JUDGMENT OF THE COURT (Fifth Chamber)
28 January 1999 (1)
(Part Four of the EC Treaty Article 227 of the EC Treaty Article 7(1)(a) ofSixth Directive 77/388/EEC Goods in free circulation in overseas countries andterritories)
In Case C-181/97,
REFERENCE to the Court under Article 177 of the EC Treaty by the Hoge Raadder Nederlanden for a preliminary ruling in the proceedings pending before thatcourt between
A. J. van der Kooy
and
Staatssecretaris van Financiën
on the interpretation of Articles 132(1) and 227 of the EC Treaty and of Article7(1)(a) of Sixth Council Directive 77/388/EEC of 17 May 1977 on theharmonisation 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), as amended by Council Directive 91/680/EEC of 16 December 1991supplementing the common system of value added tax and amending Directive77/388/EEC with a view to the abolition of fiscal frontiers (OJ 1991 L 376, p. 1),
THE COURT (Fifth Chamber),
composed of: J.-P. Puissochet, President of the Chamber, J.C. Moitinho deAlmeida, C. Gulmann, D.A.O. Edward (Rapporteur) and M. Wathelet, Judges,
Advocate General: D. Ruiz-Jarabo Colomer,
Registrar: H. von Holstein, Deputy Registrar,
after considering the written observations submitted on behalf of:
Mr Van der Kooy, by G.J. Jansen and G.J. van Slooten, tax advisers,
the Netherlands Government, by J.G. Lammers, Acting Legal Adviser in theMinistry of Foreign Affairs, acting as Agent,
the French Government, by K. Rispal-Bellanger, Head of Subdirectorate inthe Legal Directorate, Ministry of Foreign Affairs, and A. de Bourgoing,Chargé de Mission in the same directorate, acting as Agents, and
the Commission of the European Communities, by B.J. Drijber, of its LegalService, acting as Agent,
having regard to the Report for the Hearing,
after hearing the oral observations of the Netherlands Government, represented byM. Fierstra, Deputy Legal Adviser in the Ministry of Foreign Affairs, acting asAgent; of the French Government, represented by A. de Bourgoing; and of theCommission, represented by P. van Nuffel, of its Legal Service, acting as Agent, atthe hearing on 12 March 1998,
after hearing the Opinion of the Advocate General at the sitting on 30 April 1998,
gives the following
Judgment
- 1.
- By judgment of 7 May 1997, which was received at the Court on 9 May 1997, theHoge Raad der Nederlanden (Supreme Court of the Netherlands) referred for apreliminary ruling under Article 177 of the EC Treaty a question on theinterpretation of Articles 132(1) and 227 of the EC Treaty and of Article 7(1)(a)of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of thelaws of the Member States relating to turnover taxes Common system of valueadded tax: uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by
Council Directive 91/680/EEC of 16 December 1991 supplementing the commonsystem of value added tax and amending Directive 77/388/EEC with a view to theabolition of fiscal frontiers (OJ 1991 L 376, p. 1) ('the Sixth Directive).
- 2.
- That question arose in the context of proceedings brought by Mr Van der Kooychallenging the notice of assessment of value added tax ('VAT) addressed to himby the Netherlands tax authorities in respect of the importation of a motor vesselfrom the Netherlands Antilles.
Community law
- 3.
- The territorial area of application of the EC Treaty is defined in Article 227(1)thereof by a list of the Member States, one of which is the Kingdom of theNetherlands. The Netherlands Antilles form part of that Kingdom.
- 4.
- By way of derogation from Article 227 of the Treaty, the Government of theKingdom of the Netherlands obtained the right, by the 'Protocol on the applicationof the Treaty establishing the European Economic Community to the non-European parts of the Kingdom of the Netherlands of 25 March 1957, to ratify theTreaty on behalf of the Kingdom in Europe and Netherlands New Guinea only.
- 5.
- The first paragraph of Article 227(3) of the Treaty provides: 'The specialarrangements for association set out in Part Four of this Treaty shall apply to theoverseas countries and territories listed in Annex IV to this Treaty.
- 6.
- Originally, the Netherlands Antilles did not appear on that list. They were insertedby Convention 64/533/EEC of 13 November 1962 amending the Treaty establishingthe European Economic Community to render the special association arrangementsdefined in Part Four thereof applicable to the Netherlands Antilles (JO 1964, 150,p. 2414), which entered into force on 1 October 1964.
- 7.
- Part Four of the Treaty is entitled 'Association of the overseas countries andterritories.
- 8.
- Article 131(1) of the EC Treaty reads: 'The Member States agree to associate withthe Community the non-European countries and territories which have specialrelations with Belgium, Denmark, France, Italy, the Netherlands and the UnitedKingdom. It further states that those countries and territories are listed in AnnexIV to the Treaty.
- 9.
- Article 132 of the Treaty provides:
'Association shall have the following objectives:
1. Member States shall apply to their trade with the countries and territoriesthe same treatment as they accord each other pursuant to this Treaty.
- 10.
- Article 133 specifies:
'1. Customs duties on imports into the Member States of goods originating inthe countries and territories shall be completely abolished in conformity with theprogressive abolition of customs duties between Member States in accordance withthe provisions of this Treaty.
2. Customs duties on imports into each country or territory from MemberStates or from the other countries or territories shall be progressively abolished inaccordance with the provisions of Articles 12, 13, 14, 15 and 17.
- 11.
- Article 136 provides:
'For an initial period of five years after the entry into force of this Treaty, thedetails of and procedure for the association of the countries and territories with theCommunity shall be determined by an Implementing Convention annexed to thisTreaty.
Before the Convention referred to in the preceding paragraph expires, the Councilshall, acting unanimously, lay down provisions for a further period, on the basis ofthe experience acquired and of the principles set out in this Treaty.
- 12.
- On the basis of the second paragraph of Article 136 of the Treaty, the Council hasadopted a series of decisions concerning the association of the overseas countriesand territories ('the OCTs) with the European Economic Community. CouncilDecision 91/482/EEC of 25 July 1991 on the association of the overseas countriesand territories with the European Economic Community (OJ 1991 L 263, p. 1, 'theSixth OCT Decision) is applicable for a period of 10 years beginning on 1 March1990. It does not contain any provisions relating to taxation.
- 13.
- Article 101 of the Sixth OCT Decision provides:
'1. Products originating in the OCT shall be imported into the Community freeof customs duties and charges having equivalent effect.
2. Products not originating in the OCT but which are in free circulation in anOCT and are re-exported as such to the Community shall be accepted for importinto the Community free of customs duties and taxes having equivalent effectproviding that they:
have paid, in the OCT concerned, customs duties or taxes having equivalenteffect of a level equal to, or higher than, the customs duties applicable in
the Community on import of these same products originating in thirdcountries eligible for the most-favoured-nation clause,
have not been the subject of an exemption from, or a refund of, in wholeor in part, customs duties or taxes having equivalent effect,
are accompanied by an export certificate.
...
- 14.
- Article 102 of the Sixth OCT Decision prohibits the application of any quantitativerestrictions or measures having equivalent effect to imports of products originatingin the OCT.
- 15.
- Under Article 2(2) of the Sixth Directive, the importation of goods is subject toVAT.
- 16.
- Article 7(1) of the Sixth Directive provides that 'importation of goods is to mean:
'(a) the entry into the Community of goods which do not fulfil the conditionslaid down in Articles 9 and 10 of the Treaty ....
- 17.
- The territorial application of the Sixth Directive is defined in Article 3 thereof:
'(1) For the purposes of this Directive:
territory of a Member State shall mean the territory of the country asdefined in respect of each Member State in paragraphs 2 and 3,
Community and territory of the Community shall mean the territory ofthe Member States as defined in respect of each Member State inparagraphs 2 and 3,
third territory and third country shall mean any territory other thanthose defined in paragraphs 2 and 3 as the territory of a Member State.
(2) For the purposes of this Directive, the territory of the country shall be thearea of application of the Treaty establishing the European Economic Communityas defined in respect of each Member State in Article 227.
The dispute in the main proceedings
- 18.
- The motor vessel Joshua was built as a fishing vessel in Haarlem, the Netherlands,in 1964. In 1984 it was sold to Caribbean Chartering & Sales Ltd in Nassau,Bahamas, and taken outside the customs territory of the European Community.
- 19.
- In 1985 and 1986 the vessel was converted in the Netherlands into a cruising vessel,and on 22 April 1993 was sold to Mr Van der Kooy, who is resident in theNetherlands, and Mr J. Wielinga, who is resident in Curaçao, Netherlands Antilles.
- 20.
- It appears from the observations of the Netherlands Government that on 8 April1993 Mr Van der Kooy entered into a contract of agency with the companiesPijnacker BV and Van der Vliet Quality Yachts BV, both established in Muiden,the Netherlands, under which the latter company undertook to sell the vessel forthe price of NLG 1 400 000. The contract provided that the Joshua was to beberthed at Scheveningen, the Netherlands, as from 15 May 1993.
- 21.
- As from that date, the Joshua, flying the flag of the United Kingdom, lay in thePort of Scheveningen with Mr Van der Kooy on board.
- 22.
- On 20 July 1993, the Inspecteur van de Belastingdienst/Douane (Inspector of Taxand Customs) for the district of Hoofddorp requested Mr Van der Kooy to payturnover tax of NLG 157 500 (the basis of assessment being determined as NLG900 000) on the ground that the vessel had been imported into the Netherlandswithin the meaning of Article 18 of the Wet op de Omzetbelasting (Law onTurnover Taxes) 1968 (1993 version), which is the provision intended to implementArticle 7(1)(a) of the Sixth Directive.
- 23.
- The Inspecteur van de Belastingdienst/Douane dismissed Mr Van der Kooy'sobjection to his decision, which was upheld by the Gerechtshof (Regional Court ofAppeal), Amsterdam.
- 24.
- Mr Van der Kooy appealed to the Hoge Raad to have the Gerechtshof's judgmentset aside. The Hoge Raad considers, as did the Gerechtshof, that the territory ofthe Netherlands Antilles cannot be regarded as the 'territory of a Member Statewithin the meaning of Article 3(1) and (2) of the Sixth Directive, read inconjunction with Article 227 of the Treaty, nor can it be treated as such, by virtueof Article 132(1) of the Treaty, for the purposes of levying VAT if no implementingmeasure has been adopted to that effect.
The national court's question
- 25.
- Taking the view that the proper interpretation of Articles 132(1) and 227 of the ECTreaty and Articles 3(1) and (2) and 7(1)(a) of the Sixth Directive was not clearin the circumstances of the case, the Hoge Raad stayed proceedings and referredthe following question to the Court for a preliminary ruling:
'In the light of Article 132(1) and Article 227 of the EC Treaty, is Article 7(1)(a)of the Sixth Directive to be interpreted as meaning that the importation into theNetherlands of a ship which was previously in free circulation in the NetherlandsAntilles is to be regarded as the entry into the Community of a product which doesnot fulfil the conditions of Articles 9 and 10 of the EC Treaty?
Admissibility
- 26.
- The French Government considers that the request for a preliminary ruling isinadmissible in that it does not allow either the Court or such Member States asmay intervene in the proceedings to provide a useful interpretation of Communitylaw. The extremely succinct statement of the facts contained in the Hoge Raad'sjudgment does not reveal either the reasons for which that court considers thevessel's connection with the Netherlands Antilles to be established or the use towhich it is put by Mr Van der Kooy in the Netherlands.
- 27.
- It has consistently been held that, in order to reach an interpretation of Communitylaw which will be of use to the national court it is essential for that court to definethe factual and legislative context of the questions referred or, at the very least, toexplain the factual circumstances on which they are based (see, inter alia, JoinedCases C-320/90, C-321/90 and C-322/90 Telemarsicabruzzo and Others v Circostel[1993] ECR I-393, paragraph 6; Case C-157/92 Pretore di Genova v Banchero [1993]ECR I-1085, paragraph 4; Case C-66/97 Banco de Fomento e Exterior v Pechim andOthers [1997] ECR I-3757, paragraph 7; and Joined Cases C-128/97 and C-137/97Italia Testa and Modesti [1998] ECR I-2181, paragraph 5).
- 28.
- The information provided in orders for reference not only enables the Court toprovide a useful reply but also gives the Governments of the Member States andother interested parties the opportunity to submit observations pursuant to Article20 of the EC Statute of the Court of Justice. It is the Court's duty to ensure thatthe opportunity to submit observations is safeguarded, bearing in mind that, byvirtue of the abovementioned provision, only the orders for reference are notifiedto the interested parties (Banco de Fomento e Exterior, cited above, paragraph 8).
- 29.
- In the present case, the Hoge Raad's judgment, whilst very succinct, none the lesscontains the essential circumstances of the dispute in the main proceedings.
- 30.
- As regards the findings of fact made by the national court, it must be noted that,as has been observed by the Advocate General at point 9 of his Opinion, the Courtis in principle required to base its consideration on the premisses which thereferring court regards as having been established; in the present case, thosepremisses include the vessel's previous ties with one of the OCTs.
- 31.
- The request for a preliminary ruling must therefore be held admissible.
Substance
- 32.
- By its question, the national court wishes to ascertain, in substance, whether theentry into a Member State of goods coming from the Netherlands Antilles must beregarded as entry into the Community for the purposes of applying Article 7(1) ofthe Sixth Directive.
- 33.
- The Netherlands and French Governments agree with the Commission that theterritory of the Netherlands Antilles cannot be regarded as forming part of theterritory of the Community for the purposes of Articles 3 and 7 of the SixthDirective and Article 227 of the Treaty, nor can it be treated as such by virtue ofArticle 132(1) of the Treaty for the purpose of levying turnover tax if noimplementing measure has been adopted to that effect.
- 34.
- It follows from the provisions of Articles 3 and 7 of the Sixth Directive, readtogether, that the terms 'Community and 'territory of the Community relate tothe area of application of the Treaty as defined for each Member State in Article227 of the Treaty.
- 35.
- Article 227 of the Treaty lists the States to which the Treaty is to apply, and thefollowing paragraphs contain special provisions for certain specific territories.
- 36.
- In accordance with Article 227(3) of the Treaty and Convention 64/533, the specialarrangements for association set out in Part Four of the Treaty apply to the OCTs,including the Netherlands Antilles.
- 37.
- Under those arrangements, failing express reference, the general provisions of theTreaty do not apply to the OCTs (Case C-260/90 Leplat v Territory of FrenchPolynesia [1992] ECR I-643, paragraph 10).
- 38.
- Consequently, the entry into a Member State of goods coming from theNetherlands Antilles cannot be categorised as an intra-Community transaction forthe purposes of the Sixth Directive, unless a special provision so prescribes.
- 39.
- There is no provision to that effect in the Sixth Directive. Nor, moreover, are thereany rules providing for the application of VAT to imports from the OCTs in eitherPart Four of the Treaty or the Sixth OCT Decision.
- 40.
- It is true that Article 101 of the Sixth OCT Decision provides that productsoriginating in the OCT and certain products which are in free circulation there areto be imported into the Community free of customs duties and charges havingequivalent effect. However, a tax such as the VAT levied on imports of productsinto a Member State does not have the ingredients of a charge having an effectequivalent to customs duties (Case 15/81 Schul v Inspecteur der Invoerrechten enAccijnzen [1982] ECR 1409, paragraph 21).
- 41.
- The Sixth OCT Decision therefore does not have the effect of bringing the territoryof the Netherlands Antilles within the territorial scope of the Sixth Directive.
- 42.
- The answer to the national court's question must therefore be that the entry intoa Member State of goods coming from the Netherlands Antilles must be regardedas entry into the Community for the purposes of applying Article 7(1) of the SixthDirective.
Costs
- 43.
- The costs incurred by the Netherlands and French Governments and by theCommission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in theaction pending before the national court, the decision on costs is a matter for thatcourt.
On those grounds,
THE COURT (Fifth Chamber),
in answer to the question referred to it by the Hoge Raad der Nederlanden byjudgment of 7 May 1997, hereby rules:
The entry into a Member State of goods coming from the Netherlands Antillesmust be regarded as entry into the Community for the purposes of applying Article7(1) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisationof the laws of the Member States relating to turnover taxes Common system ofvalue added tax: uniform basis of assessment, as amended by Council Directive91/680/EEC of 16 December 1991 supplementing the common system of valueadded tax and amending Directive 77/388/EEC with a view to the abolition of fiscalfrontiers.
| PuissochetMoitinho de Almeida Gulmann Edward Wathelet |
Delivered in open court in Luxembourg on 28 January 1999.
R. Grass
J.-P. Puissochet
Registrar
President of the Fifth Chamber
