On March 31, 1992m the ECJ issued its decision in the case C-200/90 (Dansk Denkavit and Poulsen Trading).
Context: Article 33 of the Sixth VAT Directive – Direct effect – Turnover tax – Law on the employment market contribution.
Article in the EU VAT Directive
Article 33 of the Sixth VAT Directive (Article 401 of the EU VAT Directive 2006/112/EC).
Article 401 (Other taxes, duties and charges)
Without prejudice to other provisions of Community law, 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 or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.
Facts
- The Østre Landsret referred four questions to the Court for a preliminary ruling on the interpretation of various articles of the EEC Treaty and the Sixth Council Directive in a case between two Danish companies and the Danish Ministry for Fiscal Affairs regarding a levy introduced in 1988.
- The levy was imposed on taxable persons for VAT purposes and other undertakings to finance certain social expenditure previously borne by employers.
- The plaintiffs argued that the levy was a turnover tax prohibited by the Sixth Council Directive or a charge having equivalent effect prohibited by the EEC Treaty, or alternatively, discriminatory internal taxation caught by Article 95 of the EEC Treaty. They sought reimbursement of the sums they had paid by way of the levy.
Questions
- 1. Should Article 33 of the Sixth Council Directive 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 (77/388/EEC) be interpreted as precluding a Member State from charging a fiscal levy that has the following characteristics:
- (i) The levy is paid both on activities that are subject to VAT and on any other business activities which consist in the supply of goods or services for consideration, and is calculated according to criteria laid down by law, which give the tax authorities no discretion and make no distinction between domestically-produced and imported goods.
- (ii) For undertakings which are taxable persons for VAT purposes the same basis of assessment is used as for VAT, since the levy, like VAT, is charged at each stage as a percentage of the undertaking’s sales (excluding exports) with deduction of purchases on which the levy has been paid at an earlier stage.
- (iii) In contrast to the VAT system, the levy is not paid on importation, but is, however, paid on imported goods on the full sale price at the first sale by a domestic undertaking.
- (iv) In contrast to VAT, the levy need not be indicated separately on invoices.
- (v) The levy is settled with the customs authorities according to the same principles as VAT, and the customs authorities thus make refunds in the event of a negative basis of assessment.
- (vi) The levy is charged alongside the existing VAT system, since it replaces neither wholly nor in part the amount of VAT to be paid under the VAT legislation in force, and the levy is itself included in the price on which VAT is calculated.
- 2. With regard to a national levy with the characteristics described in the first question, does Article 33 of the said directive create rights for the benefit of
individuals which national courts are obliged to protect? - 3. If the first or second questions, or both, are answered in the negative, should the prohibition of charges having an effect equivalent to customs duties in
Article 9 et seq. of the EEC Treaty be interpreted as meaning that a tax scheme such as that described in the first question is, as far as imported products are
concerned, contrary to that prohibition because the levy in respect of undertakings which are taxable persons for VAT purposes is calculated on the VAT
basis without deduction of the value of imported products? - 4. If the third question is answered in the negative, should Article 95 of the EEC Treaty be interpreted as meaning that the tax scheme, in particular on the ground of the matters referred to in the third question, is contrary to the prohibition of discriminatory domestic taxation laid down in the said provision?
AG Opinion
1. Article 33 of the Sixth Directive precludes the introduction and maintenance in force of a national tax such as the ’employment market contribution’ introduced by Danish Law No 840 of 18 December 1987.
2. In prohibiting the introduction and maintenance in force of charges which can be characterized as turnover taxes, Article 33 of the Sixth Directive confers on individuals rights which may be relied upon before the national courts.
3. A national charge such as the contested levy, which is borne by both domestic products and imported products, does not fall within the scope of Article 9 et seq. of the Treaty.
4. A national tax system may be considered compatible with Article 95 of the Treaty only if it is established that its structure is such as to preclude discrimination against imported products in any circumstances whatsoever. It is for the national court to ascertain whether the rules governing the contested levy are such as to preclude discrimination against imported products in all cases.
Decision
- 1. Article 33 of the Sixth Council Directive of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system
of VAT: uniform basis of assessment (77/388/EEC) precludes the introduction or maintenance of a fiscal levy which:- is paid both on activities subject to VAT and on other industrial or commercial activities which consist in the supply of services for consideration;
- is charged, in the case of undertakings which are taxable persons for VAT purposes, on the same basis of assessment as that used for VAT, in other words as a percentage of the volume of sales after deduction of purchases;
- unlike VAT, is not paid on importation, but is charged on the full sale price of imported goods at the first sale in the Member State concerned;
- unlike VAT, does not have to be indicated separately on invoices; and
- is charged alongside VAT.
- 2. Article 33 of the Sixth Council Directive 77/388/EEC creates rights for the benefit of individuals which the national courts are obliged to protect.
Summary
The Sixth Council Directive of 17 May 1977 on turnover taxes prohibits the implementation or continuation of a fiscal levy that is charged on both VAT and other commercial activities, is assessed in the same way as VAT, is not paid on imports but is charged on the full sale price of imported goods, does not have to be indicated separately on invoices, and is charged alongside VAT. This directive also establishes rights for individuals that must be protected by national courts.
Source
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