On Spetember 17, 1997, the ECJ issued its decision in the case C-28/96 (Fazenda Pública v Fricarnes)
Context: National charges on the marketing of meat — Charge having equivalent effect — Internal taxation — Turnover tax
Article in the EU VAT Directive
Article 33 of the Sixth VAT Directive
Without prejudice to other Community provisions, the provisions of this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties and, more generally, any taxes, duties or charges which cannot be characterized as turnover taxes.
Facts
- The Supreme Administrative Court of Portugal referred three questions to the Court of Justice for a preliminary ruling on the interpretation of Articles 9, 12, and 95 of the EC Treaty and Article 33 of the Sixth Council Directive.
- The questions arose in a case between the Portuguese Ministry of Finance and Fricarnes SA regarding non-payment of charges on the marketing of meat and offal, a charge for ruminants, and a charge for measures to combat swine fever.
- The charges were imposed by various Decree-Laws, and the revenue from them was initially collected by the National Board for Livestock Products and later transferred to the Agricultural Guidance and Stabilization Board (IROMA).
- IROMA was entrusted with various tasks related to the management and coordination of markets in agricultural and livestock products.
- Its responsibilities were later transferred to a new body, the National Institute for Intervention and Agricultural Guarantee (INGA), except for the management of slaughterhouses.
Questions
1. Are the ”charges” described, which have the characteristics described above, contrary to Article 95(1) and (2) of the Treaty of Rome?
2. Are they to be regarded as charges having an effect equivalent to a customs duty on imports, prohibited by Articles 9 and 12 of that Treaty?
3. Are they to be regarded as turnover taxes within the meaning of Article 33 of the Sixth Directive, without prejudice to Article 378 of the Act of Accession or any other Community legislation?
AG Opinion
N/A
Decision
- (a) Pecuniary charges under a general system of internal charges applying systematically to domestic and imported products according to the same criteria are covered in principle by Article 95 et seq. of the EC Treaty.
A charge levied without distinction on domestic and imported products constitutes a charge having an effect equivalent to a customs duty, prohibited by Articles 9 and 12 of the Treaty, if the revenue from it is intended to finance activities benefiting only the taxed domestic products and if the resultant advantages fully offset the burden which the latter products bear; if those advantages only partly offset the burden borne by the domestic products, the charge constitutes discriminatory internal taxation prohibited by Article 95 of the Treaty and must be reduced proportionally.
(b) If the activities financed by the charge benefit domestic products and taxed imported products but the former obtain a proportionally greater advantage from them, the charge constitutes, to that extent, a charge having an effect equivalent to a customs duty or discriminatory internal taxation, depending on whether the advantage accruing to the taxed domestic products fully or only partly offsets the burden which they bear. - It is for the national court to undertake the verifications necessary for determining how the contributions in question are to be characterized in law. In so doing it will consider:
(a) whether the revenue from the charge at issue, which is specifically intended to be used to combat diseases of livestock reared on national territory, benefits exclusively animals of national origin or, at least, benefits them proportionally more than imported animals;
(b) whether the revenue from all the charges at issue is used for stabilization only of trade with the other Member States in the products which bear the charges;
(c) whether the institutional integration of the organizations representing the economic agents concerned and the implementation of the national and Community aid schemes and financial and fiscal incentives in favour of the agri-foodstuffs industry and the distribution of agri-foodstuffs, to which part of the revenue from the charges in question is appropriated, benefit only domestic production or whether they benefit such production proportionally more than imported products. - A tax levied only on certain products, which is not proportional to the price of those products, is not charged at each stage of the production and distribution process and is not imposed on the added value of the products, is not in the nature of a turnover tax within the meaning of Article 33 of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment.
Summary
A charge which is applied only to certain products, which is neither proportional to the price of those products nor collected at each stage of the production and distribution process and which is not levied on the added value of the products, does not have the character of VAT within the meaning of art 401 VAT Directive.
Source
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