C-30/89 Commission v France

Judgment of the Court of 13 March 1990. - Commission of the European Communities v French Republic. - Action for failure to fulfil obligations - Sixth VAT Directive - Territorial scope - Transport between two points within national territory but occurring partly outside it. - Case C-30/89. European Court reports 1990 Page I-00691

Summary Parties Grounds Decision on costs Operative part

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1.Tax provisions - Harmonization of laws - Turnover taxes - Common system of value-added tax - Sixth Directive - Territorial scope - Transport services carried out between two points within national territory but partly outside it - Requirement to tax - None - Consequence - Exclusion from the own resources basis

( Council Regulation No 2892/77; Council Directive 77/388 )

2.Community law - Principles - Legal certainty - Rules capable of entailing financial consequences - Common system of value-added tax as a basis for the system of own resources of the European Communities

1.Since the Sixth Directive ( 77/388 ) on the harmonization of the laws of the Member States relating to turnover taxes contains no rule requiring the Member States to subject to VAT the parts of the journey constituting a transport service which take place beyond their territorial limits in international space, even where the transport is carried out, without a stop in another State, between two points within the same national territory, it cannot be interpreted as requiring the French Republic to tax transport operations between its mainland territory and the départements of Corsica as regards that part of the journey occurring in or above international waters . Consequently, that Member State was under no obligation to include, in accordance with Regulation No 2892/77, the turnover relating thereto in the VAT own resources basis .

2.Certainty and foreseeability are requirements which must be observed all the more strictly in the case of Community rules liable to entail financial consequences . That is the case with Community rules on VAT, given the Member States' obligation to make available to the Community as own resources a proportion of the amounts collected as VAT .

In Case C-30/89

Commission of the European Communities, represented by John Forman and Alain van Solinge, members of its Legal Department, acting as Agents, with an address for service in Luxembourg at the office of Georgios Kremlis, a member of its Legal Department, Wagner Centre, Kirchberg,

applicant,

v

French Republic, represented by Edwige Belliard, Sub-Director in the Directorate for Legal Affairs of the Ministry of Foreign Affairs, acting as Agent, and Claude Chavance, Principal Attaché in the Central Administration of the Directorate for Legal Affairs in the said ministry, acting as Deputy Agent, with an address for service in Luxembourg at the French Embassy, 9 boulevard du Prince-Henri,

defendant,

supported by

Kingdom of Spain, represented by Javier Conde de Saro, Director-General for Coordination in Matters involving Community Law and Institutions, and Rosario Silva de Lapuerta, abogado del Estado in the State Legal Department for matters before the Court of Justice, acting as Agent, with an address for service in Luxembourg at its embassy, 4-6 boulevard E . Servais,

intervener,

APPLICATION for a declaration that the French Republic has

( i)failed to comply with the obligation to make the necessary calculations, to forward a copy of those calculations and to make available to the Commission on 31 October 1986 the own resources unpaid for 1980 to 1985 for which it is accountable under Council Regulation ( EEC, Euratom, ECSC ) No 2892/77 of 19 December 1977 implementing in respect of own resources accruing from value-added tax the Decision of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own resources ( Official Journal 1977, L 336, p . 8 ) owing to the exemption granted in respect of transport between mainland France and the départements of Corsica as regards the part of the journey occurring outside the mainland territory, in breach 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 ( Official Journal 1977, L 145, p . 1 ), and

( ii)failed to comply with the obligation to pay interest on those sums, as from 31 October 1986, in accordance with Article 11 of Council Regulation ( EEC, Euratom, ECSC ) No 2891/77 of 19 December 1977 implementing the Decision of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own resources ( Official Journal 1977, L 336, p . 1 ),

THE COURT

composed of : O . Due, President, F . A . Schockweiler and M . Zuleeg, Presidents of Chambers, T . Koopmans, G . F . Mancini, T . F . O' Higgins, J . C . Moitinho de Almeida, F . Grévisse and M . Diez de Velasco, Judges,

Advocate General : C . O . Lenz

Registrar : J . A . Pompe, Deputy Registrar

having regard to the Report for the Hearing and further to the hearing on 24 January 1990,

after hearing the Opinion of the Advocate General delivered at the sitting on 14 February 1990,

gives the following

Judgment

Grounds

1By an application lodged at the Court Registry on 3 February 1989, the Commission of the European Communities brought an action under Article 169 of the EEC Treaty for a declaration that by exempting from value-added tax ( hereinafter referred to as "VAT "), in breach 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 ( Official Journal 1977, L 145, p . 1 ), transport between mainland France and the départements of Corsica as regards the part of the journey occurring outside the mainland territory, the French Republic had

( i)failed to comply with the obligation to make the necessary calculations, to forward a copy of those calculations and to make available to the Commission on 31 October 1986 the own resources unpaid for 1980 to 1985, for which it is accountable under Council Regulation ( EEC, Euratom, ECSC ) No 2892/77 of 18 December 1977 implementing in respect of own resources accruing from value-added tax the Decision of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own resources ( Official Journal 1977, L 336, p . 8 ), and

( ii)failed to comply with the obligation to pay interest on those sums, as from 31 October 1986, in accordance with Article 11 of Council Regulation ( EEC, Euratom, ECSC ) No 2891/77 of 19 December 1977 implementing the Decision of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own resources ( Official Journal 1977, L 336, p . 1 ).

2The Commission took the view that it was apparent from the provisions of the Sixth Directive, in particular Articles 2 and 3, that transport by sea and air where the places of departure and arrival are situated within French territory is to be regarded as carried out entirely within France and thus subject to VAT in so far as there is no stop in another country, regardless of whether or not the transport involves a journey in or above international waters .

3The Commission accepts that the French Republic may, on the basis of Article 28(3)(b ) and point 17 of Annex F to the Sixth Directive, continue to exempt from VAT transport between mainland France and the départements of Corsica as far as the part of the journey occurring outside the mainland territory is concerned .

4In that case, the French Republic must, however, in the Commission' s view, compensate for that exemption by including in the VAT own resources basis, in accordance with Article 9(2 ) of Regulation No 2892/77, the turnover corresponding to the whole of the transport operations in question, including the part relating to the journeys made in or above international waters between mainland France and Corsica .

5Consequently, on 6 May 1987 the Commission sent a letter of formal notice to the Government of the French Republic, thereby initiating the procedure provided for in Article 169 of the EEC Treaty .

6By letter dated 7 July 1987, the French Republic challenged the Commission' s view . It contended inter alia that the non-taxation of the part of transport operations between mainland France and Corsica occurring in international waters or in the airspace above such waters ensues from Article 9(2)(b ) and not from the transitional measures provided for in Article 28(3)(b ) of the Sixth Directive . The word "place" in Article 9(2)(b ) of the Sixth Directive is a geographical concept enabling the place of supply of a service to be determined so that the taxation of an economic activity carried on at that place may be attributed to the country which exercises territorial sovereignty over it . The high seas and international airspace are not part of the territory of a Member State so that, as far as transport between mainland France and Corsica is concerned, the part of the journey occurring in or above international waters does not take place in France . The French Republic accordingly concluded that the part of journeys between mainland France and Corsica occurring in or above international waters did not have to be included in the VAT own resources basis .

7Reference is made to the Report for the Hearing for a fuller account of the facts of the case, 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 .

8In order to determine whether the French Republic was bound to make available to the Commission, as own resources, the amount of VAT corresponding to the part of the journey taking place in or above international waters in the case of transport between its mainland territory and the départements of Corsica, it is necessary to consider the obligations which the Sixth Directive imposes on Member States .

9In that regard, it should be recalled first of all that, with a view to establishing in the Community a common system of VAT, the directive requires the Member States to adjust their national systems of VAT to the common rules which it lays down .

10Those rules govern, amongst other matters, the determination of the place where taxable transactions are effected, which, according to the seventh recital in the preamble to the Sixth Directive, is necessary in order to avoid conflicts concerning jurisdiction as between Member States .

11Thus, Article 2(1 ) of the Sixth Directive requires Member States to subject to value-added tax the supply of services "effected for consideration within the territory of the country ".

12Article 3(1 ) defines the territorial scope of the Sixth Directive as the area of application of the Treaty establishing the EEC as stipulated in respect of each Member State in Article 227 of the Treaty .

13As regards the supply of services, Article 9(1 ) of the Sixth Directive lays down the general rule that the place where a service is supplied "shall be deemed to be the place where the supplier has established his business or has a fixed establishment from which the service is supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides ".

14However, as regards transport services, Article 9(2)(b ) of the Sixth Directive provides, by way of exception to the general rule, that the place where such services are supplied "shall be the place where transport takes place, having regard to the distances covered ".

15It follows from those provisions that the only obligation which the Sixth Directive imposes on Member States in relation to the taxation of transport services is to tax services carried out within the territorial limits of the States .

16The specific attachment rule for transport services, which constitutes a derogation from the general rules for determining the place where a service is supplied laid down in Article 9(1 ) of the Sixth Directive, is thus intended to ensure that each Member State taxes transport services as regards the parts of the journey carried out in its territory .

17On the other hand, the Sixth Directive contains no rule requiring the Member States to subject to VAT the parts of the journey constituting a transport service which take place beyond the territorial limits of the Member States in international space . More particularly, no provision in the directive requires Member States to subject to VAT transport services corresponding to the distances covered in international space where the transport takes place without a stop in another Member State between two points in the same national territory .

18Although, as the Court held in the judgment of 23 January 1986 in Case 283/84 Trans Tirreno Express v Ufficio Provinciale IVA (( 1986 )) ECR 231, paragraph 21, the Sixth Directive, in particular Article 9(2)(b ), does not prohibit a Member State from charging to VAT a transport service effected between two points within its national territory, even where a part of the journey is made outside its national territory, provided that it does not encroach on the tax jurisdiction of other States, it may not be inferred from that ruling that the Sixth Directive has the effect of requiring the Member States to subject to VAT transport operations carried out within their territory in respect of that part of the journey occurring in or above international waters . The only consequence which may be inferred from the general aim of the Sixth Directive is that Member States who make use of their freedom to extend the scope of their tax legislation beyond their strict territorial limits are bound, when taxing such operations, to observe the common rules laid down by the directive .

19In those circumstances, it must be concluded that the wide interpretation advocated by the Commission in the present case has no foundation in the Sixth Directive itself .

20Such an interpretation is, moreover, unlikely to create a common system of VAT . Even if, in accordance with the Commission' s argument, Member States were required to tax the part of the journey taking place in or above international space in the case of a transport operation directly connecting two points of the same national territory, there would be no uniformity in the system of VAT since the interpretation advocated by the Commission would leave open the case of a transport operation effected between two points in different Member States .

21In support of its argument the Commission also referred to the Member States' common view which it purports to infer from the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties ( Official Journal 1985, L 302, p . 23, hereinafter referred to as "the Act "). The Act added a point 15 to Article 15 of the Sixth Directive allowing the Portuguese Republic to treat as international transport, and therefore not to subject to VAT, sea and air transport between the islands making up the autonomous regions of the Azores and Madeira and between those regions and the mainland ( see Annex I, V, point 2 of the Act ). However, according to the second paragraph of Article 374 of the Act, "the derogation referred to in point 15 of Article 15 of the Sixth Directive ... shall not affect the amount of duties due (( as own resources from VAT ))".

22In that regard, it is to be observed first of all that no provisions similar to those applying to the Portuguese Republic have been provided for in the case of the Kingdom of Spain, which is, however, in an identical situation to that of the Portuguese Republic as far as sea and air transport between the mainland and the islands under its sovereignty is concerned . It must therefore be accepted that the provisions of the Act referred to by the Commission were adopted with the aim of resolving specific problems which accession entailed for the Portuguese Republic . In those circumstances, it is not possible to infer from those provisions an intention on the part of the Member States to give a certain interpretation to the wording of a provision of pre-existing secondary law .

23In addition, it must be remembered that the Court has repeatedly held that certainty and foreseeability are requirements which must be observed all the more strictly in the case of rules liable to entail financial consequences ( see the judgments of 15 December 1987 in Case 326/85 Netherlands v Commission (( 1987 )) ECR 5091, paragraph 24, and of 22 February 1989 in Joined Cases 92/87 and 93/87 Commission v France and the United Kingdom (( 1989 )) ECR 405, paragraph 22 ). Owing to the obligation on the Member States to make available to the Community as own resources a proportion of the amounts collected as VAT, the Community rules on VAT have important financial consequences for the Member States .

24Since it follows from the foregoing arguments that the Sixth Directive cannot be interpreted as requiring the French Republic to make transport operations between its mainland territory and the départements of Corsica subject to VAT as regards that part of the journey occurring in or above international waters, France was under no obligation to include, in accordance with Regulation No 2892/77, the turnover relating thereto for the years 1980 to 1985 in the VAT own resources basis and to make those sums available to the Commission on 31 October 1986 or to pay interest for late payment on such sums from 31 October 1986 pursuant to Article 11 of Regulation No 2891/77 .

25In those circumstances, it must be concluded that the Commission has not established that the French Republic has failed to fulfil its obligations under the provisions of Regulations Nos 2891/77 and 2892/77 . The Commission' s application must therefore be dismissed .

Costs

Costs

26Under Article 69(2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs . Since the Commission has been unsuccessful in its submissions, it must be ordered to pay the costs, including those of the intervener .

Operative part

On those grounds,

THE COURT

hereby :

( 1)Dismisses the application;

( 2)Orders the Commission to pay the costs, including those of the intervener .

OPINION OF MR ADVOCATE GENERAL LENZ :> delivered on 14 February 1990 Mr President Members of the Court

A — Facts

1The proceedings to be discussed today are concerned with three questions concerning the Community's own resources. The first question is whether, in so far as they are effected in international waters, transpon operations between mainland France and the of Corsica is départements subject to value-added tax pursuant to Directive 77/3 8 8/EEC. ·

2The second question is whether France, since it did not take such action (or rather because it maintained the pre-existing rules on exemption from tax for transport operations between mainland France and Corsica), has to pay compensatory amounts as part of making available the own resources of the Communities for the years 1980 to 1985 (more particularly because the exemption operated could at most be based on Article 28 of Directive 77/388 in conjunction with point 17 of Annex F thereto).

3The third question is whether interest is chargeable on such payments, which have so far not been made, from 31 October 1986

* Original language: German.

1 — OJ 1977, L 145, p. 1.

(when they ought to have been made available to the Commission in accordance with its request).

4As the Court is aware, the Commission takes the view that such transport operations, where the places of departure and arrival are in French territory and there is no place of call in the territory of other Member States, are to be regarded as supplies of services within the territory (within the meaning of Article 2 of Directive 77/388) and thus fully liable to tax with a corresponding effect upon the making available of the Communities' own resources pursuant to Article 2 of Regu2 lation (EEC) No 2892/77. Since the French Republic takes a different view (which, moreover, as we have seen, is shared by the Kingdom of Spain), proceedings were commenced under Article 169 of the EEC Treaty in which the Commission claims a declaration that by failing to comply with the obligation to calculate unpaid own resources for the years 1980 to 1985 and for previous years, by failing to comply with the obligation to send a copy of the calculation to the Commission, by failing to comply with the obligation to make available to the Commission a sum equivalent to the own resources in question by exempting from value-added tax, in breach of the Sixth Directive on value-added tax, the international part of transport operations between mainland France and the dépar-

2 — OJ 1977, L 336, p. 8.

CCOOMMMMIISSSSIIOONN vv FFRRAANNCCEE CCOOMMMMIISSSSIIOONN vv FFRRAANNCCEE lements of Corsica and by failing to comply with the obligation to pay interest for late payment on those sums until the date they are made available to the Commission under 3 Article 11 of Regulation No 2891/77 and with effect from the dates referred to by the Commission, France has failed to fulfil its obligations under the EEC Treaty.

B — In my view, that claim should be judged as follows:

5(1) It must be admitted immediately that, according to the wording of Directive 77/388, it is not obvious that the Commission's view is correct. On the contrary, it tends to support the view of France and Spain, for Article 2 states (inter alia) that the supply of services effected for consideration within the territory of the country by a taxable person acting as such shall be subject to value-added tax whilst Article 3 defines the 'territory of the country' as the area of application of the Treaty establishing the European Economic Community as stipulated in respect of each Member State in Article 227 (which certainly does not include international waters).

6(2) It must further be recognized that the two judgments mainly referred to in the proceedings (namely the judgments in Cases 5 168/84" and 283/84 ) do not directly either support the Commission's view or make the

33 —— OOJJ 11997777,, LL 333366,, pp.. 11 33 —— OOJJ 11997777,, LL 333366,, pp.. 11

4 — Judgment of 4 July 1985 in Case 168/84 Gunter Berkholz v 4 — Judgment of 4 July 1985 in Case 168/84 Gunter Berkholz v 44 —— JJuuddggmmeenntt ooff 44 JJuullyy 11998855 iinn CCaassee 116688//8844 GGuunntteerr BBeerrkkhhoollzz vv Finanzamt Hambur -Mitte-Allitadt[i985] ECR 2251. Finanzamt Hambur -Mitte-Allitadt[i985] ECR 2251. FFiinnaannzzaammtt HHaammbbuurr --MMiittttee--AAlllliittaaddtt[[ii998855]] EECCRR 22225511.. 55 —— JJuuddggmmeenntt oo(( 2233 JJaannuuaarryy 11998866 iinn CCaassee 228833//8844 TTrraamm 55 —— JJuuddggmmeenntt oo(( 2233 JJaannuuaarryy 11998866 iinn CCaassee 228833//8844 TTrraamm

TTiirrrreennoo EExxpprreeiissvv UUffffiicciioo PPrroovviinncciiaallee [[11998866]] EECCRR 223311

TTiirrrreennoo EExxpprreeiissvv UUffffiicciioo PPrroovviinncciiaallee [[11998866]] EECCRR 223311

defendant's position stronger, for they clearly do not deal with the problem which now concerns us and which did not have to be dealt with at the time.

7Indeed, in the judgment in Case 168/84 (concerning the supply of services on board sea-going vessels) the Court merely stated that Article 9 of Directive 77/388 does not limit the power of the Member States to tax services supplied outside their territorial jurisdiction (which simply means that Member States are afforded such a possibility without having any obligation in that regard).

8Similarly, the judgment in Case 283/84 (which concerned sea transpon between the Italian peninsula and Sardinia, which is subject to value-added tax for the whole distance) the Court simply stated — in response to the question raised in the proceedings whether a Member State can impose such taxation or whether it is excluded under the Value-Added Tax Directive — that the directive, in particular Article 9(2)(b) thereof, in no way restricts the freedom of the Member States to extend the scope of their tax legislation beyond their normal territorial limits (which again means that they have such a possibility but no obligation to that effect).

9I would add in parenthesis that the fact that elsewhere in the German version of the judgment it is stated: 'Im Falle derartiger Beförderungen, die als reine Inlandsbeförderungen anzusehen sind. . . ' (in the case of such transport operations, which are to be regarded as purely internal. .. ) is, on the other hand, obviously of no significance, for that wider definition is no doubt due to a translation error as a comparison with the Italian text (Italian was the language of the case) and the French text of the judgment shows 'nel caso dei trasporti suddetti, che possono essere considerati come trasporti puramente interni. . . '; 'dans l'hypothèse de tels transporte qui peuvent être considérés comme des transports purement internes ... ' ).

10(3) However, it will be observed — and this is the reason why those judgments should not be completely disregarded in the present case — that in Case 168/84 it was stated that Article 9 was designed to secure a rational delimitation of the respective spheres of application of national value-added tax legislation (which justifies the conclusion that too much importance should not be placed on the wording adopted in it so far as it is concerned simply with the definition in the scope of the directive) and there it was also a case of services which took place outside the territorial jurisdiction of the Member States 'on board sea-going ships over which they have jurisdiction' (which would suggest a modification of the territorial principle on which France and Spain put so much weight).

11In the judgment in Case 283/84, too, reference is made (as in the judgment in 6 Case 51/88 ) to the object of Article 9 of the directive of delimiting the spheres of application of national value-added tax legislation in order to avoid conflicts of jurisdiction where a supply of services may

6 — Judgment of 15 March 1989 in Case 51/88 Hammann v Finanzamt Hamburg-Eimsbüttel[1989] ECR 767. be covered by the laws of more than one Member State.

12The Court also emphasized that no conflict of jurisdiction arises where the ship effecting the transport plies between two points within a single Member State and where the route chosen, even if part of it is outside the national territory, does not pass through any area falling under the national sovereignty of another State. In the case of such transport operations, which may be regarded as purely internal, the territorial scope of value-added tax must therefore be determined on the basis of the basic rules laid down in Articles 2 and 3 of the directive and not on the basis of Article 9. That shows that for the answer to the present case, in which Article 9(2)(b) (to the wording of which Spain's representative attached special importance) does not at all apply, it is more appropriate to refer to the general rules of the Treaty on the territorial scope of Community law.

13Moreover, on the basis of those judgments, since they stress that the Member States are at liberty to tax operations in international waters, it can easily be shown that the French Government's argument derived from international law on the limits of national sovereignty certainly does not carry much weight.

14(4) While the judgments cited already show that it is not appropriate, in determining the scope of the Treaty rules, to attach too much importance to the territorial principle upon which France and Spain relied so much, that conclusion, which is important for the present case, may be supported by reference to other judgments which make it clear that the principles of the Treaty apply in certain cases also to activities outside the area of the Treaty and thus that the scope of Community law should not be viewed too narrowly.

15Let me cite first the judgment in Case 7 167/73, according to which a provision of the French code du travail maritime requiring the crew of a ship to consist of a certain proportion of French members was held to be incompatible with Article 48 of the Treaty and Regulation (EEC) No 8 1612/68 enacted thereunder. Since it was stressed that sea transport was subject to the general rules of the Treaty and therefore any discrimination in relation to access to work and conditions of employment was prohibited, it would be difficult to accept that that rule applies only while the ships concerned are within the territorial waters of the Member States.

16The principle that the temporary exercise of activities (here transport through international waters) does not suffice to exclude the application of Community law (here the Value-Added Tax Directive) if the activity has a sufficiently close link with the territory of the Community (here the ports of departure and arrival lie within the same Member State) is confirmed by the 9 judgment in Case 237/83. In that judgment Community social law was

7 _ Judgment of 4 April 1974 in Case 167/73 Commiato v

French Republic [\97*] ECR 359 French Republic [\97*] ECR 359 FFrreenncchh RReeppuubblliicc [[\\9977**]] EECCRR 335599

8 _ OJ, English Special Edition 1968 (II), p. 475.

9 — Judgment o( 12 Julv 1984 in Case 237/83 SARL ľrodeU v CCaannssee pprriimmaaiirree dd''aassssuurraannccee mmaallaaddiiee ddee FFaannss [[11998844]] CCaannssee pprriimmaaiirree dd''aassssuurraannccee mmaallaaddiiee ddee FFaannss [[11998844]] ECR 3153 declared applicable to an activity which an employee from a Member State exercised in a non-member country on behalf of an undertaking from a different Member State.

17Secondly, I refer to the judgment in , 0 Case 9/88 (which concerned the question whether a Portuguese worker employed on a Netherlands ship was covered by the Community principle of equal treatment in the exercise of his activity). I consider it very significant that in that case the Court, having regard to the case-law according to which employment outside the territory of the Community may be regarded as employment within the territory of a Member State if there is a sufficiently close connection with that territory, held that a Portuguese worker employed on a Netherlands ship was to be regarded as employed within the territory of that Member State if there were sufficient links with it (determined by the registration of the ship, the shipowner's place of establishment in the Netherlands, the worker's recruitment in the Netherlands, the application of Netherlands law to the contract of employment and the application of Netherlands social security law as well as Netherlands income tax law to the worker).

18(5) Thus, while the considerations suggested by the judgments cited above (as regards the modification of the territorial principle and the correct interpretation of the spacial scope of the rules of the Treaty) militate against the view put forward by

10 — Judgment of 27 September 1989 in Case 9/88 Mano Lopes ddaa VVeeiiggaavv SSttaaaattsssseeccrreettaarriiss vvaann lliiiissiimmee [[11998899]] EECCRR 22998899 ddaa VVeeiiggaavv SSttaaaattsssseeccrreettaarriiss vvaann lliiiissiimmee [[11998899]] EECCRR 22998899 France and Spain regarding the interpretation of the Value-Added Tax Directive, some other arguments reinforce the view-that the Commission is right.

19(a) I am not thinking so much of the (certainly interesting) fact mentioned by the Commission that at the 16th session of the Advisory Committee on Value-Added Tax a very large majority of the delegations was in favour of taxing transport services such as those involved in this case. For, as the Commission admitted and France pointed out, this occurred simply for practical reasons; on the other hand, it was not stated that that conclusion was binding in law.

20(b) However, the reference to the aim of harmonization pursued by Directive 77/388, which includes, as the title of the directive shows, a uniform basis of assessment, seems to me to be important.

21If that is borne in mind — and in that regard, as the Commission rightly stated, it should not be overlooked that we are concerned with complete harmonization and that all exemptions (as stated in the n judgment in Case 235/85 ) 'must be expressly provided for and precisely defined' (paragraph 19) — the conclusion is inescapable that it is incompatible with those aims (as already stated in the Opinion in Case 283/84) for the taxation of transport operations between two places in a Member State to differ depending on whether they take place by land or by sea and, in the latter case, again depending on whether the

11 — Judgment of 26 March 1987 in Case 235/85 Commission v Kingdom of lhe Netherlands [1987] ECR 1471.

transport operations take place in coastal waters or outside the 12-mile zone (which, moreover, would be difficult to check and would not be consistent with the principle, expressed in the 17th recital of the directive, of simplifying the levying of tax or with the aim of avoiding fraud or tax avoidance). Even if it has to be admitted that such considerations are irrelevant as regards transport operations to Corsica, their relevance in other situations, which may easily be imagined in certain Member States, cannot be disputed and it is reasonable to take them into account in interpreting the directive, which is of general application. It is accordingly apparent that the directive is governed by the principle that a transport operation effected between two places in a Member State without entering foreign territory is to be regarded as a supply of services effected within the territory of the country.

22(c) In addition, there is the guidance to be obtained from the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties.

23As is known, the Commission referred in that respect to Section V 'Taxation' in Annex I, which provided that Article 15 of Directive 77/388 was to be supplemented so that the Portuguese Republic might treat sea and air transport between the islands making up the autonomous regions of the Azores and Madeira and between those regions and the mainland in the same way as international transport. Secondly, it referred to the fact that, according to Article 374 of the Act, the supplementary provision just mentioned was not to affect the amount of duties owed as own resources from value-added tax.

24Accordingly, it must indeed be assumed that in adopting those provisions all the States concerned accepted that such transpon operations were, for the purposes of the Value-Added Tax Directive, national transport operations subject to value-added tax. Had it been clear that the directive was to be interpreted in the way advocated by France and Spain (namely to the effect that the Member States are at liberty to tax or exempt such transport operations), the addition to the Act of Accession would not have been necessary or (this relates to the observation made by the Spanish Government at the hearing that the addition to Article 15 of the Value-Added Tax Directive was necessary because journeys in territorial waters were also to be covered) it could have been limited to treating transport in coastal waters as international transport.

25In my opinion, that analysis cannot be contradicted by the argument that the purpose of such special provisions in the acts of accession is to resolve specific problems connected with the accession of a Member State and that therefore more far-reaching consequences should not be drawn from them. When, as happens in Section V of Annex I to the Act of Accession in relation to Article 15 of the Value-Added Tax Directive, an addition and amendment of an existing system is adopted, the incidental effect of this is to reveal how the system is to be understood on a particular point; in a way it provides an authentic interpretation of existing rules and not only the solution of a specific accession problem.

26Moreover, as far as Article 374 of the Act of Accession is concerned, it is not at all apparent why a payment obligation regarding value-added tax for transport services to the places mentioned had to be imposed on Portugal only. In view of the large distances in question, between the mainland and the islands belonging to it, and the economic strength of the Member State concerned, an exemption would have been more in line with expectations.

27In this regard, therefore, it cannot just be a question of a particular problem being resolved; it is more likely that a principle valid in general for Member States is being made clear.

28(6) I would therefore take the view that, after carefully weighing all the relevant aspects, it must be recognized that the Commission has put forward the better arguments for its view. The Value-Added Tax Directive therefore requires taxation of the entire stretch between mainland France and Corsica and an exemption is conceivable only under Article 28(3)(b) in conjunction with Annex F to the Value-Added Tax Directive (on which France wished to rely only in so far as transport within coastal waters was concerned).

29Consequently, it is also clear (on this conclusion there was basically no dispute) that the own resources due as value-added tax must be calculated accordingly, pursuant to Regulation No 2892/77, and made available to the Community.

30It is also clear that, since this did not happen in spite of the Commission's request, interest is payable under Article 11 of Regulation (EEC) No 2891/77. A late credit entry is, of course, sufficient in order for interest to become due. However, according

C Conclusion C Conclusion CC — CCoonncclluussiioonn

31(7) The Commission's application to the case-law of the Court, the reason for the lateness of the credit entry does not u matter (judgment in Case 303/84 ) nor, in particular, the fact that the Member State concerned did not share the Commission's 13 view of the law (Case 93/85 ) that is to say that, as was stressed in the present case, it acted in good faith upon a different interpretation of Community law.

must accordingly be upheld and the declaration made as requested. The French Republic must also be ordered to pay the costs as claimed.

12 — Judgment of 20 March 1986 in Case 303/84 v Commission Federal Republic of Germany [1986] ECR 1171.

13 — Judgment of 18 December 1986 ¡n Case 93/85 Commission v United Kingdom [1986] ECR 4011.