The present case concerns the value-added tax rules applying to a vehicle belonging to a Luxembourg student resident in the Grand Duchy of Luxembourg but temporarily entered on the aliens' register in Belgium because he was at university there. He lived in Belgium with his wife (originally of French nationality but who subsequently took Luxembourg nationality) who was working in Belgium. At the end of his studies he returned to Luxembourg. The present case is indirectly relevant to all students who are temporarily studying in another Member State, although its significance has diminished since the entry into force of Directive 83/182/EEC, which I shall consider later. Of course, for a number of years the Community has increasingly been encouraging temporary studies in other Member States. In particular, though, the present case is indirectly of importance to all university students of
Often they commute between their home and the university with a vehicle registered in Luxembourg on which value-added tax has also been paid in Luxembourg. As appears from the examples given by the Commission in Case
The present case turns on the question of how far it is possible, without contravening Community law, to deny the exemption from value-added tax for temporary imports, which is provided for in Belgium in cases of this kind, to a student who has a temporary second residence (or a habitual residence) in Belgium with his wife (who is in temporary employment there). A number of other facts of the case are also relevant to an appraisal of the legal position.
The present case differs in important respects from Case
In judging the present case it is necessary to consider the Belgian rules relating to value-added tax, their application in practice and the facts on which the national proceedings are based. The national proceedings are not concerned in the present case with the levying of value-added tax on a car imported into Belgium but are, in fact, of a criminal nature. I have basically adopted the summary of the relevant facts in the Report for the Hearing. However I have also taken account of the clarifications made by the Belgian Government. I have added the explanations given in answer to a question from the Court concerning the payment of the cost of Mr Profant's studies and his subsistence.
Adopting the Report for the Hearing in this way obviously has the advantage of enabling the appraisal of the case to be based on a statement of facts on which not only the Judge Rapporteur and Advocate General agree but which also takes account of the parties' observations on the Report for the Hearing.
In Belgium Article 2 of the Code on Value-Added Tax introduced by the Law of
Article 40 (1) of the Code provides for exemption from value-added tax in respect of the temporary importation of certain goods. Article 23 of Royal Decree No 7 of
Under Article 25 (3) (a) of the Ministerial Decree of
It appears from the file that under Article 25 of the abovementioned Ministerial Decree the Belgian authorities normally grant Luxembourg students who have their main residence in Luxembourg and attend an educational establishment in Belgium the benefit of temporary exemption in respect of their vehicles registered in Luxembourg. Nevertheless the authorities exclude from that benefit married students if it appears that on their marriage they have established their new family home and thus their normal residence in Belgium.
Venceslas Profant, a Luxembourg national, entered Belgium in 1976 to study zoology at the university of Liège. He was entered in the alien's register at Liège from
On
For travelling between Liège and Luxembourg as from 1978 Mr Profant used successively two cars bought and registered in Luxembourg and on which Luxembourg value-added tax had been paid. The first car, an Alfa Romeo, was sold and returned to Luxembourg in 1979; the couple brought the second car, a Volkswagen, with them on their return in 1981.
In 1980 the Belgian tax authorities informed Mr Profant that since he had been normally resident in Liège after his marriage in 1978 he had to pay value-added tax on each of the abovementioned vehicles. However, in view of the resale of the Alfa Romeo in 1979, the tax authorities proposed a penalty of BFR
In May 1984 the Cour de cassation [Court of Cassation] quashed the judgment of the Cour d'appel, Liège, on the ground that the contested judgment did not state the relevant legal provisions either in its own grounds or by reference to the judgment under appeal. The case was remitted to the Cour d'appel, Brussels, which gave a default judgment in July 1984 in accordance with the judgment of the Cour de cassation. Mr Profant lodged an objection against the judgment with the Cour d'appel, Brussels, which by judgment of
Taking the view that as regards the use of the Volkswagen the case raised questions concerning the interpretation of Community law, the Cour d'appel, Brussels, by judgment of
It is apparent from the grounds of the judgment that the Cour d'appel is asking whether a double imposition of value-added tax on a Luxembourg national who bought his car in Luxembourg but used it mainly in Belgium is not contrary to Community law.
The
Citing the judgment of the Court of
Finally the Belgian Government maintains that Community law, and in particular Article 95 of the EEC Treaty, does not prevent in the present case the levying of value-added tax on a vehicle which has already borne value-added tax in the country of origin. It is true that the Court held in its judgment of
The Belgian Government therefore proposes the following answer to the question put by the Cour d'appel, Brussels: the levying of value-added tax on the importation of a vehicle bought in another Member State where value-added tax has been paid does not constitute a charge having an effect equivalent to a customs duty or taxation of a foreign product which is greater than that levied on a similar domestic product in so far as double taxation may be avoided either by remission on the occasion of the exportation of the article from the country of origin or by exemption on importation into the country of destination.
The
The Commission observes that the present case raises two questions of principle which call for closer consideration:
The Commission observes that Article 14(1) (c) of the Sixth Council Directive of
In order to determine the nature of those two concepts in Community law the Commission refers to the aforesaid Council Directive 83/182/EEC of
It follows that, in view of the objectives pursued by Article 14 (1) (c) of the Sixth Council Directive, Mr Profant must be regarded as having temporarily imported goods. Consequently, the Commission contends, the vehicle in question must be exempt from Belgian value-added tax.
In the event of the Court considering Mr Profant as having his normal residence in Belgium and being liable to Belgian value-added tax, the Commission maintains that he must be allowed to have the value-added tax already paid in Luxembourg taken into account. Any other solution would cause patent injustice and curtail the scope of the judgment of the Court of
In conclusion the Commission proposes that the following answer should be given to the question put by the Cour d'appel, Brussels:
In answering the question raised I shall return to certain statements made at the hearing in relation to the observations submitted to the Court.
As the Commission has rightly observed, the wording of the question put by the national court in the present case is somewhat infelicitous. By its choice of wording the national court gives the impression that it is asking only that the Court of Justice, for such a case as this interpret the relevant articles of Title I of the EEC Treaty, specifically Articles 12 and 13. For the reasons stated in paragraphs 18 to 21 of the decision in the aforementioned
In view of the particular nature of the problem confronting the national court, it may be taken to be asking the Court of Justice whether, in such a case, value-added tax levied by a Member State on the importation of a private car from another Member State is compatible with Community law including the Council directives on the harmonization of the laws of Member States on turnover tax.
On the basis of the file, the Court's answer may be confined to addressing the following factual situation, expressed in abstract terms :
In my opinion the problems in question arise mainly from the extremely wide definition of the scope of the harmonized value-added tax given by Articles 2 and 7 of the Sixth Council Directive.
Article 2 of the Directive reads :
Article 7 states in that respect that:
As regards the use of vehicles, that wide definition would obviously mean that any journey across the frontier of another Member State would be subject to the said tax if a number of exemptions had not been laid down
The written and oral observations in the present proceedings rightly deal in particular with the interpretation of the said Article 14.
...
In so far as relevant,
Until the entry into force of these rules, Member States may:
As is apparent from my earlier summary of the relevant Belgian legislation, there apply in this case
The Belgian Government bases its argument that Mr Profant is liable to value-added tax mainly on the abovementioned words of Article 14 (2) of the Sixth Council Directive.
Since the passage provides only that Member States may
For the purpose of that interpretation the Commission considers that Articles 5 and 7 of Council Directive 83/182 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another are also relevant. Articles 5 and 7 authorize students temporarily to import a vehicle into the country where they pursue their studies and Article 7 provides that
Although I can see some justification for that opinion, I do not think that the acceptance of that view would greatly assist the Court in answering the question. The Court would still have to give consideration to the arguments of the Belgian Government which are also relevant if the Court proceeds solely on the basis of the concept of
At the hearing the Belgian Government based its view on the taxable nature of the imported vehicle
Further, the Belgian Government admitted both in the proceedings before the national court and in the proceedings before this Court that the Belgian system of exemption in question would have remained applicable if the couple had not married but simply lived together. As is apparent from the second paragraph on page 4 of the order for reference, the national court also considered that finding relevant.
In my view the aforesaid three arguments put forward in support of the Belgian Government's case are not convincing.
In my opinion the concept of residence for the purpose of income tax cannot be regarded as a decisive factor in the concept of residence for the purpose of value-added tax (in fact the present case concerns not
As regards the second argument, it is first of all not very clear why a student living with his wife who works (both originating in another Member State) should be treated differently from a student living with his wife who is also a student (both also originating from another Member State). Finally, it is difficult to see why the risk of the evasion of value-added tax (within the meaning of Article 14 (1) of the Sixth Council Directive) should be greater in the case of a married student than in that of a student living with a woman who is not his wife.
Finally, as is apparent from the statement of Mr Profant's counsel at the hearing, the third and probably main argument of the Belgian Government rests on an incorrect factual basis since Mr Profant's living expenses (and the cost of car) were paid wholly or in part by his parents and not by his wife who was working. The Court obviously cannot determine in a preliminary ruling procedure whether those statements are factually correct. Nevertheless in order not to extend the scope of the answer to the question beyond what is actually necessary in the present case I propose that the Court should incorporate an abstract hypothesis based on those facts as a condition in its answer.
Let me begin my final observations in this case by recalling that the main proceedings are criminal proceedings. It may be assumed that when determining the question of guilt or fixing the penalty the competent Belgian court will take account of all the special circumstances of the case including the doubts as to whether there is a punishable act in the light of the Community rules cited and the Commission's views on the matter. In my opinion that applies even if the Court should ultimately share the view of the Belgian Government. In contrast to the Commission which, for that eventuality, further referred to the principle of proportionality as developed in the Court's case-law, I do not consider it necessary to examine separately the question whether that principle is applicable.
It also does not seem to me desirable to propose as an alternative answer to the questions raised that the Court should apply, as the Commission suggests, the principle contained in the two judgments in the
My final opinion in this case is based primarily on the first two recitals in the preamble to the First Council Directive, of
The second recital states that:
Unlike the aforementioned
For those reasons I think that in a case such as this a wide interpretation of Article 14 of the Sixth Council Directive is warranted, as the Commission advocated in its main observations in both written and oral procedures. As has already been stated, the relevant points at issue are, on the one hand, the concept of
I therefore propose the following answer to my reformulated version of the question referred to the Court by the Cour d'appel, Brussels :
If the abovementioned conditions are satisfied, it is immaterial whether, during his stay in the first-mentioned Member State, the student, whether or not he is married, lives with a national of a Member State other than the first-mentioned State, even if his companion has a separate source of income there and irrespective of whether the student has to pay income tax on that income.