JUDGMENT OF 21. 10. 1970 — CASE 23/70 HASELHORST v FINANZAMT DÜSSELDORF
In Case 23/70 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht Düsseldorf for a preliminary ruling in the action pending before that court between
THE COURT composed of: R. Lecourt, President, A. M. Donner (Rapporteur) and A. Trabucchi, Presidents of Chambers, W. Strauß, R. Monaco, J. Mertens de Wilmars and P. Pescatore, Judges, Advocate-General: K. Roemer Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Facts and procedure
II — Summary of the observations of the parties
1 — The first question
(a) Observations of the Commission
(b) Observations of the plaintiff
2 — The second question
(a) Observations of the Commission
(b) Observations of the plaintiff
(c) Observations of the German Government
3 — The third question
(a) Observations of the Commission
(b) Observations of the plaintiff
(c) Observations of the German Government
Grounds of judgment
The first question
The second question
The third question
Costs
I —. Facts and procedure
1. Do the provisions of Article 4 of the Decision of the Council of Ministers of the EEC of 13 May 1965 on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway (65/271/EEC — OJ No 88 of 24.5.1965), in conjunction with Article 1 of the First Directive of the Council or Ministers of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes (67/227/EEC)—OJ No 71 of 14. 4. 1967) or, possibly, with the second paragraph of Article 5 and Articles 74 and 80 of the EEC Treaty, produce direct effects in the legal relationships between the Member States and individuals and do they create individual rights which the courts of the Member States must protect?
2. Did the provisions of Article 4 of the Decision of the Council of Ministers of the EEC of 13 May 1965, in conjunction with Article 1 of the First Directive of the Council of Ministers of 11 April 1967 or, possibly, with the second paragraph of Article 5 and Articles 74 and 80 of the EEC Treaty, impose a prohibition before 1 January 1970 on any Member State which had introduced the common system of value-added tax and abolished specific taxes on the carriage of goods, on the introduction of specific taxes on the carriage of goods levied instead of turnover tax, where the Member States had not yet all adopted these abovementioned measures?
3. Does the German tax on the transport of goods by road (Bundesgesetzblatt - 1968, I, p. 1461) which is imposed on an activity and not on an exchange of services and the basis of assessment of which is not the consideration for a service but rather the product thereof, constitute a specific tax within the meaning of Article 4 of the Decision of the Council of Ministers of 13 May 1965?
II —. Summary of the observations of the parties
1. — The first question
(a). Observations of the Commission
1. Under Article 189 of the Treaty decisions addressed to Member States are only binding upon those Member States to which they are addressed. Therefore they can only have an indirect effect on citizens. They can only give rise to direct rights and duties for the citizen if an implementing measure is adopted under national law. The fact that Article 189 of the Treaty only acknowledges that regulations have direct effect can be invoked in favour of this line of argument.
2. As regards secondary Community law, the Treaty deliberately makes a distinction between legal measures which are directly applicable-regulations — and legal measures not of this nature (directives and decisions addressed to Member States). This carefully established distinction would be destroyed if particular provisions in a decision addressed to Member States were acknowledged to be directly applicable. The result would be legal uncertainty.
3. In some sectors (for example agriculture, transport and commercial policy) the Therefore it more or less depends on measure. In other sectors the only legal instrument permitted is a directive, for example as regards the right of establishment and of provision of services and harmonization of legislation. From this it can be deduced that Member States did not wish to grant the Community any direct legislative power in these sectors.
4. Finally, under the Treaty it is not necessary for decisions to be published. Therefore it more or less depends onchance or the shrewdness of the individual whether he can invoke provisions of Community law favourable to him in the courts of his country. This leads to some degree of inequality before the law, since it cannot be assumed a priori that the judge is aware of legal measures which have not been published.
1. According to the case-law of the Court of Justice with regard to the provi sions of the Treaty which produce direct effects, the determining factor is not that Member States are named as the addressees. The only question is whether a provision is directly applicable per se. The considerations which the Court of Justice has put forward in this respect as regards the provisions of the Treaty may be applied to the provisions of a decision addressed to Member States.
2. It is certainly correct that Article 189 of the Treaty expressly recognizes only regulations as having direct effect in all Member States. However, the definition of a decision which is laid down in Article 189 does not in any way exclude the possibility, in certain circumstances of acknowledging that even decisions addressed to Member States have this effect. A distinction must be. made between direct applicability within the meaning of Article 189 of the Treaty and provisions which can produce direct effects on the legal relationships between Member States and those subject to their jurisdiction. Direct applicability, within the meaning of Article 189, means in particular that no national legislation is required to make a measure adopted under Community law effective. As to whether provisions can produce direct effects as regards individuals within the meaning of the case-law of the Court, that on the other hand is a question — to the extent to which obligations to performsome action are involved — whether an individual can have direct rights in spite of the absence of national implementing legislation.
3. The danger of legal uncertainty must not be exaggerated. Essentially, no problems can arise unless decisions prescribe a certain course of action to be followed by Member States and unless the period given to them for this purpose expires without that course of action having been carried out. To prevent this, periods of sufficient length could be laid down and Member States for their part could do everything to enact the necessary implementing provisions within the required time. If one adds that according to the case-law of the Court of Justice the provisions must be unequivocal and unconditional, it follows that the question of direct applicability should only arise with regard to a small number of decisions.
4. The fact that certain provisions contained in decisions addressed to Member States are acknowledged to be directly applicable does not mean that the system of legal measures of secondary Community law as laid down in Article 189 of the Treaty has been abandoned. The result of the direct applicability of some provisions is on the contrary the reinforcement of the legal protection of the personal rights of the individual, since the system in Article 189 of the Treaty is retained just as it is in other respects.
5. It is customary for the institutions of the Community, apart from very rare exceptions, to publish for information purposes decisions addressed to Member States in the Official Journal. The argument based on the fact that the publication of decisions addressed to Member States is not compulsory is thus shown to be of little weight inasmuch as the institutions of the Community go beyond the duty of publication laid down in Article 191 of the Treaty and also publish decisions addressed to Member States.
6. The case-law of the Court seems to provide arguments in favour of the direct applicability of decisions and not reasons for opposing it. Thus, in its judgment of 18 February 1970 in Case 38/69, the Court of Justice expresses itself in the following terms about the so-called Acceleration Decision of 26 July 1966 (OJ 1966, p. 297):
(b). Observations of the plaintiff
2 —. The second question
(a). Observations of the Commission
(b). Observations of the plaintiff
(c). Observations of the German Government
3. — The third question
(a). Observations of the Commission
(b). Observations of the plaintiff
(c). Observations of the German Government
1. By an order dated 20 May 1970 received at the Court on 25 May 1970 the Finanzgericht Düsseldorf has referred to the Court, pursuant to Article 177 of the Treaty establishing the European Economic Community, several questions on the interpretation of Article 4 of the Council Decision of 13 May 1965 on the harmonization on certain provisions affecting competition in transport by rail, road and inland waterway (OJ Special Edition 1965, p. 67) and of Article 1 of the First Council Directive of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes (OJ Special Edition 1967, p. 14), as well as of the second paragraph of Article 5, and Articles 74 and 80 of the EEC Treaty.
2. In its first question the Finanzgericht asks the Court for a ruling on whether the provisions of Article 4 of the Decision, in conjunction with Article 2 of the Directive and, possibly, with the second paragraph of Article 5 and Articles 2, 74 and 80 of the Treaty, produce direct effects in the legal relationships between the Member States and those subject to their jurisdiction in such a way that these provisions create rights for individuals which the national courts must protect.
3. The question concerns the combined effect of provisions contained in a decision and a directive. According to Article 189 of the EEC Treaty a decision is binding in its entirety upon those to whom it is addressed. Furthermore, according to this article a directive is binding, as to the result to be achieved, upon each Member State to which it is addressed, but leaves to the national authorities the choice of form and methods.
4. Mention was made, in the observations of the parties, of the opinion that by distinguishing between the effects of regulations on the one hand and of decisions and directives on the other, Article 189 precludes the possibility of decisions and directives producing the effects mentioned in the question, which are reserved to regulations.
5. However, although it is true that by virtue of Article 189 regulations are directly applicable and therefore, by virtue of their nature, capable of producing direct effects, it does not follow from this that other categories of legal measures mentioned in that article can never produced similar effects. In particular, the provision according to which decisions are binding in their entirety on those to whom they are addressed enables the question to be put whether the obligation created by the decision can only be invoked by the Community institutions against the addressee or whether such a right may possibly be exercised by all those who have an interest in the fulfilment of this obligation. It would be incompatible with the binding effect attributed to decisions by Article 189 to exclude in principle the possibility that persons affected may invoke the obligation imposed by a decision. Particularly in cases where, for example, the Community authorities have, be means of a decision, imposed an obligation on a Member State or all the Member States to act in a certain way, the effectiveness (l'effet utile) of such a measure would be weakened if the nationals of that state could not invoke it in the courts and the national courts could not take it into consideration as part of Community law. Although the effects of a decision may not be identical with those of a provision contianed of a provision contained in a regulation this difference des not exclude the possibility that the end result, namely the right of the individual to invoke the measure before the courts, may be the same as that of a directly applicable provision of a regulation.
6. Article 177, whereby the national courts are empowered to refer to the Court all questions regarding the validity and interpretation of all acts of the institutions without distinction, also implies that individuals may invoke such acts before the national courts. Therefore, in each particular case, it must be ascertained whether the nature, background and wording of the provision in question are capable of producing direct effects in the legal relationships between the addressee of the act and third parites.
7. The Council Decision of 13 May 1965 addressed to all the Member States is based in particular on Article 75 of the Treaty which empowers the Council to lay down common rules, the conditions under which non-resident carriers may operate and any other appropriate provisions to implement a common transport policy. The Council therefore has extensive freedom in the choice of the measures to adopt. The decision in question, taken as a whole, lays down the objectives to be achieved within the context of a policy of harmonizing national provisions and the timetable for their realization. In view of these objectives the first paragraph of Article 4 of the decision provides that once a common system of turnover tax has been adopted by the Council and brought into force in the Member States, the latter shall apply that system, in a manner to be determined, to the carriage of goods by rail, road and inland waterway. The second paragraph of that article provides that this common system of turnover tax shall, in so far as the carriage of goods by road, by rail and by inland waterway is subject to specific taxes instead of to the turnover tax, replace such specific taxes.
8. Thus this provision imposes two obligations on the Member States: first, to apply the common system of turnover tax to the carriage of goods by rail, road and inland waterway by a given date, and secondly, to replace the specific taxes (referred to by the second paragraph) by this system no later than the date when it has been brought into force. This second obligation obviously implies a prohibition on introducing or reintroducing such taxes so as to prevent the common system of turnover tax from applying concurrently in the field of transport with additional tax systems of the like nature.
9. It is apparent from the file submitted by the Finanzgericht that the question relates in particular to the second obligation. This second obligation is by its nature mandatory and general, although the provision leaves open the determination of the date on which it becomes effective. It thus expressly prohibits the Member States from applying the common system of turnover tax concurrently with specific taxes levied instead of turnover taxes. This obligation is unconditional and sufficiently clear and precise to be capable of producing direct effects in the legal relationships between the Member States and those subject to their jurisdiction.
10. The date on which this obligation becomes effective was laid down by the Council directives on the harmonization of the legislation concerning turnover taxes which fixed the latest date by which the Member States must introduce into their legislation the common system of value-added tax. The fact that this date was fixed by a directive does not deprive this provision of any of its binding force. Thus the obligation created by the second paragraph of Article 4 of the Decision of 13 May 1965 was protected by the First Directive. Therefore this provision imposes on the Member States obligations — in parituclar the obligation not to apply, as from a certain date, the common system of value-added tax concurrently with the specific taxes mentioned — which are capable of producing direct effects in the legal relationships between the Member State and those subject to their jurisdiction and of creating the right for the latter to invoke these obligations before the courts.
11. It is therefore unnecessary to consider the articles of the Tretay to which this question refers as the second paragraph of Article 4 of the decision need not be read in conjunction with them in order to produce the effects in question.
12. In its second question, the Finanzgericht asks the Court to rule whether the provisions of Article 4 of the Decision, in conjunction with Article 1 of the directive or, possibly, with the second paragraph of Article 5 and Articles 94 and 80 of the EEC Treaty, prohibits a Member State which has brought into force in its territory the common system of value-added tax and abolished specific taxes on transport) from reintroducing before 1 January 1970 specific taxes on transport levied instead of turnover tax if by this date the Member States have not all introduced these measures. To the extent to which it deals with Article 1 of the First Directive, this question clearly refers to the provisions of this Article, as amended by the Third Council Directive of 9 December 1969 on the same subject (OJ Special Edition 1969, p. 551 et seq.) which replaced the date of 1 January 1970 by 1 January 1973.
13. It is true that a literal interpretation of the second paragraph of Article 4 of the Decision might lead to the view that this provision refers to the date on which the Member State concerned has brought the common system into force in its own territory.
14. However, such an interpretation would not correspond to the aim of the directives in question. The aim of the directives is to ensure that the system of value-added tax is applied thoughout the Common Market from a certain date onwards. As long as this date has not yet been reached the Member States retain their freedom of action in this respect.
15. Moreover, the objective of the Decision of 13 May 1965 can only be achieved at the Community level and therefore cannot be brought about solely by the introduction of harmonization measures on the part of Member States individually at different dates and according to different timetables. It may be concluded from an interpretation of the combined provisions of Article 4 of the Decision and Article 1 of the Directive that the prohibition arising under the second paragraph of Article 4 of the Decision could only take effect as from 1 January 1972.
16. This conclusion cannot be modified by a consideration of the second paragraph of Article 5 and Articles 74 and 80 of the Treaty, which are referred to in the questions. Nothing in these provisions could affect the entry into force of the probihition arising from the second paragraph of Article 4 of the Decision.
17. In its third question, the Finanzgericht asks the Court to rule whether the federal tax on the carriage of goods by road (Straßengüterverkehrsteuer) which is imposed upon an activity rather than on an exchange of services, and which is not the price for a service rendered, but the product of the factors making up the service, must be considered a specific tax within the meaning of the second paragraph of Article 4 of the Decision of 13 May 1965.
18. It is not for the Court in these proceedings to assess from the point of view of Community law the features of a tax introduced by one of the Member States. On the other hand, it is within its jurisdiction to interpret the relevant provision of Community law in order to enable the national court to apply it correctly to the tax at issue.
19. Article 4 provides for the abolition of specific taxes in order to ensure a common and consistent system of taxation of turnover. By favouring in this way the transparency of the market in the field of transport this provision contributes to the approximation of the conditions of competition and must be regarded as an essential measure for the harmonization of the tax laws of the Member States in the field of transport. This objective does not prohibit the imposition on transport services of other taxes which are of a different nature and have aims different from those pursued by the common system of turnover tax.
20. A tax with the features described by the Finanzgericht which is not imposed on commercial transactions but on a specific activity, without distinguishing, moreover, between activities on one's own account and those on the account of others, and the basis of assessment of which is not the consideration for a service but the physical load expressed in metric tonnes/kilometers to which the roads are exposed through the activity taxed, does not correspond to the usual form of turnover tax. Furthermore the fact that it is intended to effect a redistribution of traffic is capable of distinguishing it from the specific taxes referred to in the second paragraph of Article 4. The question must therefore be answered to this effect.
21. The costs incurred by the Government of the Federal Republic of Germany and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the Finanzgericht Düsseldorf, the decision on costs is a matter for that court.
On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the plaintiff in the main action, the Government of the Federal Republic of Germany and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 5, 74, 75, 80, 177 and 189; Having regard to the Council Decisions of 13 May 1965, especially Article 4; Having regard to the Council Directives of 11 April 1967 and 9 December 1969 on the harmonization of legislation of the Member States concerning turnover taxes; Having regard to the Protocol on the Statute of the Court of Justice of the European Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the questions referred to it by the Finanzgericht Düsseldorf, by order of that court of 20 May 1970, hereby rules :
1 The second paragraph of Article 4 of the Council Decision of 13 May 1965, which prohibits the Member States from applying the common system of turnover taxes concurrently with specific taxes levied instead of turnover tax, is capable, in conjunction with the provisions of the Council Directives of 11 April 1967 and 9 December 1969, of producing direct effects in the legal relationships between the Member States to which the decision is addressed and those subject to their jurisdiction, and of creating for the latter the right to invoke these provisions before the courts;
2 The prohibition on applying the common system of turnover tax concurrently with specific taxes becomes effective on the date laid down in the Third Council Directive of 9 December 1969, namely on 1 January 1972;
3 A tax with the features described by the Finanzgericht which is not imposed upon commercial transactions but merely because goods are carried by road and the basis of assessment of which is not consideration for a service but the physical load expressed in metric tonnes/kilometers to which the roads are subjected through the activity taxed, does not correspond to the usual form of turnover tax within the meaning of the second paragraph of Article 4 of the Decision of 13 May 1965.
1 Translator's note: the third paragraph would appear to be meant.