61984CJ0044_EN
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Parties
IN CASE 44/84,
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY AND ARTICLE 150 OF THE EAEC TREATY BY THE COMMISSIONERS FOR THE SPECIAL PURPOSES OF THE INCOME TAX ACTS ( ' SPECIAL COMMISSIONERS ' ) FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THEM BETWEEN
DERRICK GUY EDMUND HURD
AND
KENNETH JONES ( HER MAJESTY ' S INSPECTOR OF TAXES )
Subject of the case
ON THE INTERPRETATION OF CERTAIN RULES OF COMMUNITY LAW, IN PARTICULAR, ARTICLE 3 OF THE ACT CONCERNING THE CONDITIONS OF ACCESSION AND THE ADJUSTMENTS TO THE TREATIES, ANNEXED TO THE TREATY CONCERNING THE ACCESSION OF THE KINGDOM OF DENMARK, IRELAND AND THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND TO THE EUROPEAN ECONOMIC COMMUNITY AND TO THE EUROPEAN ATOMIC ENERGY COMMUNITY, AND ARTICLES 5 AND 7 OF THE EEC TREATY, WITH REGARD TO THE LEVYING OF DOMESTIC TAXATION ON THE SALARIES PAID BY THE EUROPEAN SCHOOL AT CULHAM IN THE UNITED KINGDOM TO THE BRITISH MEMBERS OF ITS TEACHING STAFF,
Grounds
1 BY A DECISION OF 14 FEBRUARY 1984, WHICH WAS RECEIVED AT THE COURT ON 17 FEBRUARY 1984, THE COMMISSIONERS FOR THE SPECIAL PURPOSES OF THE INCOME TAX ACTS ( HEREINAFTER REFERRED TO AS ' THE SPECIAL COMMISSIONERS ' ) REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY VARIOUS QUESTIONS ON THE INTERPRETATION OF CERTAIN PROVISIONS AND GENERAL PRINCIPLES OF COMMUNITY LAW, AND IN PARTICULAR ARTICLE 3 OF THE ACT CONCERNING THE CONDITIONS OF ACCESSION AND THE ADJUSTMENTS TO THE TREATIES ( HEREINAFTER REFERRED TO AS ' THE ACT OF ACCESSION ' ), ANNEXED TO THE TREATY CONCERNING THE ACCESSION OF THE KINGDOM OF DENMARK, IRELAND AND THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND TO THE EUROPEAN ECONOMIC COMMUNITY AND TO THE EUROPEAN ATOMIC ENERGY COMMUNITY ( HEREINAFTER REFERRED TO AS THE ' TREATY OF ACCESSION ' ), AND ARTICLES 5 AND 7 OF THE EEC TREATY . THE PURPOSE OF THOSE QUESTIONS IS TO DETERMINE WHETHER DOMESTIC INCOME TAX MAY BE LEVIED ON A SPECIFIC PART OF THE EMOLUMENTS PAID TO TEACHING STAFF OF THE EUROPEAN SCHOOLS .
2 THE QUESTIONS WERE RAISED IN PROCEEDINGS BETWEEN DERRICK GUY EDMUND HURD, HEADMASTER OF THE EUROPEAN SCHOOL AT CULHAM, OXFORDSHIRE, AND THE INSPECTOR OF TAXES . THOSE PROCEEDINGS CONCERN INCOME TAX ASSESSMENTS FOR THE TAX YEARS 1978/79 AND 1979/80 IN RESPECT OF THE AMOUNTS PAID BY THE EUROPEAN SCHOOL TO MR HURD DURING THOSE YEARS .
3 THE EUROPEAN SCHOOLS WERE SET UP IN THE VARIOUS PLACES WHERE THE INSTITUTIONS OF THE EUROPEAN COMMUNITIES ARE LOCATED : IN LUXEMBOURG, BELGIUM, ITALY, THE FEDERAL REPUBLIC OF GERMANY AND THE NETHERLANDS, AND - SINCE 1978 - IN CULHAM IN THE UNITED KINGDOM . THEIR PURPOSE IS TO PROVIDE SCHOOLING FOR THE CHILDREN OF OFFICIALS AND SERVANTS OF THE COMMUNITIES IN THEIR MOTHER TONGUES . THE SCHOOLS WERE ESTABLISHED ON THE BASIS OF TWO AGREEMENTS, NAMELY THE STATUTE OF THE EUROPEAN SCHOOL OF 12 APRIL 1957 ( UNITED NATIONS TREATY SERIES, VOLUME 443, P . 129 ), WHICH SET UP THE FIRST EUROPEAN SCHOOL AT LUXEMBOURG, AND THE PROTOCOL OF 13 APRIL 1962 ON THE SETTING-UP OF EUROPEAN SCHOOLS WITH REFERENCE TO THE STATUTE OF THE EUROPEAN SCHOOL ( UNITED NATIONS TREATY SERIES, VOLUME 752, P . 267 ). THOSE TWO AGREEMENTS WERE CONCLUDED BETWEEN THE SIX ORIGINAL MEMBER STATES OF THE EUROPEAN COMMUNITIES . THE UNITED KINGDOM ACCEDED TO THOSE AGREEMENTS AFTER ITS ACCESSION TO THE EUROPEAN COMMUNITIES .
4 THE BOARD OF GOVERNORS, WHICH IS COMPOSED OF THE COMPETENT MINISTERS OF THE MEMBER STATES AND A REPRESENTATIVE OF THE EUROPEAN COMMUNITIES, AND IS RESPONSIBLE UNDER THE ABOVEMENTIONED AGREEMENTS FOR THEIR IMPLEMENTATION WITH REGARD TO EDUCATIONAL, BUDGETARY AND ADMINISTRATIVE MATTERS, ADOPTED PROVISIONS CONCERNING THE RIGHTS AND OBLIGATIONS OF MEMBERS OF THE TEACHING STAFF OF THE EUROPEAN SCHOOLS . THOSE PROVISIONS ARE SET OUT IN THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF AND CONDITIONS OF EMPLOYMENT FOR PART-TIME TEACHERS OF 4 AND 5 DECEMBER 1967, AS SUBSEQUENTLY AMENDED ( HEREINAFTER REFERRED TO AS ' THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF ' ).
5 AS REGARDS THE FINANCING OF THE SCHOOLS, ARTICLE 13 OF THE STATUTE OF THE EUROPEAN SCHOOL PROVIDES THAT THE BOARD OF GOVERNORS MUST ADOPT THE BUDGET AND, ACTING UNANIMOUSLY, APPORTION EXPENSES EQUITABLY AMONG THE CONTRACTING PARTIES . ARTICLE 26 OF THE STATUTE PROVIDES THAT THE BUDGET ADOPTED BY THE BOARD OF GOVERNORS IS TO BE FINANCED INTER ALIA BY ( I ) CONTRIBUTIONS PAID BY THE CONTRACTING PARTIES ON THE BASIS OF THE APPORTIONMENT OF EXPENSES BY THE BOARD OF GOVERNORS ; AND ( II ) SUBSIDIES FROM THE INSTITUTIONS WITH WHICH THE SCHOOL HAS CONCLUDED AGREEMENTS . THE NEGOTIATION OF SUCH AN AGREEMENT WITH THE EUROPEAN COMMUNITIES IS EXPRESSLY ORITIES AND SECONDED TO THE EUROPEAN SCHOOLS BY THOSE AUTHORITIES . THEY RECEIVE, FIRST, A SALARY PAID BY THEIR NATIONAL AUTHORITIES CALCULATED ACCORDING TO THE SALARY SCALE APPLIED IN THEIR STATE OF ORIGIN, AND, SECONDLY, AN AMOUNT PAID BY THE EUROPEAN SCHOOL, HEREINAFTER REFERRED TO AS ' THE EUROPEAN SUPPLEMENT ' . THAT EUROPEAN SUPPLEMENT CORRESPONDS TO THE DIFFERENCE BETWEEN THE NATIONAL SALARY AND A STANDARD SALARY ESTABLISHED BY THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF ON THE BASIS OF THE STAFF REGULATIONS OF OFFICIALS OF THE EUROPEAN COMMUNITIES .
7 THE LEVYING OF NATIONAL TAXATION ON TEACHERS '
SALARIES IS THE SUBJECT-MATTER OF A DECISION ( HEREINAFTER REFERRED TO AS ' THE 1957 DECISION ' ) WHICH APPEARS IN THE MINUTES OF A MEETING HELD ON 25, 26 AND 27 JANUARY 1957 BETWEEN THE REPRESENTATIVES OF THE SIX ORIGINAL MEMBER STATES OF THE EUROPEAN COAL AND STEEL COMMUNITY, WHO HAD FORMED THEMSELVES INTO THE BOARD OF GOVERNORS OF THE FIRST EUROPEAN SCHOOL AT LUXEMBOURG, WHICH WAS THEN IN THE PROCESS OF BEING SET UP . ACCORDING TO THAT DECISION :
' THE BOARD OF GOVERNORS THEREFORE DECIDED THAT MEMBERS OF THE TEACHING STAFF SHOULD PAY TAX ON THE SALARY OR PART OF THE SALARY CORRESPONDING TO THEIR NATIONAL SALARY . ON THE OTHER HAND, SUPPLEMENTS RESULTING FROM THE APPLICATION OF ARTICLES 3, 4, 5 AND 9 OF THE REGULATIONS AND ALLOWANCES PAID UNDER ARTICLES 6, 8, 9, 11 AND 12 OF THE REGULATIONS SHOULD BE EXEMPT FROM ALL TAX . TEACHERS SHOULD NOT IN ANY EVENT BE SUBJECT TO DOUBLE TAXATION ON THEIR SALARIES . '
8 IN ORDER TO ENSURE THAT, REGARDLESS OF THEIR STATE OF ORIGIN AND IN SPITE OF THE DIFFERENCES BETWEEN THE NATIONAL INCOME TAX CHARGED IN THE DIFFERENT MEMBER STATES, THE NET REMUNERATION OF TEACHERS WAS STANDARDIZED, THE BOARD OF GOVERNORS MADE PROVISION, IN 1966, FOR THE PAYMENT OF A ' DIFFERENTIAL ALLOWANCE ' . ARTICLE 24 ( 2 ) OF THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF PROVIDES THAT :
' SHOULD THE AMOUNT LEVIED IN TAXES BE HIGHER THAN THE AMOUNT WHICH WOULD BE LEVIED ON THE EUROPEAN SALARY UNDER REGULATIONS LAYING DOWN CONDITIONS AND PROCEDURES FOR APPLYING THE TAX FOR THE BENEFIT OF THE EUROPEAN COMMUNITIES, A ' ' DIFFERENTIAL ' '
ALLOWANCE EQUAL TO THE DIFFERENCE BETWEEN THE TWO AMOUNTS SHALL BE GRANTED . '
9 CONSEQUENTLY, THE NATIONAL SALARIES OF ALL THE TEACHING STAFF OF THE VARIOUS EUROPEAN SCHOOLS ARE SUBJECT TO NATIONAL INCOME TAX IN THEIR STATES OF ORIGIN . FOR TEACHING STAFF OF THE EUROPEAN SCHOOLS IN LUXEMBOURG, BELGIUM, ITALY, THE NETHERLANDS AND THE FEDERAL REPUBLIC OF GERMANY, IRRESPECTIVE OF THEIR NATIONALITY, THE EUROPEAN SUPPLEMENTS AND THE DIFFERENTIAL ALLOWANCES PAID BY THOSE SCHOOLS ARE, BY VIRTUE OF VARYING LEGAL RULES AND ADMINISTRATIVE PRACTICES, IN ONE WAY OR ANOTHER EXEMPTED FROM NATIONAL INCOME TAX, BOTH IN THE TEACHER ' S STATE OF ORIGIN AND IN THE STATE IN WHICH THE SCHOOL CONCERNED IS SITUATED .
10 IN THE UNITED KINGDOM THE EUROPEAN SUPPLEMENTS AND THE DIFFERENTIAL ALLOWANCES PAID BY THE EUROPEAN SCHOOL AT CULHAM TO TEACHERS WHO ARE NOT UNITED KINGDOM NATIONALS ARE NOT SUBJECT TO INCOME TAX . THE DISPUTE IN THE MAIN PROCEEDINGS CONCERNS THE QUESTION WHETHER SUCH PAYMENTS MAY, ON THE OTHER HAND, BE CHARGED TO TAX WHEN THEY ARE MADE TO UNITED KINGDOM NATIONALS .
11 MR HURD, A UNITED KINGDOM NATIONAL, WAS SECONDED TO THE EUROPEAN SCHOOL IN CULHAM BY THE UNITED KINGDOM AUTHORITIES . H . M . INSPECTOR OF TAXES MADE TAX ASSESSMENTS CONCERNING THE EUROPEAN SUPPLEMENTS WHICH THAT SCHOOL PAID TO HIM FOR THE TAX YEARS 1978/79 AND 1979/80 . THE INSPECTOR OF TAXES TAKES THE VIEW THAT, AS IS THE CASE FOR ALL THE TEACHING STAFF OF UNITED KINGDOM NATIONALITY AT THE EUROPEAN SCHOOL IN CULHAM, THOSE SUMS ARE LIABLE TO TAX SINCE NO EXEMPTION IS PROVIDED FOR IN THE UNITED KINGDOM LEGISLATION OR IN THE STATUTE OF THE EUROPEAN SCHOOL OR THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF . MR HURD APPEALED AGAINST THOSE ASSESSMENTS TO THE SPECIAL COMMISSIONERS .
12 MR HURD CLAIMED THAT THE SUPPLEMENTS PAID BY THE EUROPEAN SCHOOL SHOULD BE EXEMPT FROM NATIONAL TAXATION UNDER COMMUNITY LAW . SINCE THE UNITED KINGDOM HAD ACCEDED TO THE STATUTE OF THE EUROPEAN SCHOOL, AS IT WAS REQUIRED TO DO BY VIRTUE OF ARTICLE 3 OF THE ACT OF ACCESSION, IT HAD AS A RESULT ACCEPTED THE 1957 DECISION AND WAS IN THE SAME SITUATION AS THE ORIGINAL MEMBER STATES WITH REGARD TO THAT DECISION . IN ADDITION, IN HIS VIEW, ARTICLE 5 OF THE EEC TREATY IMPOSED AN OBLIGATION ON THE UNITED KINGDOM TO HONOUR THAT DECISION . MOREOVER, THE FAILURE TO IMPLEMENT IT IN RESPECT OF UNITED KINGDOM NATIONALS CONSTITUTED DISCRIMINATION PROHIBITED UNDER ARTICLE 7 OF THE TREATY .
13 THE SPECIAL COMMISSIONERS CONSIDERED THAT THEIR DECISION DEPENDED UPON VARIOUS QUESTIONS OF INTERPRETATION OF COMMUNITY LAW . THEY THEREFORE REFERRED THE FOLLOWING QUESTIONS TO THE COURT OF JUSTICE FOR A PRELIMINARY RULING :
1 . ( A ) WHETHER, IN INTERPRETING THE PROVISIONS OF ARTICLE 3 OF THE ACT ANNEXED TO THE TREATY OF ACCESSION TO THE EUROPEAN ECONOMIC COMMUNITIES OF 22 JANUARY 1972 THE COURT OF JUSTICE HAS JURISDICTION TO GIVE A PRELIMINARY RULING ON THE QUESTION WHETHER A PARTICULAR MATTER FALLS WITHIN THE MEANING OF THE WORDS ' ALL OTHER AGREEMENTS CONCLUDED BY THE ORIGINAL MEMBER STATES RELATING TO THE FUNCTIONING OF THE COMMUNITIES OR CONNECTED WITH THEIR ACTIVITIES '
( IN PARAGRAPH 1 OF THE ARTICLE ) AND THE WORDS ' DECLARATIONS OR RESOLUTIONS . . . OR OTHER POSITIONS . . . CONCERNING THE EUROPEAN COMMUNITIES ADOPTED BY COMMON AGREEMENT OF THE MEMBER STATES '
( IN PARAGRAPH 3 THEREOF );
( B)IF SO, WHETHER THE UNITED KINGDOM IS, BY VIRTUE OF THE SAID ARTICLE 3, UNDER AN OBLIGATION AS A MATTER OF COMMUNITY LAW TO GIVE EFFECT IN ITS NATIONAL LAW TO A PARTICULAR DECISION TAKEN AT A MEETING IN JANUARY 1957 THAT TEACHING STAFF OF THE EUROPEAN SCHOOL SHOULD BE EXEMPT FROM ALL TAX ON THEIR SALARIES AND ALLOWANCES ( OTHER THAN THE PART OF THEIR SALARIES CORRESPONDING TO THEIR NATIONAL SALARIES ), IN THE LIGHT OF THE CIRCUMSTANCES IN WHICH THAT DECISION WAS TAKEN, ITS SUBSEQUENT HISTORY, THE INSTRUMENTS GOVERNING THE EUROPEAN SCHOOLS AND THEIR GOVERNING BODY AND THE RESPONSES OF THE SIX ORIGINAL MEMBER STATES TO THAT DECISION PRECEDING THE DATE ON WHICH THE AFOREMENTIONED TREATY OF ACCESSION CAME INTO FORCE ( 1 JANUARY 1973 );
2.ALTERNATIVELY, WHETHER THE UNITED KINGDOM IS, BY VIRTUE OF ARTICLE 5 OR ARTICLE 7 OF THE EEC TREATY ( AND THE AFOREMENTIONED TREATY OF ACCESSION ), OR OF ANY OTHER PROVISION OF COMMUNITY LAW ( APART FROM ARTICLE 3 OF THE ACT ANNEXED TO THE TREATY OF ACCESSION ) UNDER AN OBLIGATION AS A MATTER OF COMMUNITY LAW TO GIVE EFFECT IN ITS NATIONAL LAW TO THE SAID DECISION ;
3.IF THE UNITED KINGDOM IS UNDER SUCH OBLIGATION AS IS MENTIONED IN QUESTION 1 ( B ) OR QUESTION 2 ABOVE, WHETHER ( IN THE ABSENCE OF THE IMPLEMENTATION OF THE SAID DECISION IN THE NATIONAL LAW OF THE UNITED KINGDOM ) A MEMBER OF THE TEACHING STAFF OF THE EUROPEAN SCHOOL ESTABLISHED IN THE UNITED KINGDOM IS ENTITLED AS A MATTER OF COMMUNITY LAW TO RELY ON THE SAID DECISION IN THE COURTS AND TRIBUNALS OF THE UNITED KINGDOM .
THE JURISDICTION OF THE COURT
14 QUESTION 1 ( A ) IS ESSENTIALLY INTENDED TO ESTABLISH WHETHER THE COURT HAS JURISDICTION TO GIVE A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY, AND UNDER ARTICLE 150 OF THE EAEC TREATY, ON THE INTERPRETATION OF ARTICLE 3 OF THE ACT OF ACCESSION WITH REGARD TO THE INSTRUMENTS CONCERNING THE EUROPEAN SCHOOLS AND THEIR TEACHING STAFF .
15 ACCORDING TO ARTICLE 1 ( 3 ) OF THE TREATY OF ACCESSION THE PROVISIONS CONCERNING THE POWERS AND JURISDICTION OF THE INSTITUTIONS AS SET OUT IN THE EEC AND EAEC TREATIES ARE TO APPLY IN RESPECT OF THE TREATY OF ACCESSION, AND THE PROVISIONS OF THE ACT OF ACCESSION WHICH IS ANNEXED TO THAT TREATY FORM A PART OF IT . THE POWERS AND JURISDICTION TO WHICH THAT PROVISION REFERS INCLUDE THE JURISDICTION OF THE COURT TO GIVE A PRELIMINARY RULING UNDER THE FIRST PARAGRAPH OF ARTICLE 177 OF THE EEC TREATY AND THE FIRST PARAGRAPH OF ARTICLE 150 OF THE EAEC TREATY . THE COURT THEREFORE HAS JURISDICTION TO GIVE A PRELIMINARY RULING ON THE INTERPRETATION OF ARTICLE 3 OF THE ACT OF ACCESSION .
16 HOWEVER, IN THE UNITED KINGDOM ' S VIEW, THE COURT MAY NOT, IN INTERPRETING ARTICLE 3 OF THE ACT OF ACCESSION, RULE ON THE QUESTION WHETHER INSTRUMENTS SUCH AS THE STATUTE OF THE EUROPEAN SCHOOL AND THE PROTOCOL ON THE SETTING-UP OF EUROPEAN SCHOOLS AND PROVISIONS ADOPTED ON THE BASIS OF THOSE INSTRUMENTS ARE COVERED BY THAT ARTICLE ; THE COURT DOES NOT HAVE JURISDICTION TO INTERPRET SUCH INSTRUMENTS THEMSELVES AND A REPLY TO THIS QUESTION NECESSARILY PRESUPPOSES THE INTERPRETATION THEREOF .
17 THE DANISH GOVERNMENT ALSO TAKES THE VIEW THAT THE JURISDICTION OF THE COURT MAY NOT BE EXTENDED BY MEANS OF THE INTERPRETATION OF ARTICLE 3 OF THE ACT OF ACCESSION TO INCLUDE THE INTERPRETATION OF INSTRUMENTS WHICH ARE NOT COVERED BY ARTICLE 177 OF THE EEC TREATY AND ARTICLE 150 OF THE EAEC TREATY . HOWEVER, IT CONCEDES THAT THE COURT MAY DETERMINE WHETHER OR NOT A PARTICULAR AGREEMENT OR PROVISION FALLS WITHIN THE CATEGORIES OF MEASURES COVERED BY ARTICLE 3 OF THE ACT OF ACCESSION .
18 IRELAND CONSIDERS THAT THE COURT HAS JURISDICTION TO INTERPRET ARTICLE 3 OF THE ACT OF ACCESSION AND THAT IT MAY DETERMINE WHETHER THAT PROVISION COVERS A SPECIFIC MEASURE . IT MAY NOT, HOWEVER, RULE ON THE LEGAL EFFECT PRODUCED BY THAT MEASURE WITH REGARD TO THE MEMBER STATE CONCERNED .
19 ACCORDING TO MR HURD AND THE COMMISSION, THE COURT ' S JURISDICTION TO INTERPRET ARTICLE 3 OF THE ACT OF ACCESSION INCLUDES THE POWER TO DETERMINE THE OBLIGATIONS WHICH ARISE FOR THE MEMBER STATES UNDER THE MEASURES WHICH COME UNDER THAT PROVISION . THEY ARGUE THAT THE FUNCTIONAL, FINANCIAL AND ORGANIZATIONAL LINKS BETWEEN THE EUROPEAN SCHOOLS AND THE COMMUNITIES ARE SO CLOSE THAT THE STATUTE OF THE EUROPEAN SCHOOL AND THE SUPPLEMENTARY PROTOCOL OF 1962, TOGETHER WITH THE PROVISIONS OF SECONDARY LAW APPLICABLE TO THE EUROPEAN SCHOOL, ARE PART OF ' COMPLEMENTARY COMMUNITY LAW '
AND, AS SUCH, FALL WITHIN THE JURISDICTION OF THE COURT .
20 IN ORDER TO RESOLVE THIS ISSUE IT SHOULD BE STATED IN THE FIRST PLACE THAT THE EUROPEAN SCHOOLS WERE SET UP NOT ON THE BASIS OF THE TREATIES ESTABLISHING THE EUROPEAN COMMUNITIES OR ON THE BASIS OF MEASURES ADOPTED BY THE COMMUNITY INSTITUTIONS, BUT ON THE BASIS OF INTERNATIONAL AGREEMENTS CONCLUDED BY THE MEMBER STATES, NAMELY THE ABOVEMENTIONED STATUTE OF THE EUROPEAN SCHOOL AND THE PROTOCOL ON THE SETTING-UP OF EUROPEAN SCHOOLS . THOSE AGREEMENTS TOGETHER WITH THE INSTRUMENTS, MEASURES AND DECISIONS OF ORGANS OF THE EUROPEAN SCHOOLS ADOPTED ON THAT BASIS DO NOT FALL WITHIN ANY OF THE CATEGORIES OF MEASURES COVERED BY ARTICLE 177 OF THE EEC TREATY AND ARTICLE 150 OF THE EAEC TREATY . THE MERE FACT THAT THOSE AGREEMENTS ARE LINKED TO THE COMMUNITY AND TO THE FUNCTIONING OF ITS INSTITUTIONS DOES NOT MEAN THAT THEY MUST BE REGARDED AS AN INTEGRAL PART OF COMMUNITY LAW, THE UNIFORM INTERPRETATION OF WHICH THROUGHOUT THE COMMUNITY FALLS WITHIN THE JURISDICTION OF THE COURT . THE COURT THEREFORE DOES NOT HAVE JURISDICTION TO GIVE A PRELIMINARY RULING, UNDER ARTICLE 177 OF THE EEC TREATY AND ARTICLE 150 OF THE EAEC TREATY, ON THE INTERPRETATION OF SUCH INSTRUMENTS .
21 HOWEVER, IN ORDER TO DETERMINE THE SCOPE OF ARTICLE 3 OF THE ACT OF ACCESSION WITH REGARD TO SUCH INSTRUMENTS, IT MAY BE NECESSARY TO DEFINE THEIR LEGAL STATUS AND, CONSEQUENTLY, TO SUBJECT THEM TO SUCH SCRUTINY AS IS NECESSARY FOR THAT PURPOSE . IN PERFORMING THAT TASK THE COURT DOES NOT HOWEVER ACQUIRE, ON THE BASIS OF ARTICLE 3 OF THE ACT OF ACCESSION, FULL AND COMPLETE JURISDICTION TO INTERPRET THE INSTRUMENTS IN QUESTION WHICH IT DOES NOT HAVE UNDER ARTICLE 177 OF THE EEC TREATY AND ARTICLE 150 OF THE EAEC TREATY .
22 IN REPLY TO QUESTION 1 ( A ) IT MUST THEREFORE BE STATED THAT THE COURT OF JUSTICE HAS JURISDICTION TO INTERPRET ARTICLE 3 OF THE ACT OF ACCESSION ; BY VIRTUE OF SUCH JURISDICTION IT MAY INTERPRET THE MEASURES COVERED BY THAT PROVISION ONLY IN ORDER TO DETERMINE ITS SCOPE, AND NOT FOR THE PURPOSE OF DEFINING MEMBER STATES '
OBLIGATIONS UNDER SUCH MEASURES .
ARTICLE 3 OF THE ACT OF ACCESSION
23 QUESTION 1 ( B ) IS INTENDED TO ESTABLISH WHETHER ARTICLE 3 OF THE ACT OF ACCESSION IMPOSES AN OBLIGATION ON THE NEW MEMBER STATES TO GIVE EFFECT IN THEIR NATIONAL LAW TO THE 1957 DECISION ON THE EXEMPTION FROM DOMESTIC TAXATION .
24 MR HURD ARGUES THAT ARTICLE 3 OF THE ACT OF ACCESSION REQUIRES THE UNITED KINGDOM TO IMPLEMENT THE 1957 DECISION AND TO EXEMPT ALL THE TEACHING STAFF OF THE EUROPEAN SCHOOL AT CULHAM FROM TAX ON THE EUROPEAN SUPPLEMENT . THE STATUTE OF THE EUROPEAN SCHOOL CONSTITUTES AN AGREEMENT WITHIN THE MEANING OF ARTICLE 3 ( 1 ). THE OBLIGATIONS WHICH DERIVE THEREFROM FOR A MEMBER STATE FORM PART OF THE ACQUIS COMMUNAUTAIRE WHICH THE NEW MEMBER STATES ARE UNDER A DUTY TO ACCEPT . ALTHOUGH IT WAS ADOPTED BEFORE THE SIGNING OF THE STATUTE OF THE EUROPEAN SCHOOL IN APRIL 1957, THE DECISION OF THE BOARD OF GOVERNORS IN JANUARY 1957 BECAME BINDING UNDER THE STATUTE WHEN THAT INSTRUMENT WAS RATIFIED . MOREOVER, ITS VALIDITY AND ITS BINDING FORCE HAVE BEEN RECOGNIZED IN THE PRACTICE OF THE MEMBER STATES OVER A LONG PERIOD OF TIME ; THEY CONSIDER THEMSELVES BOUND BY THE 1957 DECISION . THE UNITED KINGDOM ITSELF HAS PARTLY RECOGNIZED THE VALIDITY OF THAT DECISION BY IMPLEMENTING IT IN RESPECT OF MEMBERS OF THE TEACHING STAFF OF THE CULHAM SCHOOL WHO ARE NOT UNITED KINGDOM NATIONALS .
25 THE UNITED KINGDOM CONSIDERS THAT NEITHER ARTICLE 3 ( 1 ) NOR ARTICLE 3 ( 3 ) OF THE ACT OF ACCESSION COVERS THE 1957 DECISION . THAT DECISION WAS NEVER INTENDED TO HAVE ANY BINDING LEGAL EFFECT AND THE BOARD OF GOVERNORS WAS, MOREOVER, NOT COMPETENT TO ADOPT A RULE WHICH WAS BINDING ON THE MEMBER STATES . IN ANY EVENT, THAT DECISION, WHICH WAS TAKEN IN THE ABSENCE OF THE UNITED KINGDOM, DID NOT HAVE ANY EFFECT ON THE UNITED KINGDOM UNDER INTERNATIONAL LAW .
26 THE DANISH GOVERNMENT ALSO TAKES THE VIEW THAT A MEASURE SUCH AS THE 1957 DECISION, WHICH WAS NOT INTENDED TO HAVE BINDING EFFECT ON THE MEMBER STATES, DOES NOT CONSTITUTE AN AGREEMENT WITHIN THE MEANING OF ARTICLE 3 ( 1 ) OF THE ACT OF ACCESSION .
27 ACCORDING TO THE COMMISSION, THE 1957 DECISION, WHICH WAS ADOPTED BY THE REPRESENTATIVES OF THE GOVERNMENTS ACTING IN THAT CAPACITY AND NOT AS MEMBERS OF THE BOARD OF GOVERNORS, HAS AN ACCESSORY CHARACTER IN RELATION TO THE STATUTE OF THE EUROPEAN SCHOOL, WHICH FOR ITS PART DOES CONSTITUTE AN AGREEMENT WITHIN THE MEANING OF ARTICLE 3 ( 1 ) OF THE ACT OF ACCESSION . IN THE COMMISSION ' S VIEW, AS AN ESSENTIAL ELEMENT IN THE CREATION OF THE INTERNAL STRUCTURE OF THE EUROPEAN SCHOOL, AN IMPORTANT ASPECT OF WHICH IS A UNIFORM LEVEL OF REMUNERATION FOR THE TEACHING STAFF, THAT DECISION BECAME BINDING ON THE UNITED KINGDOM WITH THE LATTER ' S ACCESSION TO THE STATUTE OF THE EUROPEAN SCHOOL .
28 THE COURT FINDS IN THE FIRST PLACE THAT THE STATUTE OF THE EUROPEAN SCHOOL AND THE PROTOCOL ON THE SETTING-UP OF EUROPEAN SCHOOLS ARE AGREEMENTS CONCLUDED BY THE ORIGINAL MEMBER STATES RELATING TO THE FUNCTIONING OF THE COMMUNITIES OR CONNECTED WITH THEIR ACTIVITIES, WITHIN THE MEANING OF THE SECOND SENTENCE OF ARTICLE 3 ( 1 ) OF THE ACT OF ACCESSION, AND THAT THE UNITED KINGDOM ACCEDED TO THOSE AGREEMENTS IN ACCORDANCE WITH ITS OBLIGATION UNDER THAT PROVISION . ON THE OTHER HAND, THE 1957 DECISION ADOPTED BY THE REPRESENTATIVES OF THE MEMBER STATES, WHO HAD FORMED THEMSELVES INTO THE BOARD OF GOVERNORS OF THE FIRST EUROPEAN SCHOOL IN LUXEMBOURG, WHICH WAS THEN IN THE PROCESS OF BEING SET UP, WAS OF A SECONDARY NATURE IN RELATION TO THE STATUTE OF THE EUROPEAN SCHOOL AND CANNOT ITSELF BE REGARDED AS AN INTERNATIONAL AGREEMENT WITHIN THE MEANING OF ARTICLE 3 ( 1 ) OF THE ACT OF ACCESSION .
29 ARTICLE 3 ( 3 ) OF THE ACT OF ACCESSION EXTENDS THE ACQUIS COMMUNAUTAIRE WHICH THE NEW MEMBER STATES ARE UNDER A DUTY TO ACCEPT BY VIRTUE OF THEIR ACCESSION TO THE COMMUNITIES TO ALL ' DECLARATIONS OR RESOLUTIONS OR OTHER POSITIONS . . . CONCERNING THE EUROPEAN COMMUNITIES ADOPTED BY COMMON AGREEMENT OF THE MEMBER STATES ' . THE 1957 DECISION, WHICH WAS ADOPTED FOR THE PURPOSES OF THE IMPLEMENTATION OF THE AGREEMENT ON THE STATUTE OF THE EUROPEAN SCHOOL CONCLUDED IN CONNECTION WITH THE FUNCTIONING OF THE COMMUNITIES, IS ONE OF THE ' POSITIONS '
COVERED BY THAT PROVISION . CONSEQUENTLY, IN RELATION TO THE 1957 DECISION THE NEW MEMBER STATES ARE ' IN THE SAME SITUATION AS THE ORIGINAL MEMBER STATES '
BY VIRTUE OF ARTICLE 3 ( 3 ).
30 HOWEVER, ARTICLE 3 ( 3 ) OF THE ACT OF ACCESSION DOES NOT ATTACH ANY ADDITIONAL LEGAL EFFECT TO THE MEASURES TO WHICH IT APPLIES ; IT MERELY STIPULATES THAT THE NEW MEMBER STATES ' WILL . . . OBSERVE THE PRINCIPLES AND GUIDELINES DERIVING FROM THOSE DECLARATIONS, RESOLUTIONS OR OTHER POSITIONS AND WILL TAKE SUCH MEASURES AS MAY BE NECESSARY TO ENSURE THEIR IMPLEMENTATION ' . IT IS THEREFORE INTENDED TO ENSURE THAT THE NEW MEMBER STATES ARE SUBJECT TO THE SAME OBLIGATIONS AS THE ORIGINAL MEMBER STATES BY VIRTUE OF THE MEASURES IN QUESTION AND TO MAKE IT IMPOSSIBLE FOR A NEW MEMBER STATE TO RELY ON THE FACT THAT SUCH MEASURES WERE ADOPTED IN ITS ABSENCE .
31 THE COMMISSION ALSO DREW ATTENTION, IN PARTICULAR AT THE HEARING, TO THE QUESTION WHETHER, BY VIRTUE OF THE STATUTE OF THE EUROPEAN SCHOOL AND MORE GENERALLY BY VIRTUE OF THE RULES OF INTERNATIONAL LAW AND IN THE LIGHT OF THE POWERS WHICH THE MEMBER STATES HAD GIVEN TO THEIR REPRESENTATIVES ON THE BOARD OF GOVERNORS FOR THE MEETING IN QUESTION, THE 1957 DECISION CAN CREATE BINDING LEGAL EFFECTS . HOWEVER, AS HAS BEEN STATED ABOVE, THAT QUESTION IS NOT WITHIN THE JURISDICTION OF THE COURT IN THE CONTEXT OF PROCEEDINGS UNDER ARTICLE 177 OF THE EEC TREATY AND ARTICLE 150 OF THE EAEC TREATY .
32 IN REPLY TO QUESTION 1 ( B ) IT MUST THEREFORE BE STATED THAT ARTICLE 3 ( 3 ) OF THE ACT OF ACCESSION MUST BE INTERPRETED AS APPLYING TO THE DECISION ADOPTED ON 25, 26, AND 27 JANUARY 1957 BY THE REPRESENTATIVES OF THE SIX ORIGINAL MEMBER STATES OF THE ECSC, WHO HAD FORMED THEMSELVES INTO THE BOARD OF GOVERNORS OF THE EUROPEAN SCHOOL IN LUXEMBOURG, BUT THAT IT DOES NOT ADD TO THE LEGAL SCOPE OF THAT DECISION .
ARTICLE 5 OF THE EEC TREATY
33 BY THEIR SECOND QUESTION THE SPECIAL COMMISSIONERS ASK IN THE FIRST PLACE WHETHER ARTICLE 5 OF THE EEC TREATY REQUIRES MEMBER STATES TO GIVE EFFECT TO THE 1957 DECISION . IT IS CLEAR FROM THEIR DECISION THAT THAT QUESTION IS INTENDED TO ESTABLISH WHETHER THE MEMBER STATES ARE UNDER AN OBLIGATION TO EXEMPT FROM DOMESTIC TAXATION THE EUROPEAN SUPPLEMENTS PAID TO TEACHING STAFF OF THE EUROPEAN SCHOOLS SITUATED WITHIN THEIR TERRITORY WHERE THOSE STAFF ARE THEIR NATIONALS .
34 ACCORDING TO MR HURD, BECAUSE OF THE CLOSE LINK BETWEEN THE EUROPEAN SCHOOLS AND THE COMMUNITY INSTITUTIONS, ARTICLE 5 CREATES AN OBLIGATION FOR THE MEMBER STATES TO REFRAIN FROM TAKING MEASURES DETRIMENTAL TO THE FUNCTIONING OF THE EUROPEAN SCHOOLS . IN HIS VIEW, IT IS NECESSARY TO ENSURE THAT IN THE EUROPEAN SCHOOLS THERE IS NO DISCRIMINATION BETWEEN MEMBERS OF THE TEACHING STAFF AS REGARDS THE LEVEL OF REMUNERATION . IN ADDITION, COMPENSATION PAID BY THE EUROPEAN SCHOOLS IN RESPECT OF DOMESTIC TAXATION LEVIED ON THE EUROPEAN SUPPLEMENT REPRESENTS A BURDEN NOT ONLY ON THE BUDGET OF THE EUROPEAN SCHOOLS BUT ALSO ON THAT OF THE COMMUNITY AND IS THEREFORE DIRECTLY DETRIMENTAL TO THE COMMUNITY . IN THAT RESPECT MR HURD REFERS INTER ALIA TO ARTICLE 24 ( 2 ) OF THE REGULATIONS FOR THE TEACHING STAFF AND TO THE BUDGETARY CONSEQUENCES OF PAYING THE DIFFERENTIAL ALLOWANCE WHICH IS PROVIDED FOR THEREIN .
35 THE UNITED KINGDOM CONTENDS THAT TAXATION OF THE EUROPEAN SUPPLEMENT DOES NOT JEOPARDIZE THE ATTAINMENT OF THE COMMUNITY ' S OBJECTIVES AND DOES NOT OPERATE TO THE DETRIMENT OF THE EUROPEAN SCHOOL AT CULHAM . REFERRING TO THE JUDGMENT OF THE COURT OF 15 SEPTEMBER 1981 ( CASE 208/80, LORD BRUCE OF DONINGTON V ASPDEN ( 1981 ) ECR 2205 ), IT CONSIDERS THAT THE REASONING IN THAT CASE CANNOT BE APPLIED IN THIS INSTANCE BECAUSE IN THIS CASE THERE IS NO IMPAIRMENT OF THE INTERNAL FUNCTIONING OF A COMMUNITY INSTITUTION .
36 THE COURT CONSIDERS THAT THE STATUTE OF THE EUROPEAN SCHOOL AND THE PROTOCOL ON THE SETTING-UP OF EUROPEAN SCHOOLS ARE TO BE VIEWED IN THE CONTEXT OF A WHOLE SERIES OF AGREEMENTS, DECISIONS AND OTHER ACTS BY WHICH THE MEMBER STATES COLLABORATE AND COORDINATE THEIR ACTIVITIES SO AS TO CONTRIBUTE TO THE PROPER FUNCTIONING OF THE COMMUNITY INSTITUTIONS AND TO FACILITATE THE ACHIEVEMENT OF THE TASKS OF THOSE INSTITUTIONS . THE EUROPEAN SCHOOLS WERE SET UP, AS IS CLEAR FROM THE FIRST RECITAL IN THE PREAMBLE TO THE STATUTE OF THE EUROPEAN SCHOOL, BECAUSE THE PRESENCE AT THE CENTRES OF ACTIVITY OF THE COMMUNITY INSTITUTIONS OF OFFICIALS FROM THE MEMBER STATES MADE IT NECESSARY TO ORGANIZE SCHOOLING FOR THEIR CHILDREN IN THEIR MOTHER TONGUES AND, AS IS STATED IN THE FIRST PARAGRAPH OF ARTICLE 1 OF THE PROTOCOL ON THE SETTING-UP OF EUROPEAN SCHOOLS, THE PURPOSE OF THOSE SCHOOLS IS TO ENSURE THAT CHILDREN OF THE STAFF OF THE EUROPEAN COMMUNITIES RECEIVE EDUCATION AND INSTRUCTION TOGETHER .
37 HOWEVER, SUCH COOPERATION BETWEEN THE MEMBER STATES AND THE RULES RELATING THERETO DO NOT HAVE THEIR LEGAL BASIS IN THE TREATIES ESTABLISHING THE EUROPEAN COMMUNITIES AND ARE NOT PART OF THE LAW CREATED BY THE COMMUNITIES AND DERIVED FROM THE TREATIES . THE PROVISIONS OF THE TREATIES DO NOT THEREFORE APPLY TO THE STATUTE OF THE EUROPEAN SCHOOL OR TO DECISIONS ADOPTED ON THE BASIS OF THAT INSTRUMENT .
38 AS REGARDS, MORE SPECIFICALLY, ARTICLE 5 OF THE EEC TREATY, IT SHOULD BE NOTED THAT THE SECOND SENTENCE OF THE FIRST PARAGRAPH OF THAT ARTICLE IMPOSES ON MEMBER STATES AN OBLIGATION TO FACILITATE THE ACHIEVEMENT OF THE COMMUNITY ' S TASKS, WHILE THE SECOND PARAGRAPH REQUIRES MEMBER STATES TO ABSTAIN FROM ANY MEASURE WHICH COULD JEOPARDIZE THE ATTAINMENT OF THE OBJECTIVES OF THE TREATY . AS THE COURT HELD IN PARTICULAR IN ITS JUDGMENT OF 10 FEBRUARY 1983 ( CASE 230/81 LUXEMBOURG V EUROPEAN PARLIAMENT ( 1983 ) ECR 255 ), THAT PROVISION IS THE EXPRESSION OF THE MORE GENERAL RULE IMPOSING ON MEMBER STATES AND THE COMMUNITY INSTITUTIONS MUTUAL DUTIES OF GENUINE COOPERATION AND ASSISTANCE . THOSE DUTIES, WHICH ARE DERIVED FROM THE TREATIES, CANNOT BE APPLIED TO AGREEMENTS BETWEEN THE MEMBER STATES WHICH LIE OUTSIDE THAT FRAMEWORK, SUCH AS FOR EXAMPLE THE STATUTE OF THE EUROPEAN SCHOOL .
39 THE POSITION WOULD BE DIFFERENT IF THE IMPLEMENTATION OF A PROVISION OF THE TREATIES OR OF SECONDARY COMMUNITY LAW OR THE FUNCTIONING OF THE COMMUNITY INSTITUTIONS WERE IMPEDED BY A MEASURE TAKEN TO IMPLEMENT SUCH AN AGREEMENT CONCLUDED BETWEEN THE MEMBER STATES OUTSIDE THE SCOPE OF THE TREATIES . IN THAT EVENT THE MEASURE IN QUESTION COULD BE REGARDED AS CONTRARY TO THE OBLIGATIONS ARISING UNDER THE SECOND PARAGRAPH OF ARTICLE 5 OF THE EEC TREATY .
40 SUCH ARE THE CONSIDERATIONS THAT MUST BE BORNE IN MIND WHEN CONSIDERING THE QUESTION WHETHER THE TAXATION OF THE EUROPEAN SUPPLEMENT PAID TO MEMBERS OF THE TEACHING STAFF OF A EUROPEAN SCHOOL IS, AS MR HURD CLAIMS, DETRIMENTAL TO THE FUNCTIONING OF THE COMMUNITY INSTITUTIONS BY REASON OF THE OPERATION OF ARTICLE 24 ( 2 ) OF THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF .
41 UNDER ARTICLE 24 ( 2 ) OF THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF, THE EUROPEAN SCHOOL GRANTS, ACCORDING TO THE INFORMATION PROVIDED BY THE PARTIES, A DIFFERENTIAL ALLOWANCE TO COMPENSATE FOR THE DOMESTIC TAXATION CHARGED ON ITS TEACHERS '
SALARIES IN SO FAR AS THE AMOUNT THEREOF EXCEEDS THE AMOUNT WHICH WOULD BE CHARGED UNDER THE PROVISIONS APPLICABLE TO OFFICIALS OF THE EUROPEAN COMMUNITY . IF A MEMBER STATE TAXES THE EUROPEAN SUPPLEMENTS, THE SCHOOL THEREFORE REFUNDS THE TAX BY MEANS OF A DIFFERENTIAL ALLOWANCE, WHICH MAY ITSELF BE TAXED . THAT PROCESS COULD THEORETICALLY BE REPEATED AD INFINITUM . IT IS TRUE THAT IN THIS CASE, AS THE UNITED KINGDOM POINTS OUT, NATIONAL LEGISLATION MAKES IT POSSIBLE TO AVOID SUCH REPETITION BY MEANS OF A SIMPLIFIED CALCULATION .
42 THE FINANCIAL BURDEN OF THAT PROCESS FALLS ENTIRELY ON THE COMMUNITY BUDGET SINCE, AS HAS BEEN EXPLAINED ABOVE, THE COMMUNITY MUST PAY FOR THE DIFFERENCE BETWEEN, ON THE ONE HAND, THE EUROPEAN SCHOOL ' S OWN INCOME AND THE NATIONAL SALARIES OF THE TEACHERS AND, ON THE OTHER HAND, THE TOTAL BUDGET OF THE EUROPEAN SCHOOL . ANY ADDITIONAL PAYMENT WHICH THE SCHOOL MAKES UNDER ARTICLE 24 ( 2 ) OF THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF THEREFORE FALLS DIRECTLY ON THE COMMUNITY BUDGET .
43 IN ORDER TO ASSESS THE DETRIMENTAL NATURE OF THE CONSEQUENCES WHICH RESULT FOR THE COMMUNITY FROM SUCH A PRACTICE ON THE PART OF A MEMBER STATE, IT IS NOT SUFFICIENT TO TAKE INTO CONSIDERATION ONLY THE CASE OF MR HURD OR THE BRITISH TEACHERS AT THE EUROPEAN SCHOOL AT CULHAM . IT IS ALSO NECESSARY TO CONSIDER THE SITUATION WHICH MIGHT RESULT IF SIMILAR PRACTICES WERE ADOPTED IN OTHER MEMBER STATES .
44 IF THE ATTITUDE OF THE UNITED KINGDOM AUTHORITIES IN MR HURD ' S CASE WERE ADOPTED GENERALLY THE RESULT WOULD BE AN EFFECTIVE TRANSFER OF FUNDS FROM THE COMMUNITY BUDGET TO THE NATIONAL BUDGET, AND THE FINANCIAL CONSEQUENCES WOULD BE DIRECTLY DETRIMENTAL TO THE COMMUNITY . IN THAT WAY A MEMBER STATE COULD UNILATERALLY INTERFERE WITH THE SYSTEM ADOPTED FOR FINANCING THE COMMUNITY AND APPORTIONING FINANCIAL BURDENS BETWEEN THE MEMBER STATES .
45 SUCH CONSEQUENCES CANNOT BE ACCEPTED . CONDUCT GIVING RISE TO THEM IS CONTRARY TO THE DUTY OF GENUINE COOPERATION AND ASSISTANCE WHICH MEMBER STATES OWE THE COMMUNITY AND WHICH FINDS EXPRESSION IN THE OBLIGATION LAID DOWN IN ARTICLE 5 OF THE TREATY TO FACILITATE THE ACHIEVEMENT OF THE COMMUNITY ' S TASKS AND TO REFRAIN FROM JEOPARDIZING THE ATTAINMENT OF THE OBJECTIVES OF THE TREATY .
46 IN THAT CONTEXT THE SPECIAL COMMISSIONERS SEEK TO ESTABLISH BY THEIR THIRD QUESTION WHETHER THE PROHIBITION DERIVING FROM ARTICLE 5 OF THE EEC TREATY AGAINST THE IMPOSITION OF DOMESTIC TAXATION ON THE EUROPEAN SUPPLEMENT OF MEMBERS OF THE TEACHING STAFF OF A EUROPEAN SCHOOL IS CAPABLE OF PRODUCING DIRECT EFFECTS IN THE LEGAL RELATIONS BETWEEN THE MEMBER STATES AND THEIR SUBJECTS AND WHETHER, CONSEQUENTLY, MR HURD IS ENTITLED TO RELY ON IT BEFORE THE COURTS AND TRIBUNALS OF THE UNITED KINGDOM .
47 ACCORDING TO A CONSISTENT LINE OF DECISIONS OF THE COURT, A PROVISION PRODUCES DIRECT EFFECT IN RELATIONS BETWEEN THE MEMBER STATES AND THEIR SUBJECTS ONLY IF IT IS CLEAR AND UNCONDITIONAL AND NOT CONTINGENT ON ANY DISCRETIONARY IMPLEMENTING MEASURE .
48 THOSE REQUIREMENTS ARE NOT FULFILLED WITH REGARD TO THE OBLIGATION AT ISSUE IN THESE PROCEEDINGS, NAMELY THE OBLIGATION ARISING FROM ARTICLE 5 OF THE EEC TREATY TO REFRAIN FROM ANY UNILATERAL MEASURE THAT WOULD INTERFERE WITH THE SYSTEM ADOPTED FOR FINANCING THE COMMUNITY AND APPORTIONING FINANCIAL BURDENS BETWEEN THE MEMBER STATES . THE DIFFERENCES WHICH EXIST IN THAT RESPECT BETWEEN THE PRACTICES OF THE MEMBER STATES CONCERNING THE DETAILED RULES AND PROCEDURES FOR EXEMPTING TEACHERS FROM DOMESTIC TAXATION SHOW THAT THE SUBSTANCE OF THAT OBLIGATION IS NOT SUFFICIENTLY PRECISE . IT IS FOR EACH MEMBER STATE CONCERNED TO DETERMINE THE METHOD BY WHICH IT CHOOSES TO PREVENT ITS TAX TREATMENT OF TEACHERS AT THE EUROPEAN SCHOOLS FROM PRODUCING DETRIMENTAL EFFECTS FOR THE SYSTEM OF FINANCING THE COMMUNITY AND APPORTIONING FINANCIAL BURDENS BETWEEN THE MEMBER STATES .
49 IN ANSWERING THE FIRST POINT RAISED BY THE SECOND QUESTION, IN CONJUNCTION WITH THE THIRD QUESTION, IT MUST THEREFORE BE STATED THAT, BY VIRTUE OF THE DUTY OF GENUINE COOPERATION AND ASSISTANCE WHICH MEMBER STATES OWE THE COMMUNITY AND WHICH FINDS EXPRESSION IN THE OBLIGATION LAID DOWN IN ARTICLE 5 OF THE EEC TREATY TO FACILITATE THE ACHIEVEMENT OF COMMUNITY ' S TASKS AND TO REFRAIN FROM JEOPARDIZING THE ATTAINMENT OF THE OBJECTIVES OF THE TREATY, MEMBER STATES ARE PROHIBITED FROM SUBJECTING TO DOMESTIC TAXATION THE SALARIES PAID BY THE EUROPEAN SCHOOLS TO THEIR TEACHERS, WHERE THE BURDEN OF SUCH TAXATION IS BORNE BY THE COMMUNITY BUDGET . THAT OBLIGATION DOES NOT PRODUCE DIRECT EFFECTS CAPABLE OF BEING RELIED UPON IN RELATIONS BETWEEN MEMBER STATES AND THEIR SUBJECTS .
ARTICLE 7 OF THE EEC TREATY AND THE GENERAL PRINCIPLES OF COMMUNITY LAW
50 THE SECOND QUESTION REFERRED TO THE COURT BY THE SPECIAL COMMISSIONERS ALSO SEEKS TO ESTABLISH WHETHER ARTICLE 7 OF THE EEC TREATY OR ANY OTHER PROVISION OF COMMUNITY LAW REQUIRES A MEMBER STATE TO EXTEND TO ITS OWN NATIONALS THE EXEMPTION FROM DOMESTIC INCOME TAX WHICH IT GRANTS TO TEACHERS OF THE EUROPEAN SCHOOL WHO ARE NATIONALS OF ANOTHER MEMBER STATE AND, MORE SPECIFICALLY, TO APPLY THE 1957 DECISION IN RELATION TO THEM .
51 IN MR HURD ' S VIEW, THE FACT THAT THE UNITED KINGDOM GRANTS THE TAX EXEMPTION TO TEACHERS OF OTHER NATIONALITIES, BUT NOT TO TEACHERS OF UNITED KINGDOM NATIONALITY, CONSTITUTES DISCRIMINATION ON GROUNDS OF NATIONALITY, CONTRARY TO ARTICLE 7 OF THE EEC TREATY .
52 THE UNITED KINGDOM CONSIDERS THAT, SINCE THE MATTER IN QUESTION IS OUTSIDE THE SCOPE OF THE EEC TREATY, ARTICLE 7 IS NOT RELEVANT . IN ADDITION, THAT ARTICLE DOES NOT REQUIRE MEMBER STATES TO ACCORD THE SAME TREATMENT TO THEIR OWN NATIONALS AS TO NATIONALS OF OTHER MEMBER STATES .
53 IN THAT RESPECT, IT SHOULD BE NOTED IN THE FIRST PLACE THAT IT IS COMMON GROUND BETWEEN THE PARTIES THAT THE REMUNERATION OF TEACHERS AT THE EUROPEAN SCHOOL IN CULHAM WHO ARE NOT UNITED KINGDOM NATIONALS IS IN FACT NOT SUBJECT TO UNITED KINGDOM TAXATION . THERE IS SOME DISPUTE BETWEEN THE PARTIES AS TO WHETHER THAT DIFFERENCE OF TREATMENT IS COVERED BY PROVISIONS OF NATIONAL LAW OR BY DOUBLE TAXATION CONVENTIONS, AND AS TO WHAT THOSE PROVISIONS ARE, BUT THAT IS NOT A MATTER FOR THE COURT . IN REPLYING TO THE QUESTION RAISED BY THE SPECIAL COMMISSIONERS THE COURT MUST THEREFORE PROCEED ON THE ASSUMPTION THAT THE QUESTION CONCERNS A MEMBER STATE WHOSE LEGISLATION PROVIDES FOR SUCH A DIFFERENCE OF TREATMENT ACCORDING TO THE NATIONALITY OF THE TEACHERS AT A EUROPEAN SCHOOL SITUATED ON ITS TERRITORY .
54 IN ORDER TO REPLY TO THAT QUESTION IT IS NECESSARY TO CONSIDER WHETHER SUCH A SITUATION FALLS WITHIN THE ' SCOPE OF APPLICATION OF THIS TREATY ', WITHIN THE MEANING OF ARTICLE 7 OF THE EEC TREATY . IT IS TRUE THAT TEACHERS AT THE EUROPEAN SCHOOL MAY BE REGARDED AS WORKERS WITHIN THE MEANING OF ARTICLE 48 OF THE EEC TREATY WHO, WHERE THEY ARE EMPLOYED IN A SCHOOL SITUATED IN ANOTHER MEMBER STATE, HAVE MADE USE OF THEIR RIGHT TO FREE MOVEMENT WITHIN THE COMMUNITY . THAT IS HOWEVER NOT THE CASE WITH REGARD TO A TEACHER WHO IS A NATIONAL OF THE MEMBER STATE IN WHICH THE EUROPEAN SCHOOL IN QUESTION IS SITUATED AND WHO HAS NOT MOVED WITHIN THE COMMUNITY TO TAKE UP A POST WITH THAT SCHOOL .
55 AS THE COURT HAS ALREADY HELD IN ITS JUDGMENTS OF 28 MARCH 1979 ( CASE 175/78 SAUNDERS ( 1979 ) ECR 1129 ) AND OF 27 OCTOBER 1982 ( JOINED CASES 35 AND 36/82 MORSON AND JHANJAN ( 1982 ) ECR 3723 ), THE PRINCIPLE OF NON-DISCRIMINATION ENSHRINED IN ARTICLE 7 OF THE EEC TREATY, TOGETHER WITH THE SPECIFIC EXPRESSION OF THAT PRINCIPLE IN ARTICLE 48, CANNOT BE APPLIED TO SITUATIONS WHICH ARE WHOLLY INTERNAL TO A MEMBER STATE AND WHICH ARE IN NO WAY CONNECTED TO ANY SITUATIONS ENVISAGED BY COMMUNITY LAW . THE MERE FACT THAT NATIONALS OF A MEMBER STATE ARE EMPLOYED BY A EUROPEAN SCHOOL SITUATED ON THE TERRITORY OF THAT STATE IS NOT SUFFICIENT TO CONFER ON THOSE PERSONS THE BENEFIT OF THE COMMUNITY RULES ON THE FREE MOVEMENT OF WORKERS AND TO LIMIT THE POWER OF THAT MEMBER STATE TO ADOPT MEASURES IN RELATION TO THEM WHICH ARE MORE RESTRICTIVE THAN THOSE APPLIED TO NATIONALS OF OTHER MEMBER STATES .
56 IT FOLLOWS THAT ARTICLE 7 OF THE EEC TREATY CANNOT BE RELIED UPON TO PROHIBIT A MEMBER STATE FROM APPLYING TO THE TEACHING STAFF OF A EUROPEAN SCHOOL SITUATED ON ITS TERRITORY TAX TREATMENT WHICH IS LESS FAVOURABLE TO ITS OWN NATIONALS THAN TO THE NATIONALS OF OTHER MEMBER STATES .
57 MR HURD ALSO REFERRED TO THE GENERAL PRINCIPLES OF COMMUNITY LAW, AND IN PARTICULAR THE PRINCIPLES OF THE PROTECTION OF LEGITIMATE EXPECTATIONS, ESTOPPEL AND COMMUNITY SOLIDARITY, FROM WHICH IT IS, IN HIS VIEW, CLEAR THAT THE UNITED KINGDOM IS BOUND TO RESPECT THE 1957 DECISION .
58 IN THAT RESPECT IT IS SUFFICIENT TO POINT OUT THAT THE PRINCIPLES RELIED ON BY MR HURD DO NOT HAVE, IN A CASE SUCH AS THIS, ANY INDEPENDENT EXISTENCE OUTSIDE THE OBLIGATION WHICH ARTICLE 5 OF THE EEC TREATY IMPOSES ON MEMBER STATES . AS REGARDS LEGITIMATE EXPECTATIONS, IT SHOULD BE NOTED THAT BY REASON OF THE APPLICATION OF ARTICLE 24 ( 2 ) OF THE REGULATIONS FOR MEMBERS OF THE TEACHING STAFF, THE FINANCIAL BURDEN IMPOSED ON HIM AS A RESULT OF THE TAXATION OF THE EUROPEAN SUPPLEMENT IS LIMITED .
59 IN REPLY TO THE SECOND QUESTION IT MUST THEREFORE BE STATED THAT NEITHER ARTICLE 7 OF THE EEC TREATY NOR THE GENERAL PRINCIPLES OF COMMUNITY LAW REQUIRE A MEMBER STATE TO GIVE EFFECT TO THE ABOVEMENTIONED DECISION OF 1957 AND TO EXEMPT THE SALARIES OF TEACHERS AT A EUROPEAN SCHOOL SITUATED ON ITS TERRITORY FROM DOMESTIC TAXATION, WHERE THOSE TEACHERS ARE NATIONALS OF THAT MEMBER STATE .
Decision on costs
COSTS
60 THE COSTS INCURRED BY, DENMARK, IRELAND, THE UNITED KINGDOM AND THE COMMISSION OF THE EUROPEAN COMMUNITIES, WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED, A STEP IN THE PROCEEDINGS PENDING BEFORE THE NATIONAL COURT, THE DECISION ON COSTS IS A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS,
THE COURT,
IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE COMMISSIONERS FOR THE SPECIAL PURPOSES OF THE INCOME TAX ACTS BY A DECISION OF 14 FEBRUARY 1984, HEREBY RULES :
( 1 ) THE COURT OF JUSTICE HAS JURISDICTION TO INTERPRET ARTICLE 3 OF THE ACT OF ACCESSION . BY VIRTUE OF SUCH JURISDICTION IT MAY INTERPRET THE MEASURES COVERED BY THAT PROVISION ONLY IN ORDER TO DETERMINE ITS SCOPE, AND NOT FOR THE PURPOSE OF DEFINING MEMBER STATES '
OBLIGATIONS UNDER SUCH MEASURES .
( 2 ) ARTICLE 3 ( 3 ) OF THE ACT OF ACCESSION MUST BE INTERPRETED AS APPLYING TO THE DECISION ADOPTED ON 25, 26 AND 27 JANUARY 1957 BY THE REPRESENTATIVES OF THE SIX ORIGINAL MEMBER STATES OF THE ECSC, WHO HAD FORMED THEMSELVES INTO THE BOARD OF GOVERNORS OF THE EUROPEAN SCHOOL IN LUXEMBOURG . IT DOES NOT, HOWEVER, ADD TO THE LEGAL SCOPE OF THAT DECISION .
( 3)BY VIRTUE OF THE DUTY OF GENUINE COOPERATION AND ASSISTANCE WHICH MEMBER STATES OWE THE COMMUNITY AND WHICH FINDS EXPRESSION IN THE OBLIGATION LAID DOWN IN ARTICLE 5 OF THE EEC TREATY TO FACILITATE THE ACHIEVEMENT OF THE COMMUNITY ' S TASKS AND TO REFRAIN FROM JEOPARDIZING THE ATTAINMENT OF THE OBJECTIVES OF THE TREATY, MEMBER STATES ARE PROHIBITED FROM SUBJECTING TO DOMESTIC TAXATION THE SALARIES PAID BY THE EUROPEAN SCHOOLS TO THEIR TEACHERS, WHERE THE BURDEN OF SUCH TAXATION IS BORNE BY THE COMMUNITY BUDGET . THAT OBLIGATION DOES NOT PRODUCE DIRECT EFFECTS CAPABLE OF BEING RELIED UPON IN RELATIONS BETWEEN THE MEMBER STATES AND THEIR SUBJECTS .
( 4)NEITHER ARTICLE 7 OF THE EEC TREATY NOR THE GENERAL PRINCIPLES OF COMMUNITY LAW REQUIRE A MEMBER STATE TO GIVE EFFECT TO THE ABOVEMENTIONED DECISION OF 1957 AND TO EXEMPT SALARIES OF TEACHERS AT A EUROPEAN SCHOOL SITUATED ON ITS TERRITORY FROM DOMESTIC TAXATION, WHERE THOSE TEACHERS ARE NATIONALS OF THAT MEMBER STATE .