2.2.(b)

Other arguments are submitted in order to justify the grant of tax exemptions. One argument is that if exemptions may be authorized in respect of air travel there is no reason why sea travel should not benefit from the same exemptions. It is clear from the observations of the Member States, both of the original members of the Community and of those that acceded to it on 1 January 1973, that at the time when the Second Directive was adopted in 1972 the question of granting tax exemptions in respect of travel by sea did not arise between the “continental” Member States and that it only became an acute issue on the accession of three new States, two of which were island States. In order to determine the scope of the reservation in Article 6 (2), it is necessary to put it in its specific context and in the more general context of the harmonization of national provisions relating to the system of taxation applicable to international and intra-Community movements of travellers. As the Commission points out, the scheme of Directive 69/169 is fundamentally different from that of the common rules governing value-added tax. Whilst the harmonization of value-added taxes effected hitherto is based on the maintenance of tax frontiers, that is to say on the principle of taxation on importation into the country of destination (together with remission of tax on exportation from the country of origin), ( 8 ) the harmonization of exemptions from import taxes granted to individuals is based on the principle of taxation in the country of origin (with remission of tax in the country of destination). Article 6 (1) of Directive 69/169 enjoins the Member States to take appropriate measures to avoid remission of tax being granted on the purchase of goods by travellers who reside in the Community and who benefit from the common rules governing exemptions provided for in the directive. After making an initial exception relating to air travel, Article 6 (2) enjoins the Member States to take the necessary steps to permit, in the cases and under the conditions provided for in paragraphs (3) and (4), the remission of turnover tax at the retail stage on sales of goods carried in the personal luggage of travellers leaving the territory of a Member State, but it excludes the remission of excise duty. Those cases relate to both persons residing outside the Community and those residing within it; with regard to the latter, tax may be remitted only in respect of items the individual value of which, inclusive of tax, exceeds the amount specified in Article 2 (1). It is possible to levy no tax on goods contained in travellers' personal luggage in the country of destination because “as a general rule” tax is charged in the country of origin and because a presumption exists that tax has not been remitted there. That does not, however, exclude the possibility of granting, in certain circumstances, a remission of tax on arrival, even where there has been a remission of tax on departure. An anomaly is therefore tolerated whereby there is total absence of taxation to the extent of the lower limits granted to travellers coming from a non-member country. I agree with Advocate General Capotorti ( 9 ) that the reservation contained in Article 6 (2) has a wide scope and that it does not affect the tax system applicable to tax-free sales in the course of intra-Community travel by sea. It is true that the States seeking to accede to the Community were consulted with regard to the amendment made to Article 6. However, the fact that those States did not, at that time, raise any objections to a possible interpretation of the amendment which would adversely affect sales on board ferries cannot amount to tacit acceptance of an interpretation to which their attention was not specifically drawn. Against the argument based on the “complete” nature of the system of tax exemptions created by the directives in relation to movements of travellers within the Community, it must be observed that the Court took care in paragraph 6 of the operative part of its judgment in that case to qualify the verb “establish” with the adverb “gradually”; that wording clearly contrasts with the “exhaustive” ( 10 ) nature of the rules on exemptions from customs duty. The gradual nature of harmonization in that field is emphasized by the fact that the directives on the matter are numbered successively. It is true that the legislation of the Member States concerning turnover tax is now the subject of a “common system” of value-added tax; but in reality the system is “common” in part only. ( 11 ) The Sixth Council Directive ( 12 ) (17 May 1977) laid down a uniform basis of assessment for value-added tax. Article 2 thereof provides that the importation of goods is to be subject to value-added tax. Article 14 provides for a limited number of exemptions on importation; none of them is concerned with exemptions from value-added tax on the importation of goods purchased in the course of intra-Community travel, whether by air or by sea. However, as the Uniteci Kingdom points out, those exemptions are stated to be without prejudice to other Community tax provisions. ( 13 ) With regard to excise duties, harmonization has not yet begun in relation to provisions governing the factors comprising the duty on tobacco products. In that respect it seems to me that reference to the New York Convention of 1954, to which all the Member States are parties, is of some relevance. Article 13 of the Convention states that: “Nothing in this Convention shall prevent Contracting States which form a customs or economic union from enacting special provisions applicable to residents of the States forming that union.” Moreover, Article 234 of the EEC Treaty provides that: “The rights and obligations arising from agreements concluded before the entry into force of this Treaty between one or more Member States on the one hand, and one or more third countries on the other, shall not be affected by the provisions of the Treaty...”. The Member States may not, therefore, rely on the 1954 Convention in order to object to the application in their relations with one another of a system which does not regulate the position in the same manner as the Convention. However, in the absence of an exhaustive set of common rules in respect of exemptions from import taxes granted to individuals, it is possible to interpret the existing Community provisions in a manner which is compatible with the New York Convention. The system of “duty-free shops” in Community air and sea travel remains a matter within the jurisdiction of the Member States and it is the interpretation proposed by Rewe which would be incompatible with the Convention. Finally, legislative developments after the adoption of the 1972 Directive provide arguments of substance. After the introduction of the exception, the Commission proposed ( 14 ) to the Council on 22 September 1972 that it should adopt a third directive in order, in particular, to harmonize the rules relating to remission of tax as regards airport shops under customs control and sales on board aircraft, ships and hovercraft carrying paying passengers, to the exclusion, however, of the tax rules relating to goods consumed on board such means of transport. The Commission had to withdraw its proposal in the face of objections from the Member States. Yet it is interesting to note that the Commission itself stated in that proposal that at that time there was no Community regime covering sales under customs control, either at airports and on board aircraft or on board ships and that the same rules should apply in both cases. Finally, during the course of these proceedings, the Commission, on 11 April 1983, proposed to the Council ( 15 ) that it should adopt a seventh directive amending Directive 69/169 and simply deleting the phrase beginning “without prejudice to” giving the following grounds in the preamble: “it must be possible for Member States to maintain in force the provisions they apply at present to sales made in shops under customs control at airports and ports, or on board means of air or sea transport, to travellers going to third countries”, and, more particularly, “it would appear to be advisable to limit the value and quantity of goods supplied tax-free to persons travelling between Member States [on board aircraft, and on vessels or hovercraft used for sea transport] and to allow such persons an exemption at import corresponding to that granted to travellers coming from third countries”.