Flashback on ECJ cases C-347/90 (Bozzi) – VAT Directive: States Allow Supplementary Contributions for Lawyers

On May 7, 1992, the ECJ issued its decision in the case C-347/90 (Bozzi).

Context: The interpretation of Artide 33 of 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 (OJ 1977 L 145, p. 1),

Article in the EU VAT Directive

Article 33 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

The question was raised in proceedings between Aldo Bozzi, a member of the Milan Bar, and the Cassa Nazionale di Previdenza ed Assistenza a favore degli
Avvocati e dei Procuratori Legali (Lawyers’ National Provident Fund, hereinafter ‘the Fund’) concerning rules under which a supplementary contribution (‘contributo integrativo’) must be paid in Italy by advocates and procuratori legali to the Fund.
It appears from the documents before the Court that all advocates and procuratori legali who are in continuous practice in Italy are required to be members of the Fund, which was set up by Law No 6 of 8 January 1952 (Gazzetta Ufficiale detta Repubblica Italiana No 16 of 19 January 1952). Contributions to the Fund and the system of benefits are governed by Law N o 576 of 20 September 1980 (‘Reform of the insurance scheme for the Bar’, Gazzetta Ufficiale detta Repubblica Italiana No 266 of 27 September 1980, hereinafter ‘Law No 576/1980’).
The rules governing supplementary contributions are laid down in Article 11 of Law N o 576/1980. Under that provision: (a) any person whose name appears on the roll of advocates and procuratori legali, including trainees affiliated to the Fund, must pay to the Fund a certain percentage of all fees which contribute to his annual turnover for the purposes of VAT, whether or not the amount has been paid by the client; the amount concerned may be passed on to the client; (b) professional associations and companies must also pay the supplement in respect of each of their members whose name is entered on the roll of advocates and procuratori legali. The total annual amount of the compulsory contributions payable to the Fund by each member of the profession is calculated as a percentage of the turnover of the association or company equal to the percentage of the share of income received by those members; (c) every year each member must pay to the Fund as a supplementary contribution a minimum amount calculated as a percentage of the turnover equal to 15 times the minimum contribution referred to in the second paragraph of Article 10 payable in respect of the same year; (d) the percentage of the supplement is fixed at 2%; (e) the supplementary contribution is not subject to income tax or VAT and is not taken into account for the purposes of calculating professional income.
Mr Bozzi considered that the levying of such a supplementary contribution was unlawful on the ground that it was contrary to Article 33 of the Sixth Council
Directive. He therefore brought an action before the Pretore di Milano to recove the amounts paid in respect of the contribution. The Pretore di Milano decided to refer the following question to the Court for a preliminary ruling

Questions

Is Article 33 of the Sixth Council Directive (No 77/388/EEC of 17 May 1977) to be interpreted as precluding the application in a Member State of a requirement that lawyers pay to the Lawyers’ National Provident Fund supplementary contributions based on the consideration payable by clients for their services, having regard to the fact that the consideration is already subject to VAT, the supplementary contribution is to be included separately on every invoice together with the VAT payable by the client and the contributions are used to provide insurance solely on the basis of the principle of solidarity and for all contributing lawyers, but not with regard to the individual contributors since their contributions do not count for pension purposes and cannot be reclaimed in the event that entitlement to a pension is not acquired?

AG Opinion

Article 33 of the Sixth VAT Directive does not preclude the imposition by a Member State of a requirement that lawyers pay to a provident fund a supplementary contribution such as the contributo integrativo.

Decision

Article 33 of the Sixth Council Directive (77/388/EEC) of 17 May 1977, on the harmonization of the laws of Member States relating to turnover taxes — Common system of value added tax, must be interpreted as meaning that it does not preclude the introduction or maintenance of contributions having the characteristics of the supplementary contribution (‘contributo integrativo’) payable in Italy by advocates and procuratori legali to the Cassa Nazionale di Previdenza ed Assistenza a favore degli Avvocati e dei Procuratori Legali.

Summary

Article 33 of the Sixth VAT Directive allows Member States to impose supplementary contributions on lawyers for a provident fund, even if the consideration is already subject to VAT. The contributions are used for insurance based on solidarity, but not for individual pension purposes.

Background and Legal Basis:
- The decision is based on the Treaty on the Functioning of the European Union and Regulation (EU) No 952/2013, specifically Article 281, which mandates the European Commission to establish a work programme for the development and deployment of electronic systems under the Union Customs Code.
Previous Work Programmes:
- The Commission had previously adopted work programmes in decisions 2014/255/EU, 2016/578, and 2019/2151, but the latter needs updating to reflect new developments in planning for electronic systems.
Content of the Updated Work Programme:
- The updated work programme lists electronic systems specified in Regulation (EU) No 952/2013, indicating relevant articles, and the expected operational dates. It distinguishes between “national systems” developed by Member States and “trans-European systems” developed in cooperation with the Commission.
Alignment with Multi-annual Strategic Plan for Customs:
- The electronic systems mentioned in the work programme are to be managed and developed in line with the multi-annual strategic plan for customs (MASP-C), as outlined in Decision No 70/2008/EC of the European Parliament and of the Council.
Deployment Details and Derogations:
- The work programme provides detailed deployment dates for each electronic system, aligning with transitional periods specified in Article 278 of Regulation (EU) No 952/2013. It allows Member States flexibility to choose deployment within specified windows. A specific case, the pre-arrival security and safety customs project (ICS2), has experienced delays, leading to a gradual three-step implementation, starting from June 3, 2023, for maritime carriers, followed by subsequent dates for other entities. Significant delays in certain Member States regarding national electronic systems have led to derogations granted by the Commission, with references to these derogations included in the Annex.