C-39/85 Bergeres-Becque v Service interrégional des douanes

JUDGMENT OF THE COURT (First Chamber)

23 January 1986 *

In Case 39/85

REFERENCE to the Court under Article 177 of the EEC Treaty by the tribunal d'instance [District Court], Bordeaux, for a preliminary ruling in the proceedings pending before that court between

G. Bergeres-Becque

and

Chef de service interrégional des douanes [Head of the Inter-Regional Customs Service], Bordeaux

on the interpretation of Article 95 of the EEC Treaty,

THE COURT (First Chamber)

composed of: R. Joliet (President of the Chamber), G. Bosco and T. Koopmans, Judges,

Advocate General: M. Darmon Registrar: H. A. Rühl, Principal Administrator

after considering the observations submitted on behalf of

Mrs Bergeres-Becque, the plaintiff in the main proceedings, by O. de Blay de Gaix, of the Bordeaux Bar,

the Netherlands Government, by E. F. Jacobs, acting as Agent,

the French Government, by R. Abraham, acting as Agent,

the Commission of the European Communities, by its Legal Adviser, J. F. Buhl,

* Language of the Case: French.

after hearing the Opinion of the Advocate General delivered at the sitting on 28 November 1985,

gives the following

JUDGMENT

(The account of the facts and issues which is contained in the complete text of the judgment is not reproduced)

Decision

Grounds

1By a judgment of 24 January 1985, which was received at the Court on 11 February 1985, the tribunal d'instance de Bordeaux referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty several questions on the interpretation of Article 95 of the Treaty and on the provisions of the Sixth Council Directive, No 77/388 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, L 145, p. 1).

2The questions were raised in proceedings relating to value-added tax charged by the French customs administration on a second-hand vehicle imported from Belgium by a national of that Member State residing in France. The taxpayer, who had received the vehicle as a gift, challenged the manner in which the VAT levied on importation was calculated, the customs administration having charged the rate applicable in France, namely 33 1/3% on the value of the vehicle determined on the basis of a price quotation for second-hand vehicles habitually applied in France.

3The tribunal d'instance de Bordeaux, before which an action was brought, stayed the proceedings and referred the following questions to the Court for a preliminary ruling:

'(1) Article 95 of the EEC Treaty prohibits Member States from imposing value-added tax on the importation of products from another Member State supplied by a private person where no such tax is levied on the supply of similar products by a private person within the territory of the Member State of importation, to the extent to which the residual part of the value-added tax paid in the Member State of exportation and still contained in the value of the product on importation is not taken into account. In applying that principle, is it necessary to make a distinction depending on whether the transaction is effected for valuable consideration or for nothing?

(2) If not, must value-added tax be levied on the product's value inclusive of all taxes in the State of exportation, less the residual portion of the value-added tax still contained in the product's value at the time of importation, or is the taxable amount to be the tax-free value of a similar product in the State of importation?

(3) May the portion of value-added tax due to the State of importation be calculated by means of a differential rate (the rate charged in the State of importation less the rate charged in the State of exportation) applied to a tax-free value which will be determined on the basis of the answer to the alternative set out in Question 2? If not, must the residual portion of the value-added tax paid in the Member State of exportation which is still contained in the product's value at the time of importation be set off against the amount of value-added tax charged on importation? Or must that residual portion be reimbursed by the Member State of exportation?'

4Observations were submitted by the plaintiff in the main proceedings, the Netherlands Government and the Commission. The French Government was represented at the hearing.

5The first question begins by setting out the Court's decision in its judgment of 5 May 1982 (Case 15/81 Gaston Schul v Inspecteur der Invoerrechten en Accijnzen [1982] ECR 1409) to the effect that Article 95 of the Treaty prohibits Member States from imposing value-added tax on the importation of products from other Member States supplied by a private person where no such tax is levied on the supply of similar products by a private person within the territory of the Member State of importation, to the extent to which the residual part of the value-added tax paid in the Member State of exportation and still contained in the value of the product when it is imported is not taken into account. The question seeks to ascertain whether, in applying that rule, a distinction must be made according to whether or not the transaction is effected for valuable consideration.

6The plaintiff in the main proceedings, the Netherlands Government and the Commission consider that such a distinction should not be made. On the other hand, the French Government considers that an importer of goods transferred without consideration is not entitled to deduct the VAT paid in the Member State of exportation and to which the goods are still liable if the importer did not personally pay that tax when he acquired the goods.

7It must be observed, first, that according to Article 2 (2) of the Sixth Directive 'the importation of goods' is subject to VAT, and that according to Article 7 of the directive 'importation of goods' means the entry of goods into the territory of the country. In the aforementioned judgment of 5 May 1982, the Court concluded from the foregoing that as regards imports, the chargeable event is constituted by the mere entry of the goods into the territory of the Member State concerned 'whether or not there is a transaction and irrespective of whether the transaction is carried out for valuable consideration or free of charge'.

8It must also be observed that second-hand goods imported by a private person and which that person obtained as a gift are necessarily subject, as are goods imported by a private person in the context of a sale or other transaction for valuable consideration, to payment of the VAT to which they were liable in the Member State of exportation.

9The reply to the first question must therefore be that for the purposes of applying Article 95 of the Treaty where value-added tax is levied on the importation of goods by a non-taxable person, no distinction should be made according to whether or not the transaction giving rise to the importation was effected for valuable consideration.

10The second question concerns the way in which the taxable amount is determined. In its judgment of 21 May 1985 (Case 47/84 Staatssecretaris van Financiën v Gaston Schul [1985] ECR 1491), the Court held that where a Member State charges VAT on the importation, from another Member State, of goods supplied by a private person, the taxable amount does not include the VAT paid in the Member State of exportation that is still contained in the value of the goods at the time of importation. The question seeks to ascertain whether or not that value is to be determined according to the rules for assessment applicable in the Member State of importation.

BERGERES-BECQUE v SERVICE INTERREGIONAL DES DOUANES

11The plaintiff in the main proceedings, the Netherlands Government and the Commission claim that the value at the time of importation should be fixed on the basis of the rules applicable in the country of exportation. According to the French Government, VAT payable on importation should be calculated on the basis of the value before tax of the goods being imported and that value is the same as the customs value determined according to the methods usually employed in the country of importation.

12The reply to the question is to be found in the provisions of the Sixth Directive. Article 11 (B) (1) of that directive states that the taxable amount for the purposes of levying VAT on the importation of goods where no price is paid or to be paid by the importer is the open market value of the goods, which is defined as 'the amount which an importer at the marketing stage at which the importation takes place would have to pay to a supplier at arms length in the country from which the goods are exported at the time when the tax becomes chargeable under conditions of fair competition to obtain the goods in question'.

13Article 11 (B) (2) permits the Member States to adopt as the taxable amount the customs value as defined in Regulation No 803/68, which has been replaced in the meantime by Council Regulation No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes (Official Journal, L 134, p. 1). Articles 2 to 7 of that regulation lay down the detailed rules for determining that value. According to Articles 4 and 5, the provisions relevant to this case, the customs value where no price is paid or to be paid is to be the transaction value of identical or similar goods sold for export to the Community and exported at or about the same time as the goods being valued.

14It follows that where a Member State levies value-added tax on the importation from another Member State of goods supplied by a non-taxable person, the taxable amount does not include the amount of value-added tax paid in the exporting Member State which is still contained in the value of the goods when they are imported; that value is to be determined on the basis of the relevant data in the exporting Member State.

15The third question concerns the calculation of the residual portion of the VAT paid in the Member State of exportation which is still contained in the value of the goods at the time of importation.

16While the present proceedings were pending, a reply was given to an identical question in the judgment of 21 May 1985 cited above. In those circumstances, and since no new argument was presented to the Court on this point, reference should be made to that reply.

17The reply to the third question should therefore be that the amount of the value-added tax paid in the exporting Member State which is still contained in the value of the goods when they are imported is equal :

(a) to the amount of value-added tax actually paid in the exporting Member State less a percentage representing the proportion by which the goods have depreciated, if the value of the goods has decreased between the date on which the value-added tax was last charged in the exporting Member State and the date of importation;

(b) to the full amount of value-added tax actually paid in the exporting Member State, if the value of the goods has increased over the same period.

Costs

18The costs incurred by the French and Netherlands Governments and by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision as to costs is a matter for that court.

Operative part

On those grounds,

THE COURT (First Chamber),

in answer to the questions referred to it by the tribunal d'instance de Bordeaux by a judgment of 24 January 1985, hereby rules:

(1) For the purposes of applying Article 95 of the EEC Treaty where value-added tax is levied on the importation of goods by a non-taxable person, no distinction should be made according to whether or not the transaction giving rise to the importation was effected for valuable consideration.

(2) Where a Member State levies value-added tax on the importation from another Member State of goods supplied by a non-taxable person, the taxable amount does not include the amount of the value-added tax paid in the exporting Member State which is still contained in the value of the goods when they are imported; that value is to be determined on the basis of the relevant data in the exporting Member State.

(3) The amount of the value-added tax paid in the exporting Member State which is still contained in the value of the goods when they are imported is equal:

(a) to the amount of value-added tax actually paid in the exporting Member State less a percentage representing the proportion by which the goods have depreciated, if the value of the goods has decreased between the date on which value-added tax was last charged in the exporting Member State and the date of importation;

(b) to the full amount of value-added tax actually paid in the exporting Member State, if the value of the goods has increased over the same period.

Joliet Bosco Koopmans

Delivered in open court in Luxembourg on 23 January 1986.

P. Heim

R. Joliet Registrar

President of the First Chamber

OPINION OF MR ADVOCATE GENERAL DARMON

delivered on 28 November 1985 ( *1 )

Mr President,

Members of the Court,

1In the three questions which it has referred to this Court on the subject of value-added tax (VAT), the tribunal d'instance of Bordeaux asks in substance:

Whether, for the purposes of charging imported goods to value-added tax, it is ‘necessary to draw a distinction according to whether or not the transaction is effected for consideration’ ;

If not, whether the taxable amount which must be applied is ‘the product's value inclusive of all taxes in the exporting State, less the residual part of the value-added tax still contained in the value of the product when it is imported’ or ‘the value net of tax of a similar product in the importing State’;

Whether the amount of value-added tax payable in the importing State is to be calculated

‘on the basis of a differential rate (the rate charged in the importing State less the rate charged in the exporting State)’, or

by setting off ‘the residual part of the value-added tax paid in the exporting Member State (...) still contained in the value of the product when it is imported ... against the amount of value-added tax charged on importation’, or

where appropriate, taking account of the reimbursement of the residual part by the exporting Member State.

2Those questions were raised in proceedings relating to value-added tax charged by the French customs administration on a secondhand vehicle imported from Belgium by a national of that Member State residing in France. In all essential respects they have already been answered by the Court's two Schul judgments, the first of which was delivered on 5 May 1982 (Case 15/81 Schul y Inspecteur der Invoerrechten en Accijnzen [1982] ECR 1409, hereinafter referred to as ‘Schul I’) and the second on 21 May 1985 (Case 47/84 Staatssecretaris van Financiën v Schul [1985] ECR 1501, hereinafter referred to as ‘Schul U’).

The tribunal d'instance was indeed not under any misapprehension about this because the grounds of its judgment refer expressly to the first of those decisions, while asserting with regard to the second, which had not yet been handed down when the reference was made, that the Hoge Raad [Supreme Court] of the Netherlands had referred to the Court a number of questions for a preliminary ruling because of the difficulties occasioned by the application of Schul I.

Nor do I think that anything in the written or the oral observations presented in this case justifies a reconsideration of the principles laid down in the Court's judgments, because in essence they rehearse arguments which the Court has already heard and either upheld or rejected.

I shall, therefore, be considering only the specific legal aspects of this case that require a separate answer from the Court.

3With regard to Question 1, Mrs Bergeres-Becque, who is the plaintiff in the main action, the Netherlands and the Commission take the view that the fact that the imported goods were not transferred for consideration does not call in question the application of the principles enunciated by the Court in Schul I and Schul II.

A different view is taken by the French Government, which intervened at the hearing; it states that the importer of goods transferred without consideration is not entitled to the deduction of the VAT paid in the exporting Member State in view of the fact that he has not himself had to pay that tax when acquiring the goods.

I am unable to accept that interpretation. Imported secondhand goods which are the subject of a gift are still inevitably burdened by the VAT originally paid on them in the exporting Member State. If the part of the VAT still contained in the value of the goods at the time of importation were not taken into account, the imported goods might well be subject to an overlapping of VAT in so far as the transfer of a similar article between private persons within the importing Member State, whether or not for consideration, does not give rise to further taxation {Schul I, cited above, at paragraphs 15, 31 and 34 of the decision).

With regard to that point, the Court has inferred from the Sixth Council Directive on VAT (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 Article 2 (2) and Article 7 of the directive in particular, that

‘as regards imports the chargeable event is constituted by the mere entry of the goods into the territory of a Member State whether or not there is a transaction, and irrespective of whether the transaction is carried out for valuable consideration or free of charge, be it by a taxable person or a private person’(Schul I at paragraph 14 of the decision, emphasis added),

whereas, in the case of transactions within a Member State, the event giving rise to the charge is the supply of goods for consideration by a taxable person, acting as such.

In other words, since importation is the sole chargeable event where goods are imported, the actual circumstances in which the property in the imported goods is transferred are scarcely relevant. Consequently the principles established in the Court's judgments in Schul I and Schul II with regard to the importation of goods acquired for consideration are also applicable to goods transferred by way of gift.

4In answering Question 2, it is necessary to bear in mind that, as I have already indicated, the Court ruled in Schul II that the pan of the VAT paid in the exporting Member State with which the goods are still burdened at the time of importation

‘does not form part of the taxable amount for the purposes of VAT payable on importation, since the taxable amount for similar domestic products is also an amount net of tax’(Schul II at paragraph 21 of the decision; see also paragraph 23).

However, that answer alone does not deal with all the issues raised by the tribunal d'instance of Bordeaux; there are two problems outstanding.

In the first place, the tribunal d'instance, both in the wording of Question 2 and in the grounds of its judgment, raises the question whether the taxable amount must be established on the basis of the value of the goods in the importing Member State. According to the observations of the plaintiff in the main proceedings, which were not disputed on this point, the practice of the French customs administration is to determine the value of the imported vehicle on the basis of the ‘argus’ price (a published price quotation for secondhand cars) in France.

Secondly, since no selling price was fixed in this case because the imported article was a gift, it is necessary to consider how to determine the price of the imported article. That difficulty is dealt with expressly by Article 11 (B) of the Sixth Directive, the relevant part of which provides as follows:

The taxable amount shall be:

...

the open market value, where no price is paid ....

“Open market” value of imported goods shall mean the amount which an importer at the marketing stage at which the importation takes place would have to pay to a supplier at arm's length in the country from which the goods are exported at the time when the tax becomes chargeable under conditions of fair competition to obtain the goods in question.’

In such circumstances, the Member States are given an alternative by Article 11 (B) (2), which provides that they ‘may adopt as taxable amount the value defined in Regulation (EEC) No 803/68’, namely the customs value of the goods. The regulation referred to was subsequently replaced by Regulation No 1224/80, which entered into force on 1 July 1980 (Article 22 (1) and (2) of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes, Official Journal 1980, L 134, p. 1). Articles 2 to 7 of that regulation set out the various ways of determining that value.

Those provisions make it possible to resolve the other difficulty which was raised: whether the value of the imported goods is the ‘open market’ or ‘customs’ value, it is determined in the exporting Member State, in this case Belgium. That criterion is consistent with the logic of the tax which is levied on consumption.

Furthermore, that is the reasoning which underlies the Court's judgments in Schul I and Schul II. The Court decided that, for the purposes of determining the taxable amount, the residual VAT paid in the State of exportation should be deducted from the value of the imported goods. That method implies that the value to be taken as a point of reference is the value in the Member State of exportation.

Having said this, I should add that as the Court stated,

‘it is for the person who seeks exemption from or a reduction in the value-added tax normally levied on importation to establish that he satisfies the conditions for such exemption or reduction. Accordingly it is open to the Member State of importation to require such an importer to provide the necessary documentary proof that the value-added tax was levied in the Member State of exportation and still burdens the product on importation’(Schul I, at paragraph 36 of the decision).

5By Question 3, the tribunal d'instance of Bordeaux seeks the Court's guidance on the detailed rules for the application of VAT in the importing Member State.

On that point, suffice it to point out that the principle adopted by the Court in Schul I requiring the VAT levied in the Member State of exportation to be taken into account obliges the customs authorities in the Member State of importation to deduct from the amount of VAT payable on importation only

‘the residual part of the value-added tax of the Member State of exportation which is still contained in the value of the product when it is imported. The amount of this reduction may not, however, be greater than the amount of value-added tax actually paid in the Member State of exportation’(Schul I, at paragraph 34 of the decision).

That is precisely the point which the Hoge Raad of the Netherlands asked the Court to clarify in the Schul II case. As I had advocated in my opinion, the Court held that the amount of VAT paid in the exporting Member State and still contained in the value of the goods at the time of their importation (residual VAT) was equal:

‘in cases in which the value of the goods has decreased between the date on which VAT was last charged in the Member State of exportation and the date of importation: to the amount of VAT actually paid in the Member State of exportation, less a percentage representing the proportion by which the goods have depreciated;

in cases in which the value of the goods has increased over that same period: to the full amount of VAT actually paid in the Member State of exportation’(Schul II, at paragraph 34; emphasis added).

That method confirms, if confirmation be necessary, that the value of the goods must be assessed in that Member State. As interpreted by paragraph 34 of each of the two Schul decisions, it is arrived at — once the value of the imported goods less residual VAT has been established — by deducting from the amount of VAT chargeable in principle in the Member State of importation the amount of the part of the VAT paid in the Member State of exportation which is still contained in the value of the goods. To me that interpretation appears sufficient to dispel the uncertainties voiced by the tribunal d'instance and to provide clear guidance for the practice to be followed in this respect by the customs authorities.

Conclusion

6I therefore propose that the Court answer the questions referred to it by the tribunal d'instance of Bordeaux as follows :

For the purposes of VAT charged on imports, the chargeable event is the entry of the goods into the territory of the Member State, irrespective of whether or not the transaction is effected for consideration.

The taxable amount for calculating VAT in the Member State of exportation consists in the value of the goods in the Member State of exportation as determined in accordance with the provisions of Article 11 (B) of the Sixth Directive (Directive 77/388/EEC of 17 May 1977), less the VAT of the Member State of exportation still contained in that value.

The amount of the VAT paid in the Member State of exportation which must be deducted from the VAT payable in the Member State of importation is equal:

in cases in which the value of the goods has decreased between the date on which VAT was last charged in the Member State of exportation and the date of importation: to the amount of VAT actually paid in the Member State of exportation, less a percentage representing the proportion by which the goods have depreciated;

in cases in which the value of the goods has increased over that same period: to the full amount of VAT actually paid in the Member State of exportation.

( *1 ) Translated from the French.