Report for the Hearing in Case C-9/92
I — Facts and legal background
(a) Community legislation
Council Directives 83/182/EEC on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another (OJ 1983 L 105, p. 59) and 83/183/EEC on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals (OJ 1983 L 105, p. 64) are both based on the assumption that the tax arrangements applicable in the Member States constitute obstacles to free movement of persons and that it is necessary to eliminate them by establishing tax exemptions in order to create an internal market.
Article 3 of Directive 83/182 provides:
Where a private vehicle (...) is imported temporarily, the item imported shall be exempt from the taxes specified in Article 1 for a period, continuous or otherwise, of not more than six months in any 12 months, provided that: (a) the individual importing such goods: (aa) has his normal residence in a Member State other than the Member State of temporary importation; (bb) employs the means of transport in question for his private use; (b) the said means of transport is not disposed of or hired out in the Member State of temporary importation or lent to a resident of that State. However, private vehicles belonging to a car-hire firm having its head office in the Community may be re-hired to nonresidents with a view to being re-exported, if they are in the country as a result of a hire contract which ended in that country.
Article 7 of Directive 83/182 and Article 6 of Directive 83/183 provide:
1. For the purposes of this Directive, normal residence means the place where a person usually lives, that is for at least 185 days, continuous or otherwise, in each calendar year, because of personal and occupational tics, or, in the case of a person with no occupational ties because of personal ties which show close links between that person and the place where he is living. (...) 2. Individuals shall give proof of their place of normal residence by any appropriate means, such as their identity card or any other valid document. 3. Where the competent authorities of the Member State of importation have doubts as to the validity of a statement as to normal residence made in accordance with paragraph 2, or for the purpose of certain specific controls, they may request any additional information or evidence.
Articles 2 and 3 of Council Directive 73/148/EEC of 21 May 1973 on the abolition of restrictions on movement and residence within the Community for nationals of Member States with regard to establishment and the provision of services (OJ 1973 L 172, p. 14) grant to nationals of the Member States the right to enter and leave the territory of the Member States simply on production of a valid identity card or passport and prohibits any other restrictions on movement and residence. Article 3(2) provides that: No entry visa or equivalent requirement may be demanded ....
(b) National legislation
Directive 83/182 was transposed into national law by Ministerial Order No Δ 1254/141/1984, subsequently amended by Ministerial Order No Δ 247/13 of 1 March 1988. The first subparagraph of Article 3 of the latter defines normal residence as:
Article 8(2) provides that:
Article 9(4) provides that:
Article 15 provides that:
Title II of Circular No Δ 366/26 Πολ 10 lists the documentary evidence which the authorities may take into account for the purpose of determining normal residence:
— passport identity card certificate of registration with municipality or commune certificate of registration with consular authorities residence permit work permit tax returns insurance company certificates documents proving the place of residence of other members of the family (spouse's occupation, school or university attended by children etc.) any other document which may in your opinion serve to prove normal residence in a certain place.
That provision ends as follows:
Directive 83/183 was transposed by Ministerial Order No Δ 264/23/2985, as amended by Order No Δ 245/11 of 1 March 1988. Article 2(1 )(c) of this order defines normal residence as:
Article 4(1) provides that:
According to Article 4(2):
Article 29(3) provides that:
(c) Pre-litigation procedure
By letter before action of 29 May 1989 (SG (89) D/6650), the Commission called on the Hellenic Republic in accordance with Article 169 of the EEC Treaty to submit its observations on the infringement of Directive 83/182; in that letter, the Commission reached the conclusion that (a) the first subparagraph of Article 3, the second subparagraph of Article 8(2) and Article 9(4) of Order 247/13, cited above, were incompatible with Community law and that (b) the failure to transpose Article 7(2) and (3) of the abovementioned directive into Greek national law was incompatible with Greece's obligations under the directive and the Treaty and constituted a practice incompatible with Community law. The Hellenic Republic did not reply.
By letter before action of 10 August 1989 (SG (89) D/10718), the Commission called on the Hellenic Republic in accordance with Article 169 of the EEC Treaty to submit its observations on the infringement of Directive 73/148; it warned the Greek authorities that the system of stamping passports with the particulars of the vehicle and specifying the maximum period for which the vehicle may remain in Greece (between one and six months) was contrary to Articles 2 and 3 of the directive. The Hellenic Republic's reply was, in the opinion of the Com mission, unsatisfactory.
Finally, by letter before action of 30 May 1989 (SG (89) D/6820), the Commission called on the Hellenic Republic in accordance with Article 169 of the EEC Treaty to submit its observations on the infringement of Directive 83/183; the Commission considered that (a) Articles 2(1)(c) and 4(1) of Order 245/11 were incompatible with the directive and that (b) the failure to transpose Article 6(2) and the routine checking of evidence establishing the place of normal residence were incompatible with Community law. The Greek Government did not reply, since it considered that it had already done so in a letter of 10 March 1989 concerning Directives 83/182 and 83/183 in particular.
Subsequently, the Commission sent two reasoned opinions to the Hellenic Republic pursuant to Article 169: by letter of 28 May 1990 (SG (90) D/22405), in which it stated that, by adopting and maintaining in force a system of temporary importation of means of transport which was incompatible with Council Directives 83/182 and 73/148, the Hellenic Republic had failed to fulfil its obligations under the EEC Treaty; and by letter of 7 March 1991 E (91) 232, in which it stated that, by adopting and maintaining in force a system of permanent importations from a Member State of the personal property of individuals which was incompatible with Directive 83/183, the Hellenic Republic had failed to fulfil its obligations under the EEC Treaty. The Greek authorities answered the first reasoned opinion by letter of 8 August 1990 and the second by letter of 28 March 1991.
Since the Greek authorities' replies did not satisfy the Commission, it decided to bring the present action.
II — Procedure and forms of order sought by the parties
The written procedure before the Court followed the normal course. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.
The Commission claims that the Court should:
declare that, by adopting and maintaining in force a system of temporary and permanent importation of means of transport which is incompatible both with Directives 83/182 and 83/183 on tax exemptions applicable to temporary and permanent imports from a Member State of the personal property of individuals and with Directive 73/148 on the abolition of restrictions on movement and residence within the Community for nationals of Member States, the Hellenic Republic has failed to fulfil its obligations under the EEC Treaty; order the Hellenic Republic to pay the costs.
The Hellenic Republic contends that the Court should:
dismiss the action; order the Commission to pay the costs.
III — Pleas in law and arguments of the parties
A — The general rules for determining normal residence
(a) Temporary importation
1. The Commission
1.1. According to the Commission, the first subparagraph of Article 3 of Ministerial Order No 247, cited above, is incompatible with Directives 83/182 and 83/183, since it defines normal residence by reference to a period of 12 months and not by reference to the calendar year, as required by the directives.
1.2. For the Commission, the length of time a person spends in a particular place is merely indicative of the existence of normal residence, of which it forms just one of the criteria.
2. The Hellenic Republic
2.1. The Hellenic Republic points out that, under Article 9 of Directive 83/182, as under Article 11(2) of Directive 83/183, the Member States may maintain and/or introduce more liberal arrangements than those provided for by those directives. That is the case with regard to the concept of normal residence, since the two directives are not based on the actual concept of residence and introduce formal and quantitative criteria without fully covering the substance. In that connection, it recalls the judgment of the Court in Case 284/87 Schäflein ν Commission [1988] ECR 4475 which indicates that the requirement of 185 days per calendar year is formal and quantitative; the defendant maintains that the directives authorize the national legislature to break away from the formalism of the definition and allow more liberal, and essentially fairer, treatment of those who are subject to the directives.
2.2. The Greek Government claims that, by calculating the 185 days in relation to a 12-month period instead of a calendar year, the national legislation makes the definition in question more flexible and accordingly more favourable to the persons concerned. Reducing the 12-month period to the calendar year is undeniably a further restriction of the concept of normal residence: persons who have resided for 185 days in a period of 12 months but not in the calendar year will not qualify for the exemption.
(b) Permanent importation
1. The Commission
1.1. According to the Commission, Article 2(1 )(c) of Ministerial Order No 245/88 gives a definition of normal residence similar to that given in the case of temporary importation and, therefore, it considers that the arguments set forth above at (a) also hold good for permanent importation.
1.2. The Commission regards Article 4(1) of Ministerial Order 245/88, under which the exemption is granted only to persons who have resided outside the Hellenic Republic for at least two periods of 12 months (24 months) before moving to Greece, as being incompatible with the Community provisions, which do not lay down any minimum length of residence in a country in order to acquire normal residence there.
2. The Hellenic Republic
With regard to the Commission's argument that the Greek authorities apply the 12-month period rule to prevent persons who had resided in Greece for more than 185 days during the 12 months preceding their move from qualifying for the exemption, the defendant points out that mere statements of fact, given their lack of detail, cannot serve as the basis of argument in law. Moreover, the allegation in question is not relevant to the issue, as Article 4(2) of Order No 245 makes quite clear: not only are the persons in question not prevented from qualifying for the exemption but, on the contrary, where those persons spend up to two years in the country, it is formally provided that their normal residence at the time they first arrived may be taken into consideration.
As regards the Commission's objection set out at (b)1.2 above, the Hellenic Republic points out that the idea of normal residence implies a close and permanent link with a given place. It is therefore necessary for the minimum annual residence of 185 days to occur in the course of several years. Article 4(1) of Order No Δ 245/11 takes that minimum period into account.
The Hellenic Republic denies that this provision leads to systematic checking of the length of residence outside Greece, since it neither lays down nor requires any control procedure more specific than that laid down and required by the directive concerned.
Determining normal residence at the time of importation does not, according to the Hellenic Republic, reverse the logic of the directive. It does not make the finding as to the place of residence depend on the place of importation, but simply on the date of importation.
Β — The practice of checking the place of normal residence
(a) Temporary importation
1. The Commission
The Commission claims that the defendant has not transposed into national law Article 7(2) and (3) of Directive 83/182. It points out in that regard that the practice of systematically checking the place of residence which has grown up in Greece, giving rise to several complaints, is confirmed by Circular No Δ 366/26 Πολ 10. Title II of that circular lists the documentary evidence which the customs authorities may accept as proof of residence and authorizes them to undertake further controls whenever it is not possible to ascertain from the passport or identity card how long the person was abroad in the 12-month period before the importation. It claims that those checks can be justified only where the authorities have good reason to believe that someone has his normal residence in Greece. As it derogates from the principle of facilitating freedom of movement for persons, Article 7(3) must be strictly interpreted and applied by way of exception, not systematically.
In the Commission's view, according to the case-law of the Court on the concept of normal residence, mere establishment of the fact that a person has not spent 185 days abroad, or has spent more than 185 days in Greece, is not sufficient to raise serious doubts as to a change of place of normal residence. On the contrary, the other criteria set out in Article 7 must be looked at (Case 13/73 Angenieux v Hakenberg [1973] ECR 935, Schäflein v Commission, cited above, in Case C-216/89 Reibold v Bundesanstalt für Arbeit [1990] ECR 4163 and Ryborg, cited above) to assess whether there are grounds for concluding that the person concerned has established his permanent centre of interests in Greece.
The Commission observes that the Court has consistently held that the Member States are required to ensure the full application of directives in a sufficiently clear and precise manner so that, where these are intended to create rights for individuals, they can ascertain the full extent of those rights and, where necessary, rely on them before the national courts (Case 363/85 Commission ν Italy [1987] ECR 1733, and in Case C-208/90 Emmott ν Minister for Social Welfare [1991] ECR I-4269, paragraph 19). That is not the case as regards Article 15 of Order No 247 of 1 March 1988, since it does not indicate either the means or the evidence judged to be sufficient by the Greek authorities as proof of normal residence.
The Commission also refers to the decisions of the Court according to which issuing a circular does not constitute proper fulfilment of the obligations imposed on the Member States by Article 189 of the Treaty and does not provide the requisite guarantees of clarity, precision and transparency to enable individuals to ascertain the full extent of their rights and obligations (Case C-339/87 Commission ν Netherlands [1990] ECR I-851, and in Case C-13/90 Commission ν France [1991] ECR I-4327).
2. The Hellenic Republic
The Hellenic Republic takes the view that under Article 7 of the directive the burden of proof of normal residence falls on the individual. The authorities of the Member State of importation may request any additional information where they have doubts as to the validity of a statement as to normal residence or as to its evidential value.
According to the Hellenic Republic, the items of evidence provided for in Title II of Circular No Δ 366/26 are listed by way of guidance to add substance to Article 7(2) of Directive 83/182 which accepts any other valid document as proof of place of residence; the reference to any other information capable of constituting evidence of the place in which a person lives is a transposition of Article 7(3).
The Hellenic Republic observes that, even if it regards its own nationals as forming a class of persons with respect to whom it may legitimately harbour particular doubts (because they may have occupational and personal ties both abroad and in Greece), this still does not mean that systematic checks are carried out.
(b) Permanent importation
The Commission remarks that its submissions concerning temporary importation are equally valid with regard to permanent importation, since the wording of Article 6(2) and (3) of Directive 83/183 is identical to that of Article 7(2) and (3) of Directive 83/182.
According to the Commission, Article 29(3) of Order No 245/11, cited above, does not properly transpose the directive because it grants the administrative authorities a broad discretion with regard to the production of documentary evidence and requires systematic checking of proof of normal residence. It is apparent from Article 29 and from the Greek authorities' reply to the reasoned opinion that the persons concerned must, in most cases, produce documentary evidence other than a residence permit. According to the complaints which it has received, the Greek authorities require foreigners to produce a permit for five years' residence in Greece, otherwise they will not give authorization for temporary or permanent importation.
The Commission also considers that it is incompatible with Directive 83/183 to make the grant of the exemption subject to production of a certificate of change of residence issued by the Greek consulate for the place where the persons concerned used to live, because of the resulting restrictions and difficulties.
The Commission points out that the Greek provision requires Greek nationals claiming the exemption to prove exactly how long they have stayed. That requirement leads to systematic checks being carried out since identity cards or passports, or even residence permits, do not reveal that information.
The Hellenic Republic maintains that the objection to the requirement of authorization for five years' residence in Greece is not supported by any solid evidence. Emigration certificates are issued by consular authorities in accordance with a simple procedure and are intended to enable Greeks returning home to make exempt imports where their identity cards or other valid documents do not provide sufficient proof of their residence. The issuing of a change of address certificate provides an alternative option in addition to the provisions of Article 29(2). With regard to Greeks who claim the exemption, the Hellenic Republic notes that the Commission has not referred to a single case of the competent authorities using the power under Article 6(3) of Directive 83/183 in bad faith.
C — Stamping of passports when foreign vehicles enter and leave Greece
The Commission claims that the system of stamping passports with vehicles' registration numbers when vehicles enter and leave Greece amounts to discriminatory treatment of persons going to Greece: those who produce their passport undergo checks and the resulting delays, while others who simply produce their identity card may enter freely and without difficulty. In the Commission's view, any obstacle to freedom of movement for persons is contrary to Directive 73/148 and by extension to Directive 83/182. It refers here to the case-law of the Court (Case 321/87 Commission ν Belgium [1989] ECR 997) according to which carrying out controls upon entry into the territory of a Member State may constitute a barrier to the free movement of persons if it were found that the controls in question were carried out in a systematic, arbitrary or unnecessarily restrictive manner. The Commission also refers to the decision of the Court (Case 157/79 Pieck [1980] ECR 2171) concerning the terms entry visa and equivalent requirement used by Article 3(2) of Directive 73/148: any formality for the purpose of granting leave to enter the territory of a Member State which is coupled with a passport or identity card check at the frontier, whatever may be the place or time at which that leave is granted and in whatever form it may be granted (paragraph 10).
The Commission notes that the fact that Greeks have been given the right to travel with only an identity card does not necessarily mean that the practice of stamping passports where these documents are produced has been ended.
The Hellenic Republic states that the entry of vehicle registration numbers in passports is not a general practice, since people living in the Community more frequently use identity cards; even the possibility of applying that practice to Greeks living abroad has ceased to exist since from 10 June 1991 they have been able to travel between Member States of the EEC with only their identity cards.
Directive 73/148 concerns only the movement of persons and not of the goods which they take with them when they move; the practice of entering vehicle numbers was intended to check how long temporarily imported vehicles remain in Greece and was not meant to be a check on persons or on their normal residence.
D — Time-limit for re-exportation of vehicles belonging to car-hire firms having their head office in the Community
The Commission considers that the second subparagraph of Article 8(2) of Order No 247/13 introduces a restriction with respect to Article 3(b) of the directive which does not lay down any specific time-limit for re-exportation. Such a restriction limits, or even hinders, the re-hiring of the vehicle.
The Commission here refers to the decisions of the Court, according to which, where there is harmonization — as is the case with Directive 83/182 —, Member States are not authorized to overstep the limits laid down by the provisions of the directive (Case 815/79 Cremonini and Vrankovich [1980] ECR 3583, paragraph 6).
The Hellenic Republic contends that, having regard to its objective, re-exportation allows derogation from the general prohibition on disposing of or hiring out means of transport in the State of importation (Article 3(b) of Directive 83/182), but that this aim would be pointless if it was possible for those vehicles to remain throughout the duration of the exemption. Authorizing some businesses for a fairly long period to use cars at less cost than those used by competing businesses would clearly cause distortion of competition between similar undertakings.
E — Limiting the tax exemption on temporary importation to a period of three months
In its reply, the Commission abandons this objection. It acknowledges that in most cases vehicles supplied with temporary numberplates in the State of exportation have not complied with that State's conditions of taxation.
F — Prohibition on transfers of vehicles in adjacent countries
In its reply, the Commission abandons this objection, because the prohibition on transfers in adjacent countries was repealed by Article 9(3) of Law No 1957 of 1991.
1 Language of the case: Greek.