On June 8, 1999, the ECJ issued its decision in the case (C-338/97).
Context: Article 33 of Sixth Directive 77/388/EEC – Turnover taxes – Contributions totourism associations and to a tourism development fund
Article in the EU VAT Directive
Article 33(1) of the Sixth VAT Directive (Article 401 of the EU VAT Directive 2006/112/EC).
Article 401 (Other taxes, duties and charges)
Without prejudice to other provisions of Community law, this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.
Facts
- By two orders of 12 August 1997 and an order of 27 October 1997, received at theCourt Registry on 29 September 1997, 2 October 1997 and 17 November 1997respectively, the Verwaltungsgerichtshof (Austrian Administrative Court) referredto the Court for a preliminary ruling under Article 234 EC (ex Article 177) threequestions on the interpretation of Article 33 of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the MemberStates relating to turnover taxes Common system of value added tax: uniformbasis of assessment (OJ 1977 L 145, p. 1) (‘the Sixth Directive’).
- Those questions were raised in proceedings between (1) Mrs Pelzl and Others andthe Steiermärkische Landesregierung (Government of the Land of Styria), (2)Wiener Städtische Allgemeine Versicherungs AG and Others and the TirolerLandesregierung (Government of the Land of Tyrol), and (3) STUAG Bau-Aktiengesellschaft and the Kärntner Landesregierung (Government of the Land ofCarinthia) concerning the liability of the plaintiffs in the main proceedings forcharges to promote tourism introduced by the Steiermärkische Tourismusgesetz(Tourism Law of the Land of Styria), the Tiroler Tourismusgesetz (Tourism Lawof the Land of Tyrol), and the Kärntner Fremdenverkehrsabgabegesetz (Law of theLand of Carinthia on the charge to promote tourism).
- Those charges are intended to promote tourism in the federal Länder concerned. In Styria, the charge funds local tourism associations. In the Tyrol, it is paid in partto local tourism associations and in part to a tourism development fund, theTourismusförderungsfonds. In Carinthia, the charge is divided between the Landand the communes.
- Each of those charges is, in principle, payable by all traders having a direct orindirect economic interest in tourism and having their registered office or a placeof business in the Tyrol, Carinthia, or in one of the communes of Styria designatedby the Steiermärkische Tourismusgesetz, which applies to most, but not all, of theterritory of Styria.
- The charge is levied according to different rates, depending on the benefit whichthe taxable person derives from tourism, measured by his classification in aprofessional category, as well as, in Styria and the Tyrol, by the classification of thecommune in which he has his registered office.
- The basis of assessment of the charge is, in principle and subject to certainexemptions, the annual taxable turnover, as defined by the Federal Law onTurnover Tax, achieved in the federal Land concerned.
- Mrs Pelzl and Others, Wiener Städtische Allgemeine Versicherungs AG andOthers, and STUAG Bau-Aktiengesellschaft instituted proceedings before theVerwaltungsgerichtshof challenging the dismissal of their objections against theadministrative decisions imposing on them the charges to promote tourism. Theyargued, in particular, that those contributions were contrary to Article 33(1) of theSixth Directive, which provides that: ‘Without prejudice to other Communityprovisions …, this directive shall not prevent a Member State from maintaining orintroducing taxes on insurance contracts, taxes on betting and gambling, exciseduties, stamp duties and, more generally, any taxes, duties or charges which cannotbe characterised as turnover taxes ….
- Questions
Case C-338/97
Does Article 33(1) of the Sixth Council Directive of 17 May 1977 on theharmonisation of the laws of the Member States relating to turnover taxes Common system of value added tax: uniform basis of assessment (77/388/EEC)preclude, on the ground that it is in the nature of a turnover tax, the maintenancein force of a charge which is payable in a Bundesland (federal State) of a MemberState of the European Communities
- in respect of each calendar year by all undertakings directly or indirectlyinvolved in tourism which have their registered office or a place of businesswithin certain closely defined areas, where the sum of those areas comprisesalmost the whole area of the federal State, and
- the amount of which is essentially proportional to the turnover achieved bythe undertaking primarily in that federal State within a calendar year, butwhere the rate of contribution varies according to the intensity of tourismin that area and according to the degree of benefit which the legislaturedeems the commercial sector in question (occupational group) to derivefrom tourism, and
- where no provision is made for the deduction of input tax?
Case C-344/97
Is Article 33(1) of the Sixth Council Directive of 17 May 1977 on theharmonisation of the laws of the Member States relating to turnover taxes(77/388/EEC) to be interpreted with regard to the description ”characterised asturnover taxes” as precluding the imposition on traders by a Member State of atourism charge (contribution) which has the following features:
- it is payable by traders with a direct or indirect interest in the tourismindustry and therefore by a large number of, but not all, traders;
- it goes to a local tourism association to finance the development of thetourist industry or to a fund to be used for the whole region (Land);
- the basis of assessment is the yearly turnover with certain exceptions, inparticular turnover related to services to customers whose place of residence(seat) is outside the area covered by the legislation, in so far as the servicesare not for a business situated within the area covered by the legislation (aBundesland of a Member State composed of federal States) nor services tofinal consumers, and turnover related to other services in so far as they arenot supplied exclusively or primarily within the area covered by thelegislation (the Bundesland of the Member State);
- the amount of the charge varies according to the benefit deemed by thelegislature to be derived from tourism by the sector to which the taxpayerbelongs;
- the amount of the charge is higher in tourist areas than in others, and
- no provision is made for deduction of input tax?
Case C-390/97
Does Article 33(1) of the Sixth Council Directive of 17 May 1977 on theharmonisation of the laws of the Member States relating to turnover taxes Common system of value added tax: uniform basis of assessment (77/388/EEC)preclude, on the ground that it is in the nature of a turnover tax, the maintenancein force of a charge which is payable in a Bundesland (federal State) of a MemberState of the European Communities in respect of each calendar year by allundertakings directly or indirectly involved in tourism which have their registeredoffice or a place of business within that federal State, and the amount of which isessentially proportional to the turnover achieved by the undertaking in that federalState within a calendar year, but where the rate of contribution varies according tothe degree of benefit which the legislature deems the commercial sector in question(occupational group) to derive from tourism, and where no provision is made forthe deduction of input tax?
AG Opinion
Case C-338/97:
Article 33(1) 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 does not preclude the maintenance in force of a tax which is payable in a Bundesland (Regional State) of a Member State of the European Communities
- in respect of each calendar year by all undertakings with as direct or indirect interest in tourism which have their registered office or a place of business within certain closely defined areas, where those areas together comprise almost the entire Bundesland, and
- the amount of which is essentially proportional to the turnover achieved by the undertaking primarily in that Regional State within a calendar year, but where the rate of contribution varies according to the intensity of tourism in that area and according to the degree of benefit which the legislature deems the commercial sector in question (occupational group) to derive from tourism, and
- where no provision is made for the deduction of input tax.
Case C-344/97:
On a proper construction of Article 33(1) 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 the expression ‘characterised as turnover taxes‘ does not preclude Member States from imposing on traders a tourism tax (contribution) which has the following features:
- it is payable by traders with a direct or indirect interest in the tourist industry and therefore by a large number of traders, but not all;
- it is paid to a local tourist association to finance the development of the tourist industry or to a fund to be used for the whole region (Land);
- the basis of assessment is the annual turnover with certain exceptions, in particular turnover related to services to customers whose place of residence (seat) is outside the area covered by the legislation – in so far as those services are not for a business situated within the area covered by the legislation (a Bundesland of a Member State composed of federal States) and are not services to final customers – and turnover related to other services in so far as these are not supplied exclusively or primarily within the area covered by the legislation (the Bundesland of the Member State);
- the amount of the levy varies according to the benefit deemed by the legislature to be derived from tourism by the sector to which the taxpayer belongs;
- the amount of the levy is higher in tourist areas than in others, and
- no provision is made for deduction of input tax.
Case C-390/97:
Article 33(1) 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 does not preclude the maintenance in force of a tax which is payable in a Bundesland (Regional State) of a Member State of the European Communities in respect of each calendar year by all undertakings directly or indirectly involved in tourism which have their registered office or a place of business within that Regional State, and the amount of which is essentially proportional to the turnover achieved by the undertaking in that Regional State within the reference calendar year, but where the rate of contribution varies according to the degree of benefit which the legislature deems the commercial sector in question (occupational group) to derive from tourism, and where no provision is made for the deduction of input tax.
Decision
The Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisationof the laws of the Member States relating to turnover taxes Common system of value added tax: uniform basis of assessment, and in particular Article 33 thereof, does not preclude a charge of the kind introduced by the Steiermärkische Tourismusgesetz, the Tiroler Tourismusgesetz and the KärntnerFremdenverkehrsabgabegesetz, which is payable by traders in a federal Land whohave an economic interest in tourism, which is calculated, in principle, on the basis of annual turnover and from which input tax is not deductible.
Summary
Art 401 VAT Directive does not preclude a levy payable by entrepreneurs in a Bundesland who have an economic interest in tourism, which is in principle calculated on the basis of the annual turnover and does not allow deduction of input tax.
Source
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