Report for the Hearing in Case C-131/91
I — Legal background to the main proceedings
A — The national provisions
1. Under Article 35 of the Belgian Value Added Tax Code, as amended by Article 17 of the Law of 27 December 1977 {Moniteur Belge of 30 December 1977), The King may lay down a minimum basis of assessment for supplies and imports of: 1. motor cars, motor cycles and other land vehicles whatever the type of motor, and also trailers; 2. ....
2. That article was implemented by Royal Decree No 17 of 20 July 1970 {Moniteur Belge of 31 July 1970), which laid down a minimum basis of assessment for VAT purposes for both new and secondhand cars. That decree was repealed by Royal Decree No 17 of 20 December 1984 {Moniteur Belge of 3 January 1985) laying down a minimum basis of assessment for value added tax purposes for secondhand cars and secondhand vehicles intended for mixed use (private and commercial). Article 1 of the decree provides that:
3. Under Article 2(1) of the decree the basis of assessment may not be lower than a specified percentage of the list price. The percentages are fixed according to the period of time which elapsed between the date on which the vehicle was first used and the date on which it was supplied or imported: 85% if VAT is due within three months; 80% if VAT is due within four, five or six months; 70% if VAT is due within seven, eight or nine months; 65% if VAT is due within ten, eleven or twelve months; 55% if VAT is due within two years; 45% if VAT is due within three years, and so forth.
4. According to Article 2(2), the list price is the price, fixed by the manufacturer at the time when the vehicle was first used, for sale to the user of new cars intended for mixed use of the same type with their equipment and accessories.
B — The Community provisions
5. As regards the basis of assessment, Article HA(l)(a) of the Sixth Directive provides that:
6. Article 27 of the Sixth Directive provides for simplification measures by way of derogation from the rules of secondary Community law concerning the levying of VAT. Article 27(1) provides that:
7. In addition, Article 32 of the directive lays down special rules concerning secondhand goods in the following terms:
II — Facts and procedure
8. The plaintiff in the main proceedings, K Line Air Service Europe BV, sold in 1988 a Mercedes 280 SE motor car which had already been used, and which was therefore no longer a new car, to Eulaerts NV, the first defendant in the main proceedings, for the sum of BFR 260000. VAT was calculated on the selling price at 25% plus 8% luxury tax, resulting in a total amount of BFR 85800. The plaintiff and the first defendant are taxable persons for VAT purposes.
9. In the course of an inspection the tax authorities noted that under the Belgian legislation VAT should have been calculated by reference to the minimum basis of assessment for secondhand cars. That minimum basis of assessment was 55% of the list price. The VAT payable on the supply of the car therefore amounted to BFR 176963. That amount was paid by K Line.
10. K Line claimed from Eulaerts, the purchaser of the car, the additional VAT and luxury tax amounting to BFR 91163 (176963 — 85800). However, Eulaerts refused to pay the invoice because in its view the minimum basis of assessment was contrary to the provisions of the Sixth Directive.
11. K Line therefore instituted proceedings against Eulaerts before the Rechtbank van Eerste Aanleg, Brussels, claiming payment of the sum of BFR 91163. Subsequently, the Belgian State was also joined to the proceedings with a view to securing reimbursement of the sum should Royal Decree No 17 infringe the Sixth Directive.
12. By a judgment of 2 May 1991 the Rechtbank van Eerste Aanleg declared the application admissible and, before giving judgment on the substance, referred the following question to the Court of Justice for a preliminary ruling:
13. The order for reference was lodged at the Registry of the Court on 16 May 1991.
14. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by Eulaerts, the first defendant, represented by H. van den Keybus of the Brussels Bar; by the Belgian State, the second defendant, represented by I. Maselis of the Brussels Bar; and by the Commission of the European Communities, represented by J. F. Buhl, Legal Adviser, and P. van Nuffel, of its Legal Service, acting as Agents.
Ill — Written observations submitted to the Court
A — The compatibility of Royal Decree No 17 with the Sixth Directive
1. Eulaerts, the first defendant, observes first that under Article 11 of the Sixth Directive the taxable amount in the case of the sale of goods is the price. According to Eulaerts, that uniform taxable amount has crucial importance for the harmonization of the legislation of the Member States concerning VAT, since it makes it possible inter alia for the application of the Community rate to taxable transactions to lead to comparable results. In this case, the taxable amount provided for by the Sixth Directive is, according to Eulaerts, completely disregarded, the Belgian State maintaining its own rules which are entirely different from the Community rules.
2. The Belgian State, the second defendant, refers first to the judgments of the Court in Case 324/82 Commission v Belgium, above and Case 391/85 Commission v Belgium [1988] ECR579. It maintains that in those judgments it was only in relation to new cars that the Court held that the minimum taxable amount based on the list price was incompatible with the Sixth Directive. As regards the minimum taxable amount for secondhand cars, Belgium points out that the Commission has not instituted infringement proceedings because it considers that the Belgian legislation is covered by the second paragraph of Article 32 of the directive.
3. The Commission, after setting out the relevant Community and national legislation and the case-law of the Court, states that the present dispute concerns the taxable amount on the sale of a secondhand car between taxable persons. In its view, the reply to the question raised by the national court therefore requires in particular examination of the scope of Article 32 of the Sixth Directive concerning secondhand goods. If Article 32 of the directive is not applicable, the Commission considers that the question arises as to the effect of Article 27 of the directive, concerning the simplification measures which the Member States may adopt pursuant to that article.
B — The compatibility of Royal Decree No 17 with Articles 9 to 11 of the EEC Treaty
1. Euherts considers that, by applying a minimum taxable amount, the Belgian State prevents the parties from taking account of the specific depreciation of the motor car concerned. Yet certain makes of car have the reputation of depreciating more rapidly than other makes because of rust. Makes which have that reputation command a lower price on the secondhand market.
2. Belgium argues that the minimum taxable amount introduced by Royal Decree No 17 constitutes neither a customs duty nor a charge having equivalent effect to a customs duty.
3. The Commission considers that the dispute in the main proceedings concerns solely the question as to the amount of VAT due on the sale of a secondhand car in Belgium. In the Commission's view, there does not appear to be any relevant international aspect to the dispute such as to require an interpretation of the Community provisions concerning the free movement of goods.
1 Language of the case: Dutch.