Report for the Hearing in Case C-208/91
I — Legal background to the dispute in the main proceedings
A — National legislation
1. Under French law, VAT is charged on transactions contributing to the production or supply of buildings, pursuant to Article 257(7) of the Code Général des Impôts (General Tax Code, hereinafter CGI), which states:
2. Under Article 691 of the CGI:
3. With reference to this article, Article 1840 G ter of the CGI provides as follows:
4. Finally, the second paragraph of Article 291 of Annex II to the CGI states:
B — The Community legislation
5. Article 33 of the Sixth Council Directive No 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of VAT: uniform basis of assessment (OJ 1977 L 145, p. 1, hereinafter the Sixth Directive) provides as follows:
II — Facts and procedure
6. Mr Beaulande, the applicant in the main proceedings, purchased a house in Nantes in January 1980, undertaking to demolish it and to erect a residential building within four years.
7. Mr Beaulande subsequently applied for and obtained three successive building permits for the said house, all three of which were withdrawn voluntarily. On 11 September 1984 the tax authorities rejected an application for an extension of the building period and on 12 November 1984 issued him with an assessment to tax, which was confirmed on 26 February 1985.
8. On 4 June 1986 an order for payment of the stamp duty due under Article 1840 G ter of the CGI, amounting to FF 221700, plus an additional duty of 6%, equal to FF 71091, was served on the applicant.
9. A complaint by Mr Beaulande was rejected by decision of 2 June 1989, notified to him on 13 July 1989.
10. On 14 September 1989 Mr Beaulande brought an action against the Directeur des Services Fiscaux (Director of the Tax Authorities) of Loire Atlantique to have the demand for payment of 4 June 1986 declared void, primarily on the grounds that the stamp duty could be characterized as a turnover tax, so that its imposition alongside VAT on the occasion of the same conveyance was in breach of Article 33 of the Sixth Directive.
11. In their reply, the French tax authorities argued that Article 33 of the Sixth Directive should not be taken out of the general context of that directive. Article 4(3)(b) states that Member States may consider the supply of building land as subject to VAT. In their view, it follows that the French State may set a time-limit for the collection of VAT on building land and make it subject to an undertaking by the purchaser to build within a period of four years, failing which the transactions in real property may be taxed in the normal way at the proportional rates of stamp duty.
12. The dispute came before the Tribunal de Grande Instance (Regional Court), Nantes, which decided by judgment of 7 May 1991 to refer the following question to the Court of Justice for a preliminary ruling:
13. The order for reference was received at the Court Registry on 2 August 1991.
14. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by R. Beaulande, the applicant in the main proceedings, acting on his own behalf, by the French Government, represented by P. Pouzoulet and G. de Bergues, acting as Agents, and by the Commission of the European Communities, represented by Mr J. F-. Bühl, Legal Adviser, acting as Agent.
III — Summary of the written observations submitted to the Court
1. Mr Beaulande, the applicant in the main proceedings, first describes the relevant French legislation and asserts that its objective is (1) to bring building land within the scope of VAT and (2) to remove it from the scope of VAT retroactively if a building has not been erected on the land within a period of four years. In the latter case, he maintains, the VAT arrangements originally applied are called into question and stamp duty is charged retroactively. In his view, that legislation therefore retroactively cancels the initial tax charged (VAT) and replaces it by stamp duty.
2. According to the French Government, it is unequivocally clear from the very wording of Article 33 of the Sixth Directive that the directive does not preclude the levying of national taxation alongside VAT. It points out in this regard that the Court of Justice has expressly acknowledged that Community law, as it now stands, does not preclude the existence of such taxes, even where levying them may result in their imposition together with VAT in respect of one and the same transaction (judgment in Case 73/85 Kerrutt v Finanzamt Mönchengladbach-Mitte [1986] ECR 2219).
3. The Commission begins by pointing out that the Court of Justice has given several rulings on the interpretation of Article 33 of the Sixth Directive. According to the Commission, the prohibition imposed by Article 33 of the directive on Member States maintaining or introducing their own volition taxes, duties and charges that can be characterized as turnover taxes has been interpreted by the Court as clarifying the general principle proclaimed in Article 5 of the Treaty, whereby it is incumbent upon Member States to ensure fulfilment of the obligations arising out of the Treaty or resulting from action taken by the Community institutions.
1 Language of the case: French.