C-85/97 SFI v Belgian State

JUDGMENT OF THE COURT (Fourth Chamber)

19 November 1998 *

In Case C-85/97,

REFERENCE to the Court under Article 177 of the EC Treaty by the Tribunal de Première Instance de Liège (Belgium) for a preliminary ruling in the proceedings pending before that court between

Société Financière d'Investissements SPRL (SFI)

and

Belgian State

on the interpretation of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1) and Article 95 of the EC Treaty,

THE COURT (Fourth Chamber),

composed of: J. L. Murray (Rapporteur), acting for the President of the Fourth Chamber, H. Ragnemalm and K. M. Ioannou, Judges,

* Language of the case: French.

Advocate General: J. Mischo, Registrar: D. Louterman-Hubeau, Principal Administrator,

after considering the written observations submitted on behalf of:

— Société Financière d'Investissements SPRL (SFI), by Jean-Pierre Bours and Xavier Thiebaut, of the Liège Bar,

— the Belgian Government, by Jan Devadder, General Adviser in the Ministry of Foreign Affairs, External Trade and Development Cooperation, acting as Agent, assisted by Bernard van de Walle de Ghelcke, of the Brussels Bar,

— the German Government, by E. Röder, Ministerialrat at the Federal Ministry of the Economy, acting as Agent,

— the United Kingdom Government, by John E. Collins, Assistant Treasury Solicitor, acting as Agent,

— the Commission of the European Communities, represented by Hélène Michard and Enrico Traversa, of its Legal Service, acting as Agents,

having regard to the Report for the Hearing, after hearing the oral observations of Société Financière d'Investissements SPRL (SFI), represented by Xavier Thiebaut, the Belgian Government, represented by Bernard van de Walle de Ghelcke and by Guido de Wit, of the Brussels Bar, and the Commission, represented by Hélène Michard, at the hearing on 30 April 1998,

after hearing the Opinion of the Advocate General at the sitting on 19 May 1998,

gives the following

Judgment

Legal context and the dispute

1By judgment of 24 February 1997, received at the Court on 27 February 1997, the Tribunal de Première Instance (Court of First Instance), Liège, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty two questions on the interpretation of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1, hereinafter 'the Sixth Directive') and Article 95 of the EC Treaty.

2Those questions were raised in proceedings between Société Financière d'Investissements SPRL ('SFI') and the Belgian State concerning the determination of the starting-point of the limitation period for the recovery of value added tax (ΎAT') on the company's provision to one of its employees of a vehicle rented in Luxembourg, and as to the basis on which that tax should be calculated.

The Belgian legislation

The point in time from which the limitation period for the recovery of VAT begins to run

3Article 17(1) of the Code de la TVA ('VAT Code') provides:

'For supplies of goods, the chargeable event shall occur and the tax shall be due at the time of delivery.

Where, however, the price is invoiced or received, in whole or in part, before that time, the tax shall be due, depending on the case, at the time of issue of the invoice or the time of receipt, on the basis of the amount invoiced or received.

Moreover, where the time contractually stipulated for the payment of all or part of the price falls before the times referred to in the above paragraphs, the tax shall be due at that time in the payable amount.'

4Article 81 of the VAT Code provides:

'The limitation period for actions to collect tax, interest and fines in respect of tax shall be five years from the date on which the cause of action arose.'

5The first and second paragraphs of Article 16 of Royal Decree No 1 of 23 July 1969 on measures for ensuring payment of VAT (Moniteur Belge, 1969, p. 7380) provide:

'Taxable persons shall submit the return referred to in Article 50.1.3 of the Code to their local VAT office not later than the 20th of each month.

Taxable persons whose annual turnover excluding VAT does not exceed BFR 20 million shall submit only a quarterly claim not later than the 20th of the month following each quarter. They may, however, be authorised, upon conditions laid down by the Finance Minister or his representative, to make a return not later than the 20th of each month.

...'

The calculation of VAT

6Article 32 of the VAT Code provides:

'In the case of exchange and, more generally, where the consideration is a supply that does not consist solely of a sum of money, that supply shall, for the calculation of the tax, be counted at its normal value.

The normal value represents the price capable of being obtained within the country for each of the supplies at the time the tax is due, upon conditions of full competition between an independent supplier and an independent purchaser, at the same stage of marketing.'

7Article 28.6 of the VAT Code provides:

'The taxable amount shall not include:

6. the value added tax itself.'

Community law

8Under the first and second paragraphs of Article 2 of the First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, English Special Edition 1967, p. 14, 'hereinafter the First Directive'):

'The principle of the common system of value added tax involves the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, whatever the number of transactions which take place in the production and distribution process before the stage at which tax is charged.

On each transaction, value added tax, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of value added tax borne directly by the various cost components.

...'

9Article 4 of the Sixth Directive, as it applied before the amendments which took effect on 1 January 1993, defined 'taxable person' as follows:

'1. "Taxable person" shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.

2. The economic activities referred to in paragraph 1 shall comprise all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis shall also be considered an economic activity.

...'

SH v BELGIAN STATE

10Article 10 of the Sixth Directive, under the heading 'Chargeable event and chargeability of tax' provides:

'1. (a) "Chargeable event" shall mean the occurrence by virtue of which the legal conditions necessary for tax to become chargeable are fulfilled.

(b) The tax becomes "chargeable" when the tax authority becomes entitled under the law at a given moment to claim the tax from the person liable to pay, notwithstanding that the time of payment may be deferred.

2. The chargeable event shall occur and the tax shall become chargeable when the goods are delivered or the services are performed. Deliveries of goods other than those referred to in Article 5(4)(b) and supplies of services which give rise to successive statements of account or payments shall be regarded as being completed at the time when the periods to which such statements of account or payments pertain expire.

...'

11Article 22 of the Sixth Directive, headed 'Obligations under the internal system', provides:

'1. Every taxable person shall state when his activity as a taxable person commences, changes or ceases.

4. Every taxable person shall submit a return within an interval to be determined by each Member State. This interval may not exceed two months following the end of each tax period. The tax period may be fixed by Member States as a month, two months, or a quarter. However, Member States may fix different periods provided that these do not exceed a year.

The return must set out all the information needed to calculate the tax that has become chargeable and the deductions to be made, including, where appropriate, and in so far as it seems necessary for the establishment of the tax basis, the total amount of the transactions relative to such tax and deductions, and the total amount of the exempted supplies.'

The dispute in the main proceedings

12SFI was incorporated by notarial act of 21 October 1981 under the name 'SPRL Constructions et Investissements' and was registered for VAT on that date in respect of 'real property transactions'. That registration was cancelled on 1 January 1982 because no taxable transactions had been carried out.

SH v BELGIAN STATE

13After its name had been changed to 'Société Financière d'Investissements' and its objects had been widened on 8 September 1988, SFI applied on 26 April 1989 to be re-registered for VAT.

14On 16 May 1989, when the application for re-registration was still being processed, SFI submitted a VAT return for the period from 1 January 1988 to 31 December 1988. SFI was re-registered for VAT on 1 June 1989.

15Following a VAT inspection on 2 February 1993 relating to the period from 1 January 1988 to 31 December 1991, the VAT authorities noted various irregularities, which meant that SFI was obliged to pay back the principal sum of BFR 4 062 889 in VAT, and drew up a régularisation schedule.

16On 12 January 1994, the Receveur (Tax Collector) of the Premier Bureau de Rec ettes TVA (First VAT Collection Office), Liège, issued a payment order for that sum, together with interest for late payment at 0.8% per month from 1 January 1992, and a fine of BFR 609 000. The order was made enforceable on 21 January 1994 and served on 26 January 1994.

17On 14 March 1994, the Belgian State had served on SFI an order requiring payment of BFR 3 864 231 in VAT, BFR 203 000 in fines and BFR 309 120 in statutory interest for the period to 20 March 1994.

18On 1 April 1994, SFI made an application to the Tribunal de Première Instance, Liège, for the payment order of 12 January 1994 to be set aside.

19In its action, SFI maintains that the Belgian authorities' position that the limitation period should run from the date on which, in view of its registration for VAT on 1 June 1989, the company should have submitted its first return, namely 20 July 1989, is incompatible with Articles 4 and 10 of the Sixth Directive. SFI argues that the action for recovery of VAT in respect of the period prior to 31 December 1988 was time-barred. In its submission, the limitation period runs from the date on which a sum becomes chargeable, which, under Article 17 of the VAT Code, is the date of the chargeable event constituted by delivery of the goods or performance of the services liable to VAT.

20SFI and the Belgian State also disagree about the method of calculating the benefit in kind consisting of providing an employee with a car, for his private journeys, rented by SFI from a company established in Luxembourg. SFI complains that the Belgian tax authorities included the VAT which it paid in Luxembourg in the basis for calculating that benefit, whereas, if the vehicle had been rented in Belgium, the taxable amount would not have included VAT. In SFI's submission, the method of calculation used by the Belgian authorities is contrary not only to Article 95 of the Treaty but also to the principle of fiscal neutrality laid down by the Sixth Directive.

21Taking the view that the solution of the dispute before it depended on the interpretation of the Sixth Directive and of Article 95 of the Treaty, the Tribunal de Première Instance, Liège, decided to stay proceedings and to refer the following questions for a preliminary ruling:

'1. Is the position taken by the VAT Authorities, that the limitation period for the collection of tax runs from the 20th of the month following the quarter in which registration for VAT took place, as regards taxable transactions carried out before that registration, compatible with Articles 4 and 10 of the Sixth VAT Directive?

2. Does a system under which VAT on a benefit in kind granted to an employee of an undertaking is calculated on a VAT inclusive basis when Belgian VAT is paid by the employer and on a VAT exclusive basis when VAT of another Member State is paid offend against Article 95 of the Treaty of Rome and the principle of "fiscal neutrality" laid down by the Sixth VAT Directive?'

The first question

22By its first question, the national court is essentially asking whether Articles 4 and 10 of the Sixth Directive preclude a national practice which, in the case of transactions subject to VAT effected by a company before it was registered for VAT, consists in fixing the starting-point of the limitation period for recovery of that tax at the 20th of the month following the quarter in which that registration took place.

23The first point to be made is that Article 4 of the Sixth Directive defines 'a taxable person'. Article 10, as the heading above it indicates, concerns the chargeable event and the 'chargeability of tax'. That provision enables the date on which the tax debt arises to be determined.

24As for Article 22, paragraph 4 thereof governs the submission of returns by taxable persons, in particular the periods for which they are submitted and their content, whilst paragraph 5 provides that the amount of the tax must be paid by the taxable person when submitting the return, unless provision has been made for a different payment date or for the levying of interim payments.

25Thus, none of those provisions determines the point in time from which the limitation period for the recovery of VAT begins to run. Nor, moreover, does examination of the Sixth Directive reveal any other provision concerning this question.

26It has been consistently held that, in the absence of Community rules governing a matter, it is for the domestic legal system of each Member State to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from the direct effect of Community law, provided that those rules are not less favourable than those governing similar domestic actions nor arranged in such a way as to render it virtually impossible or excessively difficult to exercise rights conferred by Community law (see, in particular, the judgment in Case C-312/93 Peterbroeck and Others v Belgian State [1995] ECR I-4599, paragraph 12).

27It is undisputed that those two conditions are met in this case.

28SFI, however, argues that the practice of the Belgian administration infringes the principle of equality since a taxable person may exercise his right to deduct VAT only within a period of five years from the date on which that right arose, that is to say from the date on which the tax is due, whereas the five-year limitation period begins to run as against the tax authorities on the date on which the return should, in principle, be made.

29On that point, it should be recalled first of all that, where national rules fall within the scope of Community law, and reference is made to the Court for a preliminary ruling, the Court must provide all the criteria of interpretation needed by the national court to determine whether those rules are compatible with the fundamental rights the observance of which the Court ensures (Case C-260/89 ERT v Dimotiki Etairia Pliroforissis [1991] ECR I-2925, paragraph 42).

30Next, the Court has consistently held that the principle of equality is one of the fundamental principles of Community law and requires that similar situations should not be treated differently unless differentiation is objectively justified (Case 215/85 Bundesanstalt für Landwirtschaftliche Marktordnung v Raiffeisen Haupt genossenschaft [1987] ECR 1279, paragraph 23).

31As far as the present case is concerned, VAT is incontestably a matter governed by Community law. The fact that, in the absence of Community rules, the Member States are entitled to apply their own procedural rules, does not alter that finding.

32However, the position of the VAT authorities cannot be compared with that of a taxable person. The authorities do not have the information necessary to determine the amount of the tax chargeable and the deductions to be made until, at the earliest, the day when the return referred to in Article 22(4) of the Sixth Directive is made, which in this case corresponds to the 20th of the month following the quarter in which VAT registration took place. In the case of an inaccurate return, or where it turns out to be incomplete, it is therefore only from that time that the authorities can start to recover the unpaid tax.

33Thus, the fact that the five-year limitation period begins to run as against the tax authorities on the date on which the return should in principle be made, whereas an individual may exercise his right to deduction only within a period of five years as from the date on which that right arose is not such as to infringe the principle of equality.

34SFI also argues that the position of the Belgian authorities is a source of legal uncertainty.

35That argument cannot be accepted. As the Advocate General rightly points out at paragraph 16 of his Opinion, by taking as the starting-point of relations between the tax authorities and the taxable person the date on which the authorities take official notice of the declaration of commencement of activity referred to in Article 22(1) of the Sixth Directive, the national legislation in question takes the requirement of legal certainty into account, since, once registered, the taxable person can no longer be in any doubt as to the period he has in which to perform his periodic obligations or, consequently, as to the limitation period which he may enjoy.

36It follows from the foregoing that Articles 4 and 10 of the Sixth Directive do not preclude a national practice which, in the case of transactions subject to VAT effected by a company before it was registered for VAT, consists in fixing the starting-point of the limitation period for the recovery of that tax at the 20th of the month following the quarter in which that registration took place.

The second question

37By its second question, the national court is essentially asking whether Article 95 of the Treaty and the Sixth Directive preclude the VAT on a benefit granted by an employer to his employee in the form of the placing of a vehicle at his disposal for private use from being calculated by including in the taxable amount the VAT paid by the employer in another Member State on the renting of that vehicle, whereas, if the vehicle had been rented in the Member State concerned, the taxable amount would not have included the VAT paid.

38In answering that question, it is sufficient to note that the common system of VAT established by the First Directive on the basis of Articles 99 and 100 of the EEC Treaty consists, by virtue of the first paragraph of Article 2 of that directive, in the application to goods and services up to and including the retail stage of a general tax on consumption which is exactly proportional to the price of the goods and services, irrespective of the number of transactions which take place in the production and distribution process before the stage at which the tax is charged. However, as the second paragraph of that provision states, VAT is chargeable on each transaction only after deduction of the amount of VAT borne directly by the cost of the various price components. The procedure for deduction is so arranged by Article 17(2) of the Sixth Directive that only taxable persons are authorised to deduct from the VAT for which they are liable the VAT which the goods have already borne (Case 15/81 Schul v Inspecteur der Invoerrechten en Accijnzen [1982] ECR 1409, paragraph 10).

39The deduction principle just stated is of general application. Thus, neither the First Directive nor the Sixth Directive establishes a distinction according to whether a supply of services is made by a supplier established in the national territory or by one established in another Member State.

40In view of the foregoing, there is no need for the Court to rule on the question in so far as it concerns Article 95 of the Treaty.

41The answer to be given to the second question must therefore be that the First and Sixth Directives preclude the VAT on a benefit granted by an employer to his employee in the form of the placing of a vehicle at his disposal for private use from being calculated by including in the taxable amount the VAT paid by the employer in another Member State on the renting of that vehicle, whereas, if the vehicle had been rented in the Member State in question, the taxable amount would not have included the VAT paid.

Costs

42The costs incurred by the Belgian, German and United Kingdom Governments and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,

THE COURT (Fourth Chamber),

in answer to the questions referred to it by the Tribunal de Première Instance de Liège by judgment of 24 February 1997, hereby rules:

1) Articles 4 and 10 of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment do not preclude a national practice which, in the case of transactions subject to value added tax effected by a company before it was registered for value added tax, consists in fixing the starting-point of the limitation period for the recovery of that tax at the 20th of the month following the quarter in which that registration took place.

2) The First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes and the Sixth Directive 77/388 preclude the value added tax on a benefit granted by an employer to his employee in the form of the placing of a vehicle at his disposal for private use from being calculated by including in the taxable amount the value added tax paid by the employer in another Member State on the renting of that vehicle, whereas, if the vehicle had been rented in the Member State in question, the taxable amount would not have included the value added tax paid.

Murray Ragnemalm Ioannou

Delivered in open court in Luxembourg on 19 November 1998.

R. Grass P. J. G. Kapteyn

Registrar President of the Fourth Chamber

OPINION OF ADVOCATE GENERAL MISCHO delivered on 19 May 1998 *

Introduction

1The Tribunal de Première Instance (Court of First Instance), Liège has to resolve a dispute between Société Financière d'Investissements SPRL (hereinafter 'SFI') and the Belgian State. The dispute concerns a sum of VAT owed by SFI, for the recovery of which the Belgian tax authorities issued a payment order. SFI applied to have that payment order set aside on various grounds. In particular, it asserts that the recovery action brought by the tax authorities is time-barred and that the method of calculation adopted by the authorities for determining the value of the benefit in kind constituted by the provision of a company car to a partner or an employee for private journeys is legally incorrect. Since SFI's arguments rely on Community law, the national court has referred the following two questions to the Court for a preliminary ruling:

'(1) Is the position taken by the VAT authorities, that the limitation period for the collection of tax runs from the 20th of the month following the quarter in which registration for VAT took place, as regards taxable transactions carried out before that registration, compatible with Articles 4 and 10 of the Sixth VAT Directive?

* Original language: French.

(2) Does a system under which VAT on a benefit in kind granted to an employee is calculated on a VAT inclusive basis when Belgian VAT is paid by the employer and on a VAT exclusive basis when VAT of another Member State is paid offend against Article 95 of the Treaty of Rome and the principle of fiscal neutrality laid down by the Sixth VAT Directive?'

2The order for reference gives very little information on the factual and legislative background to the dispute before the national court. It seems to me that this lack of detail concerning the context in which the preliminary questions have been raised, which, in other circumstances, could constitute a hindrance to the provision of a useful reply, does not pose a real problem here. In its first question, the national court sets out the position of the Belgian tax authorities on the determination of the starting-point of the limitation period for the recovery of VAT and asks whether that position, which, it must be assumed, results from a correct interpretation of the relevant national provisions, is compatible with Community law and, more specifically, with Articles 4 and 10 of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment 1 (hereinafter 'the Sixth Directive'). That is a question which can be resolved without knowledge of SFI's dealings with the tax authorities.

3The second question is formulated less clearly, if only because it uses terminology — 'calculated on a VAT inclusive basis' and 'calculated on a VAT exclusive basis' — which is not found in the Community VAT directives. Moreover, the Court is asked to exercise its review in relation to a provision of the Treaty as well as in relation to a principle of the Community VAT system. However, its complexity is more apparent than real. From the documents in the file and the observations put forward during the oral procedure it is clear that the issue is in fact that of determining the tax base to be taken into account when VAT is applied to a benefit in kind provided to an employee in the form of goods on which VAT has been paid in another Member State. That question also can be use fully answered without any reference to SFI's precise circumstances.

The first question

4As regards the first question, it will be noted, first, that, although the Court is asked to assess the compatibility with Community law of the position taken by the tax authorities, that is because SFI disputes that position by putting forward arguments based on Community law. According to SFI, a limitation period must start to run in favour of a debtor from the time when his debt arises and when, correlatively, the creditor is entitled to assert his claim.

5However — and according to SFI this is where Community law comes in — Article 10(1) of the Sixth Directive provides as follows:

'1. (a) "Chargeable event" shall mean the occurrence by virtue of which the legal conditions necessary for tax to become chargeable are fulfilled.

(b)The tax becomes "chargeable" when the tax authority becomes entitled under the law at a given moment to claim the tax from the person liable to pay, notwithstanding that the time of payment may be deferred.'

6According to this reasoning, the date from which the limitation period starts to run is determined by Community law, since that date cannot be different from the date on which the tax becomes chargeable, which is itself determined by the Sixth Directive as the date when the chargeable event, as defined by the directive, occurs. Having chosen another date, the argument runs, the Belgian legislature was in breach of the Sixth Directive and SFI, like any other taxable person, is entitled to rely on that breach.

7Although on the face of it that reasoning appears rigorous, it must nevertheless be rejected since it rests on certain false premisses. The first false premiss lies in a mis conception of chargeability. The fact that a tax becomes chargeable does not cause it to become immediately payable. A tax becomes chargeable because the taxed transaction has been carried out, or, to use the words of the Sixth Directive, because the chargeable event has occurred. However, the fact that the tax becomes chargeable certainly does not mean that the person liable has to pay it forthwith. Can one imagine a trader sending each day to the revenue authority the amount of VAT for which he is liable in respect of sales effected during the day? Such a sensible distinction between chargeability and payment is made, not surprisingly, by the Community legislature. In the Sixth Directive, it appears not only in Article 10, the terms of which I have just cited, but also in Article 22, which, in paragraphs 4 and 5, provides:

'4. Every taxable person shall submit a return within an interval to be determined by each Member State. This interval may not exceed two months following the end of each tax period. The tax period may be fixed by Member States as a month, two months, or a quarter. However, Member States may fix different periods provided that these do not exceed a year.

The return must set out all the information needed to calculate the tax that has become chargeable and the deductions to be made, including, where appropriate, and in so far as it seems necessary for the establishment of the tax basis, the total amount of the transactions relative to such tax and deductions, and the total amount of the exempted supplies.

5. Every taxable person shall pay the net amount of the value added tax when submitting the return. The Member States may, however, fix a different date for the payment of the amount or may demand an interim payment.'

8It is thus apparent, and could not be more clearly so, that chargeability is a technical concept which should not be confused with the obligation actually to make payment of VAT. It occurs, in particular, in the deduction mechanism, which is a feature of the Community VAT system, as described in Article 17(1) of the Sixth Directive, under which the right to deduct arises at the time when the deductible tax becomes chargeable. Moreover, by its very structure, the deduction mechanism, which is governed by Articles 17 to 20 of the Sixth Directive, clearly shows that the amount of VAT payable by a trader will not, in principle, be that resulting from the taxable transactions which he has carried out and which have rendered VAT chargeable, since it will be necessary, in order to determine the actual amount payable to the revenue authority, to deduct the VAT credits available to the trader by virtue of the tax which he will have paid when purchasing from his suppliers the goods and services necessary for the pursuit of his activities. The fact that what is chargeable and what is payable do not match means that, as both a conceptual and a tax procedure matter, there must be no confusion between chargeability and the starting-point of the limitation period.

9The second false premiss on which SFI's reasoning is based lies in its view of the scope of the Sixth Directive. As far as SFI is concerned, the detailed rules for the collection of VAT are covered by the harmonisation achieved by that directive. However, that is manifestly not the case.

10A mere glance at the subdivisions of the Sixth Directive is enough to show, as the Belgian Government rightly points out, that, although the directive covers all the substantive-law aspects of the Community VAT system, it is far from laying down all the detailed procedural rules for the operation of the system, the only provisions which it devotes to them being those of Title XIII relating to the obligations of persons liable for payment, which includes Article 22 cited above. Moreover, it will be noted in passing that Article 22 itself leaves the Member States a significant margin of discretion, whether in fixing the tax period following the end of which the taxable person must produce a return, or in determining the interval within which that return must be submitted, or in fixing the date for the actual payment of the tax by the taxable person.

11Confirmation of the fact that the detailed rules for the collection of VAT are largely unharmonised will be found in Council Directive 76/308/EEC of 15 March 1976 on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties, and in respect of value added tax, as amended by Council Directive 79/1071/EEC of 6 December 1979. 4 As the Belgian Government points out, Directive 76/308 not only contains no reference to common rules governing the recovery of VAT, but expressly provides, in Article 6(1): 'At the request of the applicant authority, the requested authority shall, in accordance with the laws, regulations or administrative provisions applying to the recovery of similar claims arising in the Member State in which the requested authority is situated, recover claims which are the subject of an instrument permitting their enforcement', which assumes the absence of a common system for the recovery of VAT.

12It remains to be examined, in relation to the first question, whether the Belgian legislature has made proper use, compatible with Community law, of the freedom which it is allowed by the Sixth Directive to lay down rules for the recovery of VAT by establishing a system under which the limitation period starts to run from the 20th of the month following the quarter in which registration for VAT took place as regards taxable transactions carried out before that registration. The Court has consistently held that, even when they act within the scope of the procedural autonomy afforded to them by Community law, Member States must not lay down the procedures governing actions for safeguarding rights which individuals derive from the direct effect of Community law by laying down the rules which are less favourable than those governing similar domestic actions or which are such as to render virtually impossible the exercise of rights conferred by Community law.

13It should be made clear from the outset that, under the Belgian rules, the limitation period for businesses which are already registered runs from the 20th of the month following the quarter in which the taxable transaction was carried out, that is to say, from the exact day on which the time-limit set for the business to submit its return for that quarter expires. That has not been, and could hardly be, disputed.

14The choice under the Belgian tax rules of the date on which both submission of the return and payment must take place is fully within the limits set out in Article 22(4) and (5) of the Sixth Directive, and the fixing of the same date as the starting-point of the limitation period certainly has the virtue of consistency. As the United Kingdom Government has appositely pointed out, it would be extremely odd if a limitation period started to run in the taxable person's favour before the date on which the tax authorities, having received his return, were actually in a position to verify his honesty by carrying out whatever checks seem appropriate to them, and to decide on the adjustments called for by any inaccuracies in that return. It would be a boon to tax evaders and would seriously prejudice the effectiveness of officials responsible for recovering VAT if the limitation period, which is intended to guarantee legal certainty for honest traders but at the same time might provide impunity for those who are less honest, were to run from a date when the tax authorities, for want of possession of the taxable person's return, are utterly pow erless to act to protect the interests of the public purse, since evasion can be established only from the time of submission of a false return.

C-431/93 Van Schijndel and Van Veen [1995] ECR I-4705.

15Is the arrangement under that system in the particular case of a new taxable person, whereby the starting-point of the limitation period shifts to the 20th of the month following the quarter in which registration was

carried out by the tax authorities, objection able?

16It is true that, at the time of the facts of the case before the national court, the Community rules did not provide for registration and that taxable person status does not result from registration but from satisfaction of the conditions laid down by Article 4 of the Sixth Directive. However, I do not see any basis for considering that, by deferring the taxable person's obligation to submit a return and the associated obligation to pay until after registration, the Belgian tax rules have infringed the limits placed by the Court's case-law on the procedural autonomy of Member States. On the contrary, it seems to me that, by fixing as the anchor point in dealings between the tax authorities and the taxable person the date of registration, that is to say, the date on which the authorities took, as it were, formal note of the statement of commencement of activity provided for by Article 22(1) of the Sixth Directive, the Belgian rules take into account the requirements of legal certainty. Once registered, the taxable person should no longer have any doubt either as to the length of time available to him to discharge his periodic obligations or with regard to the limitation period from which he may benefit. Similarly, registration 'will enable the tax authorities to open a file in the taxpayer's name and to ensure that it is monitored regularly, whereas the receipt of returns and payments from an unidentified taxable person and registered as such could be a source of confusion which would certainly harm first and foremost the proper 'working of the administration but also be potentially detrimental to the taxable person himself.

17It seems to me that to start organising dealings between the taxable person and the authorities from the point which is constituted by registration is a matter of common sense and could not be construed as an intention to restrict the exercise of the taxpayer's rights.

18As far as the first question is concerned, I therefore conclude that the Sixth Directive, in particular Articles 4, 10(1) and 22 thereof, does not preclude national rules under which the limitation period for the recovery of VAT runs from the 20th of the month following the quarter in which registration for VAT took place, as regards taxable transactions carried out before that registration.

The second question

19As regards the second question, I shall be brief, if only because the oral procedure disclosed a convergence of opinions as to the answer for which it calls.

SH v BELGIAN STATE

20As I have already indicated in point 3 above, this question borrows from tax-law theory terminology not found in the Sixth Directive. However, there is no doubt that what the national court is seeking to ascertain is the tax base for the calculation of the VAT which, pursuant to Article 6(2) of the Sixth Directive, is payable on the grant by a business of benefits in kind to its employees where the business has turned to a provider of services established in another Member State in order to obtain the service from which it wishes the employees concerned to benefit. More specifically, must that taxable basic amount include the VAT on the provision of services from another Member State which has been paid there?

21As the Commission quite rightly states, it is necessary to refer to Article 11(A)(1)(c) of the Sixth Directive, which states that the taxable amount is, 'in respect of supplies referred to in Article 6(2), the full cost to the taxable person of providing the services', and to ask whether 'the full cost' means the cost inclusive of all tax or the cost exclusive of VAT.

22It is clear from the very essence of the Community system of VAT, which was designed to replace the old systems of cascade taxes with a neutral system, that the tax must always be charged on a taxable amount which includes no VAT.

23That rule was already contained in Article 8 of the Second Council Directive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes — Structure and procedures for application of the common system of value added tax, and was strongly reaffirmed by the Court in its judgment in the Schul case, which concerned the taxation of imported second-hand goods. It is restated in Article 11 of the Sixth Directive with regard to VAT on importation.

24The rule in question is therefore a completely general one which does not apply in different ways depending on whether the supply of services is carried out by a provider established within the national territory or by a provider established in another Member State.

25It therefore matters little, as the Belgian Government acknowledges, that in SFI's case the vehicles which it provides to members of its staff for their private use have been leased to it by a provider of services established in Luxembourg.

26In all cases, it is the value of the supply exclusive of VAT which must be used as the taxable amount for the purposes of the taxation provided for by Article 6(2) of the Sixth Directive.

27Since that is the case, it is not clear where any discrimination could arise with regard to services supplied from another Member State. Observance of the principle of fiscal neutrality inherent in the Community system of VAT takes away any legitimate interest which SFI has in relying not only on Article 95 of the EC Treaty, assuming that that provision, which refers to products, can extend to a supply of services from another Member State, but also on Article 59 of the EC Treaty, from which it would be necessary to argue whether the Belgian tax system had the effect of rendering less attractive for Belgian undertakings supplies of services offered by providers established in other Member States, which is not the case.

28There nevertheless remains, it seems, a disagreement between SFI and the Belgian Government over the way in which the Belgian tax authorities calculated the VAT payable by SFI, the latter claiming that the tax authorities did not in fact take into account a taxable amount exclusive of tax.

29That is a question of fact which it is not for the Court to resolve and which, moreover, the Court would be unable to examine since the necessary information is not included among the documents at its disposal.

30I would'nevertheless observe that when, in its written observations, SFI mentions a number of figures and proposes a method for calculating the VAT for which it would actually be liable, it does not perhaps argue as rigorously as it should.

31Starting from the assertion that the taxable amount taken by Belgian authorities was an amount which included VAT paid in Luxembourg, it then goes on to make a calculation to arrive at the correct taxable amount, that is to say, the value exclusive of VAT, for which purpose it takes into account a VAT rate of 25%, which corresponds to the rate applied in Belgium.

32However, if the Belgian tax authorities wrongly took into account as the taxable amount an amount including Luxembourg VAT, the VAT rate in question was 15% and not 25%.

33I suppose that this confused issue could be settled before the national court in due course.

34Since the Court must confine itself to providing an interpretation of Community law, I propose that the answer to be given to the second question should be that, in the business when paying for the goods or the case referred to in Article 6(2) of the Sixth service which it provides to its staff for their Directive, the taxable amount to be taken into private use.

account must not include VAT borne by the

Conclusion

35Having come to the end of my Opinion, I suggest that the Court answer the first question as follows:

The Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, in particular Articles 4, 10(1) and 22 thereof, does not preclude national rules under which the limitation period for the recovery of VAT runs from the 20th of the month following the quarter in which registration for VAT took place, as regards taxable transactions carried out before that registration.

I propose that the second question be answered as follows:

In the case referred to in Article 6(2) of the Sixth Directive 77/388, the taxable amount to be taken into account must not include VAT borne by the business when paying for the goods or the services which it provides to its staff for their private use.

Notes

(1) OJ 1977 L 145, p. 1.

(2) Judgment in Case 42/83 Dansk Denkavit [1984] ECR 2649, rightly referred to by the German Government in its written observations.

(3) OJ 1976 L 73, p. 18.

(4) OJ 1979 L 331, p. 10. SH v BELGIAN STATE

(5) See, in particular, the judgment in Joined Cases C-430/93 and

(6) OJ, English Special Edition Series 1967 (I), p. 16.

(7) Case 15/81 [1982] ECR 1409.