING IN THE MEDIUM TERM ANY RESTRICTIVE EFFECT ON THE CONSUMPTION OF BEER TO THE ADVANTAGE OF WINE .

21IT FOLLOWS THAT THE COMMISSION HAS NOT ESTABLISHED THAT THE TAX SYSTEM IN QUESTION ACTUALLY HAS A PROTECTIVE EFFECT . ACCORDINGLY, THE APPLICATION MUST BE DISMISSED .

Decision on costs

COSTS

22UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE, THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . SINCE THE COMMISSION OF THE EUROPEAN COMMUNITIES AND THE FRENCH REPUBLIC, WHICH INTERVENED IN ITS SUPPORT, HAVE FAILED IN THEIR SUBMISSIONS, THEY MUST BE ORDERED JOINTLY AND SEVERALLY TO PAY THE COSTS .

Operative part

ON THOSE GROUNDS,

HEREBY :

( 1 ) DISMISSES THE APPLICATION;

( 2 ) ORDERS THE COMMISSION OF THE EUROPEAN COMMUNITIES AND THE FRENCH REPUBLIC JOINTLY AND SEVERALLY TO PAY THE COSTS .