Flashback on ECJ cases C-387/01 (Weigel) – Directive allows imposition of a consumption tax such as the Normverbrauchsabgabe base tax

On April 29, 2004, the ECJ issued its decision in the case C-387/01 (Weigel).

Context: Free movement of workers – Importation of a motor vehicle – Standard fuel consumption tax (‘Normverbrauchsabgabe’) – Customs duties and charges having equivalent effect – Discriminatory taxation – Sixth VAT Directive – Turnover tax.

Article in the EU VAT Directive

Articles 2, 17 and 33(1) of the Sixth VAT Directive (Articles 2(1)(d), 167, 168 401)

Article 2 (Scope of VAT)
1. The following transactions shall be subject to VAT:
(d) the importation of goods.

Article 167 (Right to deduct VAT)
A right of deduction shall arise at the time the deductible tax becomes chargeable.

Article 168
In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
(a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;
(b) the VAT due in respect of transactions treated as supplies of goods or services pursuant to Article 18(a) and Article 27;
(c) the VAT due in respect of intra-Community acquisitions of goods pursuant to Article 2(1)(b)(i);
(d) the VAT due on transactions treated as intra-Community acquisitions in accordance with Articles 21 and 22;
(e) the VAT due or paid in respect of the importation of goods into that Member State.

Article 401
Without prejudice to other provisions of Community law, this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.

Facts

Mr and Mrs Weigel, the plaintiffs in the main proceedings, are German nationals who transferred their residence to Austria in mid-1996. Mr Weigel, who had previously been working in Germany, was at that time appointed director of the Vorarlberger Landesbibliothek. Up to the birth of their child, his wife, Mrs Weigel, had also been working in Germany.
Mr and Mrs Weigel each imported a car into Austria as personal property. After moving residence, they were required to register the cars in that Member State. Having complied with that requirement, Mr and Mrs Weigel received NoVA assessments by decisions of the Finanzamt (Tax Office) Feldkirch of 2 October 1996, with Mr Weigel’s vehicle being assessed for ATS 31 416 and that of his wife for ATS 7 668.
The tax charged to Mr Weigel was in respect of a 1995 Mitsubishi Space Wagon GLXi. That vehicle had a Eurotax valuation of ATS 187 000, which was taken as the chargeable value for NoVA purposes. Applying a rate of 14%, a charge of ATS 26 180 was assessed (‘the base tax’). A surcharge of 20% of the base tax, amounting to ATS 5 236, was then applied, bringing the total charge to tax to ATS 31 416.
The tax charged to Mrs Weigel was in respect of a 1993 Nissan Sunny Y10 L2. That vehicle had a Eurotax valuation of ATS 71 000, which was taken as the chargeable value for NoVA purposes. Applying a rate of 9%, a charge of ATS 6 390 was assessed for the base tax. A surcharge of 20% of the base tax, amounting to ATS 1 278, was subsequently applied, bringing the total charge to tax to ATS 7 668.
On appeal by Mr and Mrs Weigel, the Finanzlandesdirektion für Vorarlberg upheld the NoVA assessments made by the Finanzamt, relying on the existence of the taxable event contemplated by Paragraph 1(3) of the NoVAG.
The Weigels challenged those decisions before the Verfassungsgerichtshof (Austrian Constitutional Court). That court declined to hear the case and, upon the plaintiffs’ application, remitted the case to the Verwaltungsgerichtshof.

Questions

1. Is Article 39 EC (free movement of workers) or Article 12 EC (discrimination on the ground of nationality) to be interpreted as meaning that it is contrary to those provisions for a standard fuel consumption tax (Normverbrauchsabgabe, base tax and surcharge) to be charged on a vehicle brought into the Republic of Austria from another Member State of the Community by a person moving residence in connection with a change of place of work?

2. Do Article 90 EC (prohibiting higher taxation on goods from other Member States) or Article 23 EC (customs union) and Article 25 EC (prohibition of customs duties or charges having equivalent effect between the Member States) preclude the imposition of the standard fuel consumption tax referred to in the first question (base tax or surcharge)?

3. Is the surcharge payable as part of the Normverbrauchsabgabe referred to in the first question compatible with the Sixth Directive … as amended by Council Directive 91/680/EEC …?

AG Opinion

1) A national measure imposing a tax such as the NoVA base tax – which is payable upon the first-time registration in the state of a motor vehicle and is calculated on the basis of the value of the vehicle and its fuel consumption – on a migrant worker moving to Austria from another Member State to take up employment there and importing his or her own vehicle into that country and registering it, is not contrary to Article 39 EC.

Nor is such a measure contrary to the rules on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals laid down by Directive 83/183 and, specifically, Article 1 thereof.

2) Since they do not constitute customs duties or charges having equivalent effect, taxes such as the NoVA are not contrary to Articles 23 EC and 25 EC.

Nor does a tax such as the NoVA base tax, the amount of which is calculated using fixed scales to determine the value of an imported used vehicle, in itself give rise to discrimination prohibited by Article 90 EC provided the fixed scales precisely reflect the actual depreciation of the vehicle and the taxable value imputed to the vehicle thus corresponds exactly to the value of a similar used vehicle to be found on the domestic market. It is for the national court, however, to determine whether the fixed scale method used by the Austrian administration satisfies these conditions. The NoVA surcharge, on the other hand, is discriminatory and hence incompatible with Article 90 EC in so far as it applies to imported products in ordinary circumstances and to domestic products only in exceptional circumstances.

3) A tax such as the NoVA surcharge does not satisfy the requirements of a turnover tax as referred to in the Sixth VAT Directive and cannot therefore be considered to be a parallel tax prohibited by Article 33.

Decision

1. Articles 39 EC and 12 EC do not preclude the imposition of a consumption tax such as the Normverbrauchsabgabe base tax at issue in the main proceedings on a private individual from one Member State who on taking up residence in another Member State because of a change of place of work imports his or her car into the latter State.

2. A consumption tax such as the Normverbrauchsabgabe base tax at issue in the main proceedings constitutes internal taxation of which the compatibility with Community law must be examined not under Articles 23 EC and 25 EC but under Article 90 EC.

3. Article 90 EC must be interpreted as meaning that it does not preclude a consumption tax such as the Normverbrauchsabgabe base tax at issue in the main proceedings to the extent that the charges to that tax precisely reflect the actual depreciation of second-hand vehicles imported by private individuals and produce the desired outcome that the tax charged on imported second-hand vehicles in no case exceeds the amount of the residual tax incorporated in the value of similar second-hand vehicles already registered in the State.

4. Article 90 EC must be interpreted as meaning that it precludes the imposition of a 20% surcharge, in the case of the importation by a private individual of a second-hand car from another Member State, on a tax having the characteristics of the Normverbrauchsabgabe base tax at issue in the main proceedings.

Summary

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